SBA 8(a) BUSINESS DEVELOPMENT PROGRAM What … · SBA 8(a) BUSINESS DEVELOPMENT PROGRAM What You...
Transcript of SBA 8(a) BUSINESS DEVELOPMENT PROGRAM What … · SBA 8(a) BUSINESS DEVELOPMENT PROGRAM What You...
SBA 8(a) BUSINESS DEVELOPMENT PROGRAM What You Need To Know To Get Certified & Stay Compliant
March 11, 2015
INTRODUCTION
Holomua Consulting Group, LLC (Holomua) is a small, woman-owned business located in
Honolulu, Hawaii. Our full-service, solution-oriented consulting firm focuses on assisting
businesses with maximizing small business opportunities, navigating the complex legal and
compliance landscape of federal government contracting, and developing its tools and knowledge
to excel at government contracting.
Shannon Edie President & Senior Consultant
Daphne Tong-Pave Vice President & Senior Consultant
AGENDA
PRE-APPLICATION PERIOD: • Benefits of being an 8(a) BD program participant
• 8(a) BD program requirements
• Strategies for getting ready to apply for the program
THE 8(a) APPLICATION: • Elements of and forms required for the 8(a) application
• Tips for addressing SBA's questions and concerns
• Steps to take if your 8(a) application is initially denied
AFTER ACCEPTANCE IN THE 8(a) PROGRAM: • Ongoing requirements
NATIVE HAWAIIAN ORGANIZATION (NHO) 8(a) PROGRAM: • Benefits and requirements
RESOURCES AND TOOLS: • Realities of federal contracting
• Overview of available resources
PRE-APPLICATION
Purpose of the 8(a) BD Program [13 CFR 124.1] – “…to assist eligible
small disadvantaged business concerns compete in the American economy
through business development.”
• Section 8(a) of the Small Business Act of 1953, as amended–
Established a set-aside program for socially and economically
disadvantaged individuals
8(A) BUSINESS DEVELOPMENT PROGRAM Provides mentoring,
training, technical assistance, financial
assistance, and procurement
assistance
Maximum 9 year program
participation
4-year developmental stage and 5-year transition stage
Goal to help firms successfully compete in the market place
PRE-APPLICATION
SMALL BUSINESS GOALING REPORT FISCAL YEAR 2013
CATEGORY DOLLARS PERCENTAGE
Small Business $83,142,807,957.99 23.39%
Small Disadvantaged Business $30,616,176,486.32 8.61%
8(a) Business $13,997,559,304.36 3.94%
Veteran Owned Small Business $17,810,543,400.01 5.01%
Service Disabled Veteran Owned Small Business $12,023,167,217.12 3.38%
Woman Owned Small Business $15,364,841,129.49 4.32%
Certified HUBZone Small Business $6,244,980,082.24 1.76%
Data from the Federal Procurement Data System
GOVERNMENT-WIDE CONTRACTING GOALS:
SMALL BUSINESS
23%
WOSB
5%
SDB
5%
HUBZone
3%
SDVOSB
3%
PRE-APPLICATION P
RO
GR
AM
BE
NE
FIT
S
Sole-Source Opportunities
Contracts up to $4 million for goods and services and $6.5 million for manufacturing (exceptions for Native-owned firms)
Set Aside Opportunities
Procurement opportunities, total or partial, in which only certain businesses may compete
Joint Ventures & Teaming
Provides 8(a) firms with the opportunity to compete for large contracts
Mentor-Protégé Program
Mentor provides mentorship, and technical, management, and financial assistance
Mentor can own up to 40% in Protégé firm
Mentor can enter into joint-venture arrangements with Protégé and compete as a small business
PRE-APPLICATION
ELIGIBILITY REQUIREMENTS:
• Business must be majority owned and controlled by socially and economically disadvantaged individual(s) that are U.S. citizens
• Business must be small
• Business must demonstrate potential for success
• Principles must show good character
PRE-APPLICATION
SOCIALLY DISADVANTAGED [13 CFR 124.103] - Individuals
“who have been subjected to racial or ethnic prejudice or cultural
bias within American society because of their identities as
members of groups and without regard to their individual
qualities.”
