Should your small business get 8(a) certified?

The Small Business Administration’s (SBA) 8(a) program can give small disadvantaged businesses a major advantage, but it’s not for everyone.

We’ve got three steps to help you determine if it’s a good fit for you and your business, along with some common mistakes people make when trying to navigate the 8(a) program.

Learn how government contracting can help you grow your business’ footprint and why getting 8(a)-certified could be a gamechanger for your business.

Note: This post has been updated with the latest information from SBA on their 2023 social disadvantage requirements.

If you want to grow your business, you should think about government contracting.

The US government is the largest buyer of goods and services in the world.

Administering everything from Social Security and Medicare to highway maintenance and education, the federal government serves millions of people across the US. To support programs like these, the government awards billions of dollars in contracts every year.

Government contracting is a huge industry and it represents a real opportunity for any business looking to grow their clientele. But it also creates stiff competition.

As we’ll cover below, getting 8(a)-certified with the SBA can help with this. The business development program helps small disadvantaged firms win government contracts. This kind of competitive advantage is critical for any small business new to government work. Without an edge like this, it can be very hard to get your foot in the door at a new agency.

• Government contracting has a steep learning curve.
• The procurement process is often lengthy, time-consuming, and highly competitive.
• Most government contracts require a big up-front investment of time and resources, with no guarantee of an award.

This makes it hard for small firms to win government work.

If you don’t get 8(a)-certified, use another SBA contracting assistance program, or win a serious contracting vehicle of some kind, you’ll face some tough competition. And this is true even if you only go after contracts that have been set-aside for small businesses.

The competition for small business set-asides can be surprisingly fierce.

There are over 31 million small businesses in the US.

And if a government contract is worth more than $25,000, it has to be advertised to the public in the System for Award Management.

So sure, you won’t have to go up against large firms for a small business set-aside contract. But you’ll still have to compete with a large number of other small businesses.

And some of your competitors may have very large small businesses compared to yours.

Besides setting these spending targets, the 8(a) program also supports certified small businesses in other ways. Getting 8(a) certified gives you access to one-on-one business development assistance. You can connect with procurement and compliance experts through the program.

And you can get mentorship opportunities and technical assistance. But most importantly, the 8(a) program allows certified firms to go after special set-aside and sole-source contracting opportunities.

The RFP process can be different for 8(a) sole-source.

As long as the contract isn’t over the $4.5 million threshold (or $7 million for manufacturing), a government CO can award a sole-source contract to an 8(a)-certified firm directly and without competition.

While it’s up to the CO how to run the procurement, they could choose to send an 8(a) firm a two-page Statement of Work (SOW) instead of a full-blown Requests for Proposal (RFP).

RFPs require in-depth proposal responses from vendors. These responses are time-consuming to create, typically ranging from tens of pages to a hundred pages long or more. They’re also resource-intensive, requiring technical expertise and solutioning. It can be hard for small businesses to swing this, especially with a tight submission deadline.

But with 8(a) sole-source contracts, you can avoid this headache while still winning new government work.

And that’s what makes getting 8(a)-certified so worthwhile.

The government procurement process is challenging for customers, too. Your typical CO doesn’t look forward to reading and analyzing scores of proposals that are 100+ pages long.

8(a) sole-source awards drastically reduce this administrative burden, so they tend to be popular. In fact, $11.1 billion of the $34 billion in federal contracts awarded to 8(a) businesses in the 2020 fiscal year were 8(a) sole-sources. This means that the winning businesses faced zero competition.

Sound too good to be true? Well, there’s a catch. 

To ensure that the 8(a) program is supporting the people it’s intended to, SBA has to take a close look at both the applicants and their businesses. This means that you have to provide a lot of information in your 8(a) application.

The certification process is intense, and you’ll have to answer questions in detail. A lot of your answers will need to be backed up by evidence, too. You’ll have to submit all kinds of documentation, including financial information for you, your spouse (if you have one), and your business.

This can take months to put together. And in the end, many applicants get rejected.

We’ve got some tips to help you avoid this outcome, but getting into the 8(a) program is hard even if your application is accepted on your first try.

