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SBA 8(a) Certification Facts

 10 Myths about Certification!

A little knowledge concerning SBA certification can be a dangerous thing. A lack of knowledge can also be very harmful. Most damaging of all is the incorrect knowledge or mis-information that EZCertify.com has heard from more than a few members of the small business community concerning the SDB or 8(a)BD certifications. Left unchallenged, these misunderstandings grow into myths that are perpetuated, exaggerated and become the "pseudo-reality" of how the small business community, many of which are qualified to be certified, think about and act upon the SBA's certification process. Here are just ten of these myths that we've heard and a few of the facts and conclusions about each:


Myth #1:
"You have to be in business for two years before applying"


The Facts:
There is no "time in business requirement" for the SDB certification. You may apply and be certified, even if you've recently formed your business.

The 8(a)BD Certification process does include a "Potential for Success" application criteria, that includes a Length of Time in Business Requirement of 2 full years... or an applicant may seek a waiver by addressing the following factors:

1. Substantial business management experience of the individual(s) upon whom eligibility is based;
2. Information that the applicant concern has demonstrated technical experience to carry out its business plan with a substantial likelihood for success if admitted to the 8(a)BD program;
3. Information to demonstrate that the applicant concern has adequate capital to carry out the business plan as a Participant;
4. Information that documents the applicant concern's record of successful performance on contracts from governmental and/or non-governmental sources in the primary industry category; and
5. Information that demonstrates that the applicant concern has the ability to timely obtain the personnel, facilities, equipment and any other requirements needed to perform contracts as a Participant

In short, if you are an experienced businessperson, with a business plan, have sufficient funds to support your business operations, previous or current contracting experience and possess a few of the basic building blocks of a successful business, you can be granted a waiver of the "2-year rule."

Conclusion:
Your length of time in business need not prevent you from SDB or 8(a)BD certification.

Myth #2:
"Federal Government doesn't purchase what my business sells"


The Facts:
The Federal Government is the single largest customer in the entire world. The closest analogy is that it resembles an international, mega-corporation, with its various departments and agencies involved in just about any facet of life imaginable. Whereas a large portion of the Federal procurement budget is spent on defense, in 1998, there was more than 57 billion dollars in contracts awarded by civilian agencies (e.g. Energy, NASA, GSA, Transportation, etc.). Even in the case of defense spending, a significant percentage is spent on non-weapon associated items, such as automatic data processing equipment and services, communication equipment and services, fuels, office supplies, medical services, clothing, etc. Congress ensures that this spending is also spread out across the entire country, with military bases, agency installations and large prime contractors located in every state and territory in the U.S.

Conclusion:
The Federal Government purchases virtually everything at thousands of locations nationwide.

Myth #3:
"Most small business owners are too wealthy to qualify"


The Facts:
The financial metrics that qualify an applicant for either of the two SBA programs are quite generous. For example, the SDB program sets a standard of a $750K net worth versus the $250K net worth for the 8(a)BD program (at time of application). In reality, even this "net worth" is an adjusted number. The SBA subtracts the equity held in the applicant's primary residence, as well as the value of the applicant's holdings in their business from the classical net worth calculations. Also, any assets held jointly by an applicant and their spouse are allowed to be divided in half for these net worth calculation purposes.

According to an Urban Institute study, non-minority men and women business owners have an average net worth of less than $100K and $50K respectfully, whereas minority men and women's net worth's are even less!

Conclusion:
The vast majority of small business owners can readily prove their economic disadvantage.

Myth #4:
"You can't pay yourself well and also be certified"


The Facts:
There are no regulatory requirements establishing maximums for the income of an applicant for either the SDB or 8(a)BD programs, although income is one of several factors used to determine their economic disadvantage. You're probably safe under the following conditions:

Annual Income of Applicant Annual Sales of Company
$150,000 $0 - $1.0M
$200,000 $1.0M - $2.0M
$300,000 >$2.0M

Conclusion:
You can compensate yourself very well while participating in the SDB or 8(a)BD programs.


Myth #5:
"Only small dollar contracts are available to certified contractors"


The Facts:
In FY98, the average 8(a)BD award was $66.46K, versus an average for all awards of $15.79K.   The following table clearly shows that certified contractors can reap significant rewards from their participation in these programs.