• Designated groups include, but are not limited to:
- Native Americans
- Asian Pacific Americans
- Black Americans
- Hispanic Americans
• Individuals not included in the presumed groups can participate in the
program, but must demonstrate social disadvantage by a
“preponderance of the evidence”
PRE-APPLICATION
ECONOMICALLY DISADVANTAGED [13 CFR 124.104] - “Socially
disadvantaged individuals whose ability to compete in the free enterprise system
has been impaired due to diminished capital and credit opportunities as compared
to others in the same or similar line of business who are not socially
disadvantaged.“
• For initial eligibility, the net worth of an individual claiming economic
disadvantage must be less than $250,000. For continued eligibility, net
worth must be less than $750,000.
• Not economically disadvantaged if:
- Average three year adjusted gross
income exceeds $250,000
- Fair market value of all assets exceeds
$4 million for an applicant and $6
million for continued eligibility
PRE-APPLICATION
One time eligibility - Firm and individual for which eligibility is based, are
only eligible for the 8(a) program once*
*Exceptions apply for firms owned by Native Hawaiian Organizations or other Native entities
DISADVANTAGED INDIVIDUAL(S) MUST*:
Control the firm (must be unconditional and direct)
Manage the firm on a full-time basis during normal business hours
Have the necessary management experience
Establish policies
Hold the highest position and be the highest compensated
Be an American citizen, by birth or naturalization
PRE-APPLICATION
Must be small
[13 CFR 121 &
13 CFR 124.102]
Based on SBA size standards (i.e. primary NAICS)
Affiliation is applicable*
*Exceptions apply for firms owned by Native Hawaiian Organizations or other Native entities
PRE-APPLICATION SBA's size standards define whether a business entity is small and, thus,
eligible for Government programs and preferences reserved for “small
business” concerns. [13 CFR 121.101(a)]
• Size standards are established by industry, generally under the North
American Industry Classification System (NAICS)
• SBA primarily uses two measures of business size:
• Number of employees
• Annual receipts
NAICS CODES NAICS U.S. INDUSTRY TITLE SIZE STANDARDS IN
MILLIONS OF DOLLARS
SIZE STANDARDS IN
NUMBER OF EMPLOYEES
238210 Electrical contractors and other wiring
installation contractors $15.0
334220 Radio and television broadcasting and wireless
communications equipment manufacturing 750
541330 Engineering Services $15.0
541712 Research and development in the physical,
engineering, and life sciences 500
PRE-APPLICATION
• If two businesses are AFFILIATED, SBA will consider the
combination of both firms’ receipts or employees to determine
the size status of the business
EXAMPLE:
BUSINESS A
Small Business
Prime Contractor Economically Dependent on B
BUSINESS B
Large Business
Subcontractor Power and Control of A
BUSINESS A & BUSINESS B ARE:
• AFFILIATES for size purposes and, thus, other than small
• INELIGIBLE for small business programs
PRE-APPLICATION
Potential for Success
[13 CFR 124.107]
Be in business for at least two full years in the firm’s primary industry, as demonstrated on firm’s Federal tax returns*
Must demonstrate both technical knowledge in its primary industry, and management experience sufficient to run its day-to-day operations
Financially sound, access to credit and capital
Have substantial business management experience
Demonstrated technical experience
Have adequate capital
Record of successful performance on contracts from
governmental or nongovernmental sources in its primary
industry
Able to obtain the personnel, facilities, equipment, and any
other requirements needed to perform contracts
*SBA may waive the two years in business requirement if ALL of the following
requirements are met:
PRE-APPLICATION
Good Character
[13 CFR 124.108]
Criminal conduct
Violations of SBA regulations
Debarred or suspended firms
Debarred or suspended persons
Submission of false information
Lack business integrity (i.e. indictments, guilty convictions, civil judgments, or settlements)
