Small Business Certification Programs
Where to get certified 8a, woman owned, veteran, service disabled, or Hubzone for Small Business Certification Programs
The goal behind small business certification programs is to help level the playing field for small businesses. The 8a, woman owned (WOSB), veteran owned (VOSB), service disabled veteran owned (SDVOSB), and Hubzone certifications allow small businesses to compete fairly against larger businesses with more resources. The key part of that statement is “compete fairly”. Many companies believe that a socio-economic status entitles them to automatically win contracts. That is just not true.
However, you don’t win contracts because you’re certified
Yes there are set asides and simplified acquisitions that improve opportunities for smaller businesses. With the exception of 8(a), most statuses still require the ‘rule of two,’ requiring that contracting officers have a reasonable expectation that at least two or more companies (even disadvantaged companies) will submit an offer. There are situations where a sole source contract can and will be awarded when there is only one possible source or only one possible offer. But this is increasingly rare. When the government releases an opportunity only for small business, 8a, wosb, or veteran, it’s called a set-aside.
The challenge for small business is that not every agency or organization uses set-asides to their fullest potential AND you still have to communicate value. The value that your products and services provide is much more important than being certified, regardless of sole-source opportunities.
A socio-economic status without communicating value is worthless.
The hard truth about small business certification programs is that they don’t, on their own, win government contracts. You still have to provide a great product or service and you still need to understand how to differentiate your company from the competition. Small business specialists and consultants that tell you otherwise don’t understand the basics of federal acquisitions.
This article provides a short summary of the facts and eligibility requirements for the primary government small business certification programs. If you are interested in learning more about how to successfully use your certification, follow Joshua Frank on LinkedIn and review the dozens of documents, videos, and other resources in Federal Access.
Quick side note – whether or not you complete and submit certification packets on your own or you pay someone to do it for you… our recommendations are the same as for submitting a GSA Schedule application. Whenever possible, you should try to do it yourself first. You may also want to read Government Contractor Scams which discusses what you should and should not pay for.
Government Small Business Certification Programs
Here is a breakdown of the top 4 government small business certification programs and what you should know about them.
Woman Owned Small Business (WOSB) or EDWOSB (Economically Disadvantaged)
- You can no longer self certify. The 2015 NDAA revised a small portion of the Small Business Act. The language on self-certification has been deleted. As of the date of this article, the four third-party certifiers approved by the SBA are the El Paso Hispanic Chamber of Congress, the National Women Business Owner’s Corporation, the US Women’s Chamber of Commerce, and the WBENC
- See FAR 19.15 for more information on WOSB Program
- NAICS codes are assigned to industries that are substantially underrepresented by WOSBs
- Must meet small business size standard for primary NAICS Code and contract
- At least 51% of the business must be owned by women who are U.S. citizens
- The woman must manage the day-to-day operations of the business as well as make long-term decisions for the business
- The woman owner must hold the highest officer position in the company and work full-time in the business
Additional Requirements for EDWOSBs Only:
- Personal net worth is less than $750K
- Excludes: ownership in business and primary personal residence, income invested or use to pay taxes of the business, funds reinvested in IRA or other retirement accounts, transferred assets within two years if to or on behalf of a family member for select purposes
- Adjusted gross income average over three years is $350K or less
- Excluding income reinvested or used to pay taxes of the business
- Fair market value of assets is $6 million or less
- Excluding funds reinvested in IRA or other official retirement accounts
8a Small Business Development Program
- See FAR 19.8 for more information on the 8a program
- Social Disadvantage – Must be Hispanic American, Asian American, Black American, Native American, or a person who has experienced chronic discrimination against you on the basis of disability, gender, veteran status, race, culture or some other factor
- Personal net worth must be under 250K
- The 8a applicant must be the highest paid person in the company and your salary must be reasonable for your industry and a reasonable proportion of your company’s annual gross revenues.
- The 8a applicant’s current market value of all of their assets must be under $4 million
- Adjusted Gross Income (AGI) must be under 200K
- Must be able to prove American citizenship with a birth certificate, passport, or other documentation
- Must meet SBA small business size standards. This is based on your primary NAICS code
- The applicant must have full control of the company, own 51% or more of the company, and be engaged full-time in the business
- The applicant’s company must contract history with at least one contract completed in the past 12 months
- Must have two or more completed tax returns that display the economic viability of your company
- Applicants with felony convictions or on parole are not allowed to receive this certification
- The applicant and all owners, directors, officers, etc., must be current on all federal financial obligations such as taxes, student loans, etc
- Company financials must show a minimum of 3 months of working capital via cash in business accounts or a combination of cash, credit, and loan resources
Historically Underutilized Business Zones (HUBZone)
- See FAR 19.13 for more information on HUBZone
- Small business size standards apply for your primary NAICS Code
- Primary difference between this certification and other small business certifications is that 35% or more of all of the company’s employees must reside in the HUBZone and the primary office for the business must be in the HUBZone
- Certify that when performing HUBZone contracts, at least 35% of employees engaged in the contract live in the HUBZone
- Must meet at least one of the following:
- 51% or more owned by a U.S. citizen
- Wholly owned, owned in part, owned by a joint venture or partnership by one or more Indian Tribal Governments
- Owned by a small agricultural cooperative
Service Disabled Veteran Owned Small Business (SDVOSB)
- Certification is through the CVE at Veterans Affairs
- See FAR 19.14 for more information on SDVOSB
- The Service Disabled Veteran must have a service-connected disability that been determined by the Department of Veteran Affairs
- Must meet the small business requirements for the NAICS code assigned to the solicitation
- Must own 51% of the company, control the management of the company, and hold the highest officer position in the company
Michael LeJeune is a Partner at RSM Federal, a federal consulting and business-acceleration strategy firm that provides companies with the templates, processes, and strategies for winning government contracts. For more information about RSM Federal, please visit www.rsmfederal.com