Government contracting can be lucrative, but getting started with government contracting is also a bit like trying to solve a jigsaw puzzle where all of the pieces are the same color. We could write a 12,000-word article about the ins and outs of contracting, but let’s just focus on one topic for now – 8a contracts.
What Are 8a Contracts?
Every agency in the U.S. government sets aside a portion of its contracting jobs for small businesses. If your company qualifies as a small business, the Small Business Administration has created several designations for specific types of small businesses.
These are known as “set-asides,” and 8a contracts are a type of set aside for businesses known as small disadvantaged businesses (SDBs). You can qualify under the 8a program if you meet the following criteria:
Are You Small?
You must qualify as a small business according to government size standards (click here https://www.sba.gov/size-standards/ to see if you qualify)
Are You Majority U.S. Owned?
In order to qualify for 8a contracts, your company must be 51% owned and controlled by U.S. citizens. But, these citizens also have to be economically and socially disadvantaged.
The “socially” disadvantaged basically refers to people who historically have been either underrepresented and/or subjected to ethnic, cultural or racial bias, such as African-Americans and Native Americans, but also many other groups. For instance, your gender or a physical handicap might be a factor.
Is Your Income Low Enough?
The owner of an 8a company must be a person with a personal net worth of $250,000 or less and with $4 million or less in assets. The owner’s average adjusted gross income for the last three years also must be $250,000 or less.
If you seem to qualify based upon the aforementioned requirements, here are some fast facts about 8a contracts that might be helpful:
1. 8a Contracts Can Be Highly Profitable
If you qualify as one of those SDBs and win a few contracts, this truly can take your business to the next level. In 2018 alone, the federal government awarded $120 billion in contracts to small businesses, and more than $46 billion of this went to SDBs.
For many types of small business set-aside, the contract dollar amount is relatively small. You might find some jobs worth $20,000 or less, which definitely is profitable for a small business, but 8a contracts are a bit different and potentially more profitable. With 8a contracts, small businesses that provide products or services can earn up to $4 million. Contracts up to $6.5 million are an option for manufacturing firms.
Keep in mind that an 8a certification doesn’t mean you are guaranteed a bunch of million-dollar contracts. It simply means that there are possibilities available up to those amounts. It’s perfectly likely that you might find a $25,000 contract or a $50,000 contract that fits the goods and services you provide. While these are smaller, it still can give your business a huge boost.
Also, even if you don’t qualify as an 8a business, small businesses aren’t necessarily bidding on less profitable contracts. A regular small business could win a contract worth hundreds of thousands of dollars; it’s just a bit harder to win these bigger contracts when you don’t have 8a status.
Typically, all government contracts for $150,000 or less are set aside for small businesses and while a giant company like Lockheed Martin might find 150 grand to be small potatoes, a small business definitely would view that as a substantial sum.
2. There are 8a Contracts for Every Type of Business
According to the SBA, construction firms that qualified as SDBs were awarded $5.83 billion in contracts in the fiscal year 2018. But, it’s not just construction companies that earned contracts. Many companies that provide different types of computer-related services also were top earners, as well as security guard companies and even companies that provided weather forecasting services.
These are just some of the top earners; there are contracts out there for just about any type of business, from catering services to paper suppliers to different types of repair services. Many people mistakenly think that government contracting is all about construction and disaster cleanup-type services, but the government works with businesses from just about any industry.
3. 8a Contracts Aren’t Available Forever
The whole goal of providing 8a contracts is to help businesses grow and thrive. Once you are certified as an 8a business, you can maintain that status for up to nine years. In many cases, however, your 8a status will be taken away long before those nine years have passed, simply because you have reached the point where your business is too successful to qualify for 8a contracts.
4. 8a Contracts Can Be Easier To Attain
The government is really trying to boost small businesses, specifically those SDBs. So if you are 8a certified, you are eligible to bid on 8a contracts. Of all the businesses in the United States (more than 24 million approximately), fewer than 9,000 have been 8a certified. This definitely reduces the playing field, and with less competition, it’s just easier to get contracts.
Additionally, it is easier, in general, to bid for 8a contracts. Figuring out how to create proposals for government contracting can be very complicated in general, but if you are an 8a-certified company, the government makes a huge effort to eliminate some of the “red tape” that other businesses have to handle.
5. Sole Sourcing Is Another Benefit
In general, when a government agency needs to put out a contract for work, it’s a complicated process that can be very competitive. With 8a contracts, the government agency can kind of bypass and offer contracts to a single source without going through the whole bidding and competition process. This benefits the agency because there is less red tape, and it benefits the 8a businesses because it’s simply easier to earn contracts.
6. 8a Status Isn’t a Guarantee of Earnings
While the playing field is smaller and sole-sourcing also can make it easier to win contracts, you do still have to work hard to earn contracts. You still actively have to look for contracting opportunities. It’s highly unlikely that you would get certified and then have government agencies just calling you up and offering you jobs.
You can find contracting opportunities at Beta.SAM.gov, but we also recommended that you join your local Procurement Technical Assistance Center (PTAC). These centers are located across the country and they provide a huge amount of valuable advice.
For instance, if you have questions about contracting, you can make an appointment to speak with your PTAC representative. They offer a wide array of free workshops and events where you can grab a ton of information about government contracting. To find your local PTAC, go to APTAC-US.org.
Getting Certified
In order to bid on 8a contracts, you must be certified by the Small Business Administration. In order to start the process, you will need to go to certify.SBA.gov. However, that is not the only step you’ll need to take.
If you want to bid on any type of government contract, 8a contracts, or anything else, you must complete your System for Award Management (SAM) registration and we can help. We are a third-party registration service that handles all the intricacies of the SAM registration process.
It can take 10 or more hours to complete the SAM registration process and it can be quite complicated and frustrating, and it’s often simply easier to hand this task over to experts such as ourselves. This ensures that your registration is completed quickly and correctly, so you can start bidding on 8a contracts and other types of government contracts. To get started, just click on the green New Registration box on our homepage.