The federal government has a unique way of doing business with small, disadvantaged entrepreneurs through its 8(a) BD Program. While less than 6,500 of the millions of businesses in the United States have achieved 8(a) Certification, these firms are given a significant edge in the contracting process. The government sets aside a small percentage of its contracts for 8(a) businesses, but often exceeds this goal, awarding around 8-9% of its contracts to these firms. As a result, obtaining an 8(a) Certification can bring numerous benefits to your business.

Let’s talk about the five key advantages of becoming an 8(a) certified business:

Limited Competition

The federal government sets aside a small percentage of its contracts, typically 5%, for businesses that are part of the 8(a) BD Program, but often exceeds this goal, giving around 8-9% of its contracts to these businesses. Out of the millions of businesses in the United States, only about 350,000 are registered as contractors with the government, with less than 6,500 having successfully become certified as 8(a) firms, making the average 8(a) firm a highly successful business with annual sales exceeding $5 Million.

Sole Source Contracts

Sole Source Contracts are special agreements between the government and an 8(a) certified business owner where they discuss the details and price of a contract directly, without a formal bidding process. This is similar to how small businesses usually work together. The contract can be official as long as the 8(a) business doesn't charge more than 10% above market rates.

This type of contract is helpful for the government because it lets them award a contract much faster - often in days or weeks, instead of months. Around half of all 8(a) sales come from Sole Source Contracts, worth around $16 Billion each year.

For 8(a) businesses, Sole Source Contracts are valuable because they save time and effort on administrative tasks. To get these contracts, 8(a) firms must build good relationships with government contracting officers by being trustworthy and doing good work.

There are some limits to Sole Source Contracts: they can't be more than $4 Million for goods and services or $7 Million for manufacturing.

Boosts GSA Schedule and GWAC Effectiveness

Government agencies use different ways to buy goods and services from contractors. Some of their favorite methods are through a General Services Administration (GSA) Schedule, as well as other special programs. When these government officials try to meet their small business goals, they look for 8(a) firms already part of these contracts. This helps 8(a) businesses perform better than others.

Additionally, some special programs like the 8(a) STARS contract for IT companies can also increase sales significantly by limiting the competition.

Better Pricing

8(a) firms are small businesses that are similar to each other in terms of what they can do and how much it costs them to operate. Because of this, they tend to get better prices on their products and services compared to other businesses that don't have access to special contracts like sole source and set-aside contracts.

Construction Contractor Friendly

There are many opportunities for 8(a) construction companies across the United States because 80% of all construction projects done by the Department of Defense (DoD) take place at military facilities such as Army, Navy, Air Force, and Marine bases. These facilities are located in all 50 states and US territories. Military bases often work with 2-3 different 8(a) companies at a time, giving these companies steady, routine work close to their headquarters.

An 8(a) Certification can be a valuable tool for small, disadvantaged businesses looking to increase their chances of winning government contracts. By understanding the benefits of limited competition, sole-source contracts, boosted GSA Schedule and GWAC effectiveness, better pricing, and construction contractor-friendly opportunities, you can take your business to the next level. If you're interested in learning more about how to obtain an 8(a) Certification, taking advantage of these benefits, I always recommend contacting an industry expert such as ez8a or Advance 8a. Their expert consultants are eager to guide you through the process and help you grow your business. Neither charge for an initial consultation.