Contractor
Service/Product Procured

 

Contract Value ($000)

 

JMC Construction, Inc.
Prefabricated and Portable Buildings

 

218,866

 

High Technology Solutions
Professional Services/Engineering

 

59,243

 

Blackinton & Decker, Inc.
Construction/Office Buildings

 

46,717

 

Jackson Tull Chartered Engineer
Administrative Support Services

 

32,500

 

Chugach Engineering Service
Facilities Operations Support Services

 

32,276

 

Colsa Corporation
R&D Missile & Space Systems

 

30,764

 

Conclusion:
Small business does not necessarily translate into small-sized contracts.

Myth #6:
"There is not much business set-aside or awarded to certified companies"


The Facts:
FY98 Actual Performance:

Small Business    - $42.5B; $7.30K/Award Average
SDB     - $11.8B; $6.95K/Award Average
8(a)BD     - $6.5B; $66.46K/Award Average

Department

Small

SDB

8(a)BD

Defense

$24.1B

$6.7B

$3.4B

GSA

3.2B

800M

400M

Energy

2.7B

585M

300M

Veteran's Affairs

1.5B

425M

301M

NASA

1.3B

503M

300M

HHS

1.4B

650M

441M

Justice

1.1B

288M

191M

Agriculture

1.3B

193M

120M

Transportation

1.1B

323M

271M

TVA

1.0B

468M

391K


Conclusion:

Small, SDB and 8(a) contracting represents 1/3 of all Federal Government procurements.

 

Myth #7:
"The advantages of certification are not worth the effort"


The Facts:
The single most obvious advantage of SDB certification is that it will help applicants win more contracts than they would otherwise.  The ten (10) percent price adjustment or the evaluation factor benefits of SDB certification can provide the difference between winning and losing.  Here's an example of these two advantages in action:


Ten Percent Price Adjustment Example

Before

Now

Company

Bid Price

Company

Bid Price (Adjusted)

Large A

$600,000

Large A

$660,000

Large B

$610,000

Large B

$671,000

SDB

$650,000

SDB

$650,000

The Winner - Large A

The Winner - SDB

     
Evaluation Factor Example

Evaluation Factor

Price

Past Performance

Technical Capability

SDB Participation

Total

Max. Points

25 Pts.

25 Pts.

25 Pts.

25 Pts.

25 Pts.

Large A

25

24

23

15

87

Large B

24

23

23

20

90

SDB

22

22

22

25

91

Conclusion:
The competitive benefits of certification represent real and significant sales advantages.

Myth #8:
"I'm already certified as a WBE, DBE or MBE in my state"

The Facts:

Certification as a WBE, DBE, or MBE with your state DOT or other certifying municipalities within your state is a valuable business credential. Additionally, "quasi-universal" certification, such as that promoted by the Minority Suppliers Development Council and National Women Business Owners Corporation are also very important business development tools.

HOWEVER,

None of these certifications are currently recognized at the Federal Government level for either the SDB or 8(a)BD programs. Principal among the differences between these programs and the Federal Government programs is the close scrutiny of an applicant's social and economic disadvantage.

Conclusion:
Only SDB and 8(a)BD certifications provide competitive advantages at the Federal level.

Myth #9
It costs too much, takes too much time, is too complex, and the probability of success is too low"

The Facts:
Prior to EZCertify.com, this myth was "right on".  However, with EZCertify.com, today is a different matter, as you can see from the table below:

 

Factor

Pre-EZCertify

Post-EZCertify

Time

60-360 days

1 day

Cost

$10K - 25K

$300.00

Effort

200-400 hours, plus

4-8 hours

Guidance Available

Practically None

Cautions and Tips, to make sure you provide the SBA with what they need to see

Expert Advice

Expensive Consultants

FREE On-Line Advisor (with product purchase)

Head start to complete 8(a) and other Certifications

None

8(a) and other Certifications can be completed in less that 1 hour after completing SDB

Success Rate

<30%

>99%

Guarantee

None

Guarantee for Designated Group Members


Conclusion:
Get certified using the EZCertify.com software and save money, time and gurantee your certification


Myth #10:
"Non-minority business owners can't easily prove their disadvantage"

The Facts:

First, businesses owned and controlled by members of the following designated groups are already presumed to be socially disadvantaged:

Black Americans
Asian Pacific Americans
Hispanic Americans
Subcontinent Asian Americans
Native Americans,

and are left to prove their economic disadvantage only.

Second, non-minority women and others (those who are not members of one of the above designated groups), can, under the new regulations, more easily prove their social and economic disadvantage. The door has been opened by the change in the evidentiary standard and also by EZCertify.com, which provides a roadmap and associated real-life examples of successful social and economic claims by persons, not members of the designated groups.

Conclusion:
Successfully claiming and proving disadvantage is no longer a "virtual mission impossible."


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