SBA Works to Strengthen Its 8(a) Program

Proposals set to open up access to more businesses

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SBALogo23For the first time in several years, the Small Business Administration has conducted a comprehensive review of its 8(a) program and will announce regulation changes this summer. Created to help small, economically disadvantaged firms expand their businesses and access government contracting opportunities, the program has frequently come under fire for being inadequate and out of touch with current economic realities.

The SBA is proposing strengthening the Mentor-Protégé program by requiring that 8(a) firms receive business development assistance and perform at least 40% of the work on joint-venture projects. It also would prohibit mentor firms from acting as subcontractors to protégés in joint ventures. The goal is to ensure that small firms truly benefit from the relationship and aren’t taken advantage of to help large firms win contracts.

Size standards would be increased for 71 different types of businesses, mostly retail trade, hospitality, and food services. This purportedly would open up the program to thousands of more businesses.

The SBA also proposes to require that 8(a) firms adhere to the size limit for their primary industry or face early graduation from the program if it exceeds that limit for two consecutive years. Other proposed changes would clarify income requirements used to determine program eligibility. IRAs would be excluded from net worth calculations. Gross income and total assets could not exceed $200,000 and $3 million, respectively, to enter the program or $250,000 and $4 million to remain in it.

“A lot of what we’re doing is clarifying, cleaning up and strengthening areas we thought were lax in previous regulations,” explained SBA deputy associate administrator Calvin Jenkins.

Black business owners and advocates applaud SBA’s efforts, but lament that they don’t go far enough.

“They need to focus on how to grow larger minority businesses because changing demographics will require a strong minority business class,” says Ralph G. Moore about the SBA. As president of Ralph G. Moore & Associates, a Chicago-based management consulting firm, Moore, who is also a graduate of the 8(a) program, believes the agency has put more focus on accountability and policing rather than building stronger businesses. He adds, “The limitations government continues to place on minority businesses, like net worth and size standard limitations are counterproductive to growing a larger pool of viable minority businesses.” He’s not alone.

According to National Minority Supplier Development Council Vice President Steve Sims, the proposed changes are “useful and constructive, but don’t get at the heart of the major issues that impede or restrict minority business growth.”

  • I applaud SBA’s efforts so far but also agree there’s much more to tackle. Specifically, I’d like to see more emphasis placed on ‘mandatory’ training and coaching on the basics of business operation. In my practice, I still encounter business owners that are well into owning their businesses lacking the skills of reading and understanding financial statements, planning and launching marketing initiatives (especially internet marketing AND referral-based marketing) to fuel business growth and developing a strategic plan to reach their goals. So a great deal of my time is spent in training in these areas before any work can be done. I like the protege program but realize that business owners that are connected to other businesses without sound practices may be learning bad habits.
    I believe these areas is where the SBA and the businesses that are a part of this program will see the greatest results.

    Desiree H. Young

  • Helping small companies is fine, but race, ethnicity, and sex should not be considerations. It’s fine to help new and small businesses learn the ropes and to make sure contracting programs are open to all, that bidding opportunities are widely publicized beforehand, and that no one gets discriminated against because of skin color, national origin, or sex. But that means no preferences because of skin color, etc. either–whether it’s labeled a “set-aside,” a “quota,” or a “goal,” since they all end up amounting to the same thing. Such discrimination is unfair and divisive, and it’s almost always illegal—indeed, unconstitutional—to boot.

    • If it were not for set-asides only the big boys would get business. There wouldn’t be a reason to award a contract to a small business. Big boys have more experience and more influence. Then there would be less competition so costs would rise. Small businesses would get some business but only the opportunities that the big guys don’t want.

      • Jonathan

        That is only speculation. These “big boys” are also minority/disadvantage owned businesses. Small businesses also include “non” minority owned business (turns out that us Jews are not minorities and non-minority woman have to justify there hardships for and 8a designation). My company is being manhandled and bullied by an 8a company that has taken over more than 51% of our contract. Now the greed is setting in and the 8a wants more. It is threatening to replace the rest of us and kick us out. This is all due to greed. There is less competition allowed to bid on projects because of 8a’s. My company is the disadvantaged company, not a minority owned business. I feel we need to do away with this biased program that is outdated and creates vindictive monsters. My company and family is going to be put in the poor house very soon and even then we won’t be able to get an 8a designation to compete with these 8a’s that are in fact “big boys.”

  • Concerned government contractor

    8(a) firms are taking my business away. I am a female that owns a business and I can’t compete with “black” owned businesses. Yes I am Jewish and a female, so I am in the minority as well but I cannot obtain 8(a) status because I am not black. I cannot document these impacts as easily as saying I am black. This is a social injustice and puts me at disadvantage.It is too hard for “other” “so-called” discriminated groups to get what black people can get. I think this program should be re-structured completely. A black person is not automatically disadvantaged, this is absurd and inherently prejudice. 8(a) firms are becoming bullies and pushing around other businesses because we cannot claim “black” as a race. This program was a great idea – but not in 2010 after so many advances in U.S. equality.

    • Please note that you don’t have to be black to obtain 8(a) status. The requirements for 8(a) is that you must be socially and economically disadvantaged. Being black (or the other race categories) automatically qualifies a person as being socially disadvantaged but if you are not in one of those categories you have to show proof that you are socially disadvantaged (denied opportunities for a reason you cannot control).

      • Jonathan

        No, you don’t have to be black to get an 8a. But a black person will automatically receive an 8a status. Anyone else has to fight for it and prove social injustice. How is every black person automatically assumed to have received a social disadvantage? B.S.

        • Terran Jones

          If you were black you would know why

          • Zaza

            tax cuts didn’t work in which way? One can argue that as a result of the tax cuts feedral revenue increased during his administration. In fact, the rich paid a higher blended tax rate under Bush’s admin. vs. Clinton’s. The housing bubble was created as a result of low interest rates government creating policies to make everyone become a home owner. As for Harding, his tax cuts as well as cutting the Fed. budget, a depression was prevented in 1920-1921.

  • Butch

    While I applaud the changes in the economic requirement, I feel that the SBA should not require that you have 3 active contracts with neither exceeding 70% of value of the other two before you can apply for certification. As a small business owner, the primary reason you come to SBA is help you become more competitive by helping you get certified. If you have contracts that you have successfully maintain for several years, with solid balance sheets, lengthy experience and a track record of completing the contracts you have had, I feel SBA should allow small businesses to submit their package and review them based on what the company has done and are doing but with the SBA’s help could improve the companies business opportunities and bottom-line.