The 8(a) program is intended to give experienced socially and economically disadvantaged small business owners a level playing field as they work to grow their businesses in the federal marketplace. It’s not for startups. Your 8(a) certification is a tool you can use to capture new government work, but it’s up to you to make the most of it.

To ensure that you’re ready to get 8(a)-certified and that you qualify for the program, SBA has a number of eligibility requirements. It’s important to note that eligibility for the 8(a) program is based on both the applying company and the applying individual. So you should be prepared to answer a lot of questions about both yourself and your business. 

Read on for a rundown of these requirements, and keep in mind that you must meet all of them to move forward.

• Your company must be a small business, according to its primary NAICS code (this can be found on your SAM.gov profile, which you’ll need to set up to work with the federal government).
• You can’t have participated in the 8(a) program before (and neither can your business).
• Your business must be at least 51% owned and controlled by US citizens who are socially and economically disadvantaged. As of August 21, 2023 you’re required to submit a social disadvantage narrative to establish your eligibility.
• You must have a personal net worth of less than $850 thousand, an adjusted gross income of $400 thousand or less (averaged over the past three years), and assets totaling $6.5 million or less.
• You have to demonstrate good character.
• You have to demonstrate your potential for success and to have been in business for at least two years.

This list is a good starting point for determining if you’re eligible to get 8(a)-certified, but it just scratches the surface. When evaluating 8(a) applications, SBA considers many factors in great depth to determine whether these criteria have been met.

The 8(a) program supports people with specific backgrounds, circumstances, and experiences. If you don’t fall into this group, you won’t be able to get 8(a)-certified. But that doesn’t mean you’re on your own. There are other SBA contracting assistance programs that you should consider.

Take SBA’s Women-Owned Small Business (WOSB) and HUBZone programs, for example. The federal government also sets spending targets for these programs, aiming to award a portion of government contracts to these firms. These certifications give government COs a way to get to your business, shrinking the pool of other vendors you’ll have to compete with. So, while getting WOSB and HUBZone certified won’t give you all the same advantages that getting 8(a)-certified would, they’re still useful tools.

If you don’t have any certifications or contract vehicles that you can offer your government customers, it can be very hard for them to find a way to work with you. Even if they know they want to hire you for an opportunity, the best they’ll be able to do is put it out as a total small business set-aside. And, as we covered above, those can be hard to win. 

Even if you’re eligible to get 8(a)-certified, the program still might not be right for your business. That’s because 8(a) certification is most helpful if your customers are already using it.

Like we mentioned above, SBA sets prime contracting goals for federal agencies to encourage them to award contracts to 8(a)- certified small businesses. But these aren’t mandatory goals, and there are no penalties if agencies don’t meet their targets.

So, before you jump on the 8(a) bandwagon, you’ll want to check the spending habits of your customers. Do some market research on USASpending.gov to see what certifications and vehicles your target customers are using within your primary NAICS code. See if they’re using 8(a) set-asides or sole-sources to award these types of contracts.

If your customers are already comfortable with the 8(a) program, it could be a great fit. If they’re not, you may want to reconsider getting 8(a)-certified. In this case, effectively using your certification will require more aggressive marketing and education of the customer on your part.

If you’re eligible for 8(a) certification and you know your customers are comfortable using the program, then it might be a perfect fit for you and your business. But even so, you may not be ready to go after your 8(a) certification today.

Nine years sounds like a long time, but it goes by fast. And SBA sets targets that limit how much of your revenue can come from 8(a) contracts in your later years in the program.

The clock starts ticking the day you get 8(a)-certified, so you need to be ready to take advantage of the program’s benefits from day one.

Once you get 8(a)-certified, you only have four years in the initial “developmental stage.” Your last five years are considered your “transitional stage.” During this period, your focus as a company should be on how you can successfully transition out of the program.

If you don’t meet the yearly goals that SBA sets for your non-8(a) revenue, you can be terminated from the program. This might sound harsh, but it’s because SBA wants your business to survive after you graduate. And if you don’t diversify, you won’t be able to compete once your time in the 8(a) program comes to an end. This means that you need to be very strategic about when you get 8(a)-certified. If you’re not, you run the risk of getting into the program before you’re ready.