Currently incarcerated or on parole or probation (either pre-trial or following conviction for felony or any crime involving business integrity)
PRE-APPLICATION
STRATEGIES FOR GETTING READY TO APPLY FOR THE PROGRAM:
Confirm Eligibility • Review ALL eligibility requirement
• Ensure you meet ALL eligibility requirements
Conduct Research (i.e. 8(a) program research
and market research)
• Determine if the program is a right fit
• https://www.fbo.gov
Establish a solid business structure • Ensure your business organization is strong and will
not require changes
Obtain a DUNS Number • https://iupdate.dnb.com
Register in SAM & DSBS • https://www.sam.gov
Register in SBA General Login System • https://eweb.sba.gov/gls/dsp_login.cfm
Gather required information and documents
• Required information and documents include:
• Business – Governing, corporate, and financial
documents
• Individual – Personal and financial
• https://www.sba.gov/content/8a-application-checklist
8(a) APPLICATION
8(a) Application Overview:
Applications are completed online via the SBA General
Login System
All data is input online, generating all required forms
Entire application needs to printed and signed
Signed application and supporting documents must be
mailed to SBA
Only two (2) SBA Offices of Certification and
Eligibility:
1. San Francisco, CA
2. Philadelphia, PA
SBA will have questions and/or make requests for
additional documents
8(a) APPLICATION
APPLICATION COMPONENTS:
• Business Information and Documents
• Individual Information and Documents
8(a) APPLICATION
BUSINESS INFORMATION AND DOCUMENTS
What forms does a business need to submit for
its 8(a) application?
• SBA Form 1010-BUS
• SBA Form 1790 - Representative used and
compensation paid for services in
connections with obtaining federal
contracts
• SBA Form 1623 - Certification
Regarding Debarment, Suspension, and
other Responsibility Matters
• IRS Form 4506-T
In addition to these forms, a business must submit supporting
documents with its application.
8(a) APPLICATION
• Name
• Contact Information
• Type of Business
• Date Business Established
• EIN
• DUNS
• Corporate Structure
• Identify individuals who are owners,
directors, management members,
partners, and officers
• 1-20 Yes/No questions
SBA FORM 1010-BUS
Ensure information is accurate
Provide detailed explanation for all YES responses
8(a) APPLICATION
SBA FORM 1010-BUS (CONTINUED): • Primary NAICS Code (i.e. industry)
• Average number of employees over the
past 12 months
• Percentage of revenue earned in primary
NAICS during past 12 month
How does SBA
determine a concern's
“primary industry”?
[13 §121.107]
In determining the primary
industry in which a concern
or a concern combined with
its affiliates is engaged,
SBA considers the
distribution of receipts,
employees and costs of
doing business among the
different industries in which
business operations occurred
for the most recently
completed fiscal year. SBA
may also consider other
factors, such as the
distribution of patents,
contract awards, and assets.
PRIMARY NAICS
MAJORITY OF BUSINESS
OPERATIONS
BUSINESS SIZE
REVENUES AVERAGED FOR THREE (3) YEARS
NUMBER OF EMPLOYEES
NEED TO BE SMALL IN PRIMARY
NAICS
CONTRACT SPECIFIC
Don’t confuse
calculating
primary NAICS
with calculating
business size
8(a) APPLICATION
• Governing documents will depend on business structure. Examples include:
• Article of Organization/Incorporation and any amendments
• Operating Agreement/By-laws
• Meeting Minutes
• Buy/Sell & Voting Agreements
• Stock Certificates (Front and Back)
• Stock Register/Ledger
• Partnership Agreements
• Certificate of Good Standing
• List of current and past contracts for
past two (2) years
• Lease agreement(s) and/or proof of
ownership
• Business narrative
• Business insurance declaration pages
• Statement of Bonding (if applicable)
• SAM and DSBS Profiles
COMPANY SUPPORTING DOCUMENTS
Ensure governing documents
are accurate and consistent
(i.e. if LLC is member
managed, operating agreement
should indicate as such)
Ensure minutes are complete
and consistent. Need to
include approval for seeking
8(a) BD participation.
Ensure insurance for all
locations
Ensure SAM and DSBS
profiles are complete and
accurate
8(a) APPLICATION
COMPANY FINANCIAL DOCUMENTS
Balance sheets must be signed, certified and dated by
the business’s highest officer, CEO or President
Don’t forget to submit A/R and A/P aging schedules
Taxes must be signed and dated
• Current balance sheet and profit and loss statement,
including an aging of accounts, receivable and
payable, no older than 90 days
• Balance sheet and profit and loss statement for each
of the three preceding fiscal year-end periods
• Business tax returns for last three (3) years,
including schedules and attachments
• Signature cards for all business bank accounts
• Copies of loan agreements (i.e. lines of credit, shareholder loans, SBA loans)
• IRS 4506-T
8(a) APPLICATION
INDIVIDUAL INFORMATION AND DOCUMENTS
Who is required to submit information and documents to the SBA?
• Each person owning more than 10% of the business
• Each director, management member, partner, and officer of the
business
What are individuals required to
submit?
• SBA Form 1010-IND
• SBA Form 912
• IRS Form 4506-T
• Federal tax returns
• Resume
• SBA Form 413 – Only individual claiming economic and social
disadvantage
• Supporting documents
8(a) APPLICATION SBA FORM 1010-IND
• Ownership interest in other businesses
(including “shell” or inactive companies)
• Information regarding any transfer of assets
(within last two years)
• Information and documentation concerning
any tax liens, unsatisfied judgments, loans in
default
• Outside employment
• Bankruptcy details and copy of court’s final
order or discharge
• Present or pending lawsuits
• Any SBA loans
• Narrative statement of economic disadvantage
Do not withhold any information that is requested
Make sure your statements can be supported (i.e. documents)
8(a) APPLICATION
SBA FORM 413 - PERSONAL FINANCIAL STATEMENT
• Personal net worth =
Assets – Liabilities
(does not include personal
residence)
• Federal Tax Returns –
Previous three years,
include all W-2 forms,
1099, schedules, and other
attachments
Form 413 needs to be 30 days current
Complete all applicable sections on the Form 413
Make sure to include all assets and liabilities (i.e. value of business,
household furnishings, computers) on the 413
Tax return need to be signed and dated
Include all W-2s, schedules, and other attachments
SBA will request proof of taxes paid (i.e. cancelled checks)
8(a) APPLICATION
SBA FORM 912
• Form FD-258 (Fingerprint
Card) – Completed by
individual(s) reflecting an
arrest record on the SBA
Form 912.
• Proof of citizenship (i.e.
birth certificate)
Read all questions accurately and answer honestly
Initial all 4 boxes and sign the 912
Include all names used, including birth and married names
Include fingerprint card with application, if applicable
8(a) APPLICATION
Don’t be surprised - SBA will come back with questions
Make sure you meet all deadlines
Be honest and don’t make things up
Don’t take it personal
Ask questions
ADDRESSING SBA'S QUESTIONS AND CONCERNS:
8(a) APPLICATION
STEPS TO TAKE IF YOUR 8(A) APPLICATION IS INITIALLY DENIED
You may file a request for reconsideration
You must submit a request for reconsideration within 45 days
Thoroughly review the reason(s )for denial and determine if/how you
can address them
Provide SBA with any additional information and documentation to
address/overcome reason(s) for the initial decline (whether or not
available at the time of initial application) including information
and documentation regarding changed circumstances
SBA will issue a written decision within 45 days
POST-ACCEPTANCE
GENERAL REQUIREMENTS:
• Sign Participation Agreement [SBA Form]
• Submit Business Plan [13 CFR 124.402]
• Submit Annual Review [13 CFR 124.112(b)]
• Remain small in primary NAICS [13 CFR 124.102 (a)(2)]
• Report and seek approval for any Ownership/Management Changes [13 CFR 124.105(i)]
• Non-8(a) Business Activity Targets [13 CFR 124.509]
POST-ACCEPTANCE G
EN
ER
AL
RE
QU
IRE
ME
NT
S
Sign Participation Agreement [SBA Form] - Requires 8(a) participant to acknowledge that it will abide by the program requirements set forth in the regulations and to acknowledge the consequences of failing to comply
Submit Business Plan [13 CFR 124.402] - Must be submitted prior to receiving any 8(a) contracts. If SBA determines (prior to expiration of the 9-year term) that the firm has achieved the Development Goals set forth in the Business Plan, the SBA will graduate the firm
Submit Annual Review [13 CFR 124.112(b)] - Requires the firm to provide information demonstrating that the firm meets all of the 8(a) program eligibility requirements.