The application process for 8(a) certification is intense, there’s no way around it. To ensure that the program is serving the people it’s meant to, SBA has to put applicants and their businesses under the microscope. And doing this requires a lot of paperwork.

To get 8(a)-certified, you have to provide dozens of documents along with your application. You’ll need to include everything from your business’ Articles of Incorporation to your personal tax returns for the last three years.

Gathering all of the necessary information can be overwhelming, so it’s easy to miss a few documents or to not go into the level of depth that SBA requires. But it’s always better to err on the side of caution when submitting your application, so you should be as thorough and comprehensive as you can. 

Some of the eligibility requirements for getting 8(a)-certified are very subjective. SBA takes applications on a case by case basis, so sometimes, whether you get into the program or not depends on the analyst you get.

You should think about every interaction you have with your analyst as part of your application. Make it a point to respond to their letters and questions quickly and cordially. This is especially important if you have a past issue that might be considered a point against your good character.

You’d be surprised how common it is for businesses to become 8(a)-certified and never win an 8(a) contract. This is usually because they got certified before they were ready.

While you can get training and support from SBA throughout the program, it’s on you to actually win work once you get 8(a)-certified. You need to promote your business aggressively and put in the work to make ins at new agencies. If your target customers are new to 8(a), you have to sell them on both yourself and on the program. You also have to submit an annual review to SBA every year, which can be surprisingly burdensome. This is a lot of work, and doing it right requires careful planning and preparation.

It can be tempting to put this work off. Once you learn you’re eligible, you might want to focus on getting your 8(a) certification and worry about how to leverage, market, and administer it later. But trying to build the plane while you’re flying it is risky. And you may find that, by the time you’ve learned to make the most of your 8(a) certification, you’re about to graduate.

It can be tempting to put this work off. Once you learn you’re eligible, you might want to focus on getting your 8(a) certification and worry about how to leverage, market, and administer it later. But trying to build the plane while you’re flying it is risky. And you may find that, by the time you’ve learned to make the most of your 8(a) certification, you’re about to graduate.

The SBA expects you to hit the ground running, so you need to be ready to sprint once you’re in the 8(a) program. The years will go fast, and you have to be ready to make the most of them.

• Do your research. Before you get into the 8(a) program, make sure to do your homework. Do market research at USAspending.gov and other government websites to find out what agencies you should be targeting.
• Market yourself aggressively. After you get 8(a)-certified, you need to take a proactive approach to marketing. Don’t wait for the opportunities to come to you. Build relationships at your target agencies so you can help shape opportunities before they’re in the RFP stage.
• Be ready to push your customer to 8(a). Even if they’re familiar with 8(a) contracting, the COs you’re dealing with won’t always think to make an opportunity 8(a). Be ready to recommend that they sole-source 8(a) contracts to you or to make a contract an 8(a) set-aside. And if your customers aren’t familiar with the program, be prepared to educate them on the rules and benefits of 8(a) contracting.

While you can get some training and support from SBA, the agency won’t hold your hand after you get 8(a)-certified. It’s up to you to convince your customers that an 8(a) set-aside or a sole-source to your company is a good idea. That’s why marketing and relationship-building is so crucial to businesses’ success in the program.

At this point, you hopefully have a better sense of what the 8(a) program is and whether the program is a good fit for you and your business.

We’ve covered 8(a) certification requirements and some of the basics around how to get 8(a)-certified. We’ve also offered tips for how to become a successful 8(a) contractor.

But we’ve just scratched the surface of 8(a) contracting in this piece. And 8(a) certification is just one way that small businesses can get their foot in the door of government work.

The government industry is a huge opportunity space for any small business. Breaking into this world can be a gamechanger, offering you a stable way to grow your clientele.

But through this kind of work, you can do more than benefit your own business. By giving your government customers access to the modern tools and technologies they need to work more efficiently, you can also help improve the experiences of the people who rely on government services every day.