POST-ACCEPTANCE G
EN
ER
AL
RE
QU
IRE
ME
NT
S
Remain small in primary NAICS [13 CFR 124.102(a)(2)] - A firm can request that its primary NAICS be changed if it can show that the majority of its total revenues during a 3-year period evolved from one NAICS code to another
Report Ownership/Management changes to the SBA prior to making changes [13 CFR 124.105 (i)] - SBA must approve any ownership/management or structure changes prior to making the change
POST-ACCEPTANCE G
EN
ER
AL
RE
QU
IRE
ME
NT
S
Non-8(a) Business Activity Targets [13 CFR 124.509] - Firms must make efforts to obtain business outside the 8(a) program. Monitoring begins in the first year of the Transitional Stage and is expressed as a percentage of total revenue
Participant’s year in the
transitional stage
Non-8(a) Business Activity Targets
(required minimum non-8(a) revenue
as a percentage of total revenue)
1 15
2 25
3 35
4 45
5 55
POST-ACCEPTANCE
Consequences of Noncompliance with SBA 8(a) BD Program
Regulations (including size misrepresentations)
- Inability to receive sole-source contracts
[13 CFR 124.509]
- Suspension and/or debarment from government contracting
[13 CFR 124.305]
- Termination from the 8(a) BD program
[13 CFR 124.301]
- Civil lawsuits and penalties under False Claims Act
[13 CFR 121.108]
POST-ACCEPTANCE
Term Completion
Expiration of 9-year term
Graduation The firm has substantially achieved targets, goals and objectives set forth in the business plan and demonstrated the ability to compete in the marketplace
Early Graduation
Achievement of targets, goals and objectives prior to expiration of program term
Voluntary Withdrawal
The firm elects to voluntarily withdraw from the program
Termination SBA may terminate a firm for good cause
Examples of good cause: Submission of false information; Failure to maintain eligibility requirements; Failure to obtain prior approval from SBA for management/ownership changes
POST-ACCEPTANCE
GENERAL AREAS OF CONTRACTOR COMPLIANCE
• Code of Business Ethics and Conduct
• Anti-kickbacks, gratuities, conflict of interest Business Ethics
• Nondiscrimination in employment
• Affirmative action and recordkeeping OFCCP Compliance
• Prime contractor performance requirements
• Be aware of upcoming changes
Limits on Subcontracting
• Can impact a company’s size
• Affiliation principles apply to many government programs
Affiliation
POST-ACCEPTANCE
• From 2008 – 2014, various 8(a) companies were awarded government contracts but passed them through to a non-eligible company in order to get a percentage of the value of the contract.
8(a) Fraud: Guilty Plea in Pass-Through Case (10/2014)
• A company received more than $6.8 Million in government contracts based on falsely representing that one of the owners was a service-disabled veteran when he was in fact not a service-disabled veteran.
SDVOSB Fraud: Guilty Plea in False Claim of Service-Disabled Veteran (9/2014)
• A company obtained 8(a) certification and subsequently received government contracts based on that certification; an investigation revealed that the company was actually controlled by an individual that did not qualify as socially or economically disadvantaged under the 8(a) program.
8(a) Fraud: Guilty Plea in Fraudulent Control Case
(3/2014)
NHO 8(a) PROGRAM NATIVE HAWAIIAN ORGANIZATION (NHO) - “any community service
organization serving Native Hawaiians in the State of Hawaii which is a
not-for-profit organization chartered by the State of Hawaii, is controlled by
Native Hawaiians, and whose business activities will principally benefit
such Native Hawaiians.” [13 CFR 124.3]
NHO
For-profit firm
8(a) firm
• For-profit firms owned by NHOs are eligible for the 8(a) BD program,
under different rules
• Unlike businesses owned by individuals, proceeds from businesses
owned by NHOs go back to the Native Hawaiian community
NHO 8(a) PROGRAM
STRUCTURE: • NHO must be majority owner (i.e. 51%)
• NHO must control for-profit firm (i.e. NHO must control the for-profit Board
of Directors)
• NHO cannot own 51% or more of another business (either at the time of
application or for the previous two years) that is in the 8(a) program under the
same primary NAICS code of the applicant
• NHO-owned business must be small and meet
standards under 13 CFR 121
o Exceptions to affiliation rules apply for
NHOs and its for-profit firms.
o In general, affiliation will not be found based
on common ownership, management, and
common administrative services
• Day-to-day operations do not need to be managed
by socially and economically disadvantaged
individual(s)
SPECIAL RULES FOR NHOS [13 CFR 124.110]
NHO 8(a) PROGRAM
ELIGIBILITY:
• NHO must establish disadvantage:
o A majority of NHO members/directors must be Native Hawaiian
AND economically disadvantaged under 13 CFR 124.104
o NHO needs to re-establish eligibility every time a new firm seeks
certification
• NHO must demonstrate that its activities will benefit Native Hawaiians
• No one-time individual eligibility limitation
POST-ACCEPTANCE:
• No thresholds for ONLY Department of Defense sole-source contracts
o Section 811 of FY2010 NDAA requires J&A process for contracts
over $20 million
• No follow on contracts
SPECIAL RULES FOR NHOS [13 CFR 124.110]
NHO(a) PROGRAM
NHO 8(a) APPLICATION
What is a NHO required to submit with an 8(a) application?
• SBA Form 1010-NHO
• Bylaws
• State filings (i.e. Article of Incorporation and any amendments)
• Minutes and all resolutions for the past two years
• Documentation showing the NHO’s ownership of the applicant
business
• Demonstrate how the NHO serves the Native Hawaiian community
• Financial statements (i.e. balance sheet and profit and loss statements)
• Federal tax returns
Include complete and accurate information of all NHO-owned firms
Ensure tax returns are signed and dated
NHO minutes needs to show election of directors
NHO 8(a) PROGRAM
ALL NHO Members/Directors Need to Submit Individual Information,
including:
• SBA Form 1010-IND
• SBA Form 912
• SBA Form 413 – For individuals
claiming economic disadvantage
• IRS Form 4506-T
• Resume
• Birth Certificate that
demonstrates Native Hawaiian ancestry
Ensure 413s are 30 days current
Ensure all Board members/directors disclose all outside
affiliations/business activities
Ensure resumes include NHO Board position/responsibilities
NHO 8(a) APPLICATION
RESOURCES & TOOLS
LOCAL GOVERNMENT CONTRACTING AND BUSINESS RESOURCES
SBA Hawaii District Office
www.sba.gov
Hawaii PTAC
www.hiptac.org
Hawaii SBDC
www.hisbdc.org
Business Action Center
cca.hawaii.gov/bac
SCORE
hawaii.score.org
Holomua Consulting Group
RESOURCES & TOOLS
System for Award Management (SAM) www.sam.gov
Dun & Bradstreet www.dnb.com
U.S. Small Business Administration www.sba.gov
Dynamic Small Business Search http://dsbs.sba.gov
USAspending.gov http://usaspending.gov
Federal Business Opportunities (FBO) www.fbo.gov
Acquisition Central (Federal Agency Procurement Forecasts) www.acquisition.gov
Interagency Contract Directory www.contractdirectory.gov
GSA e-library www.gsaelibrary.gsa.gov
Electronic Code of Federal Regulations www.ecfr.gov
U.S. Census Bureau – NAICS Information www.census.gov/eos/www/naics
NAICS Association www.naics.com
QUESTIONS & NEXT STEPS
Make an appointment with us before you leave
Think about it and call us with any questions
Tell a friend about our valuable services
QUESTIONS
THANK YOU FOR ATTENDING TODAY’S WORKSHOP!
For more information about Holomua Consulting Group, LLC
and future workshops, please visit: www.holomuaconsulting.com