Small Disadvantaged Business & 8(a)

Qualifying (Small Disadvantaged Business)

  • The company must be more than 50% owned by one or more owners who are:
  • Economic disadvantage: The founder must have had diminished access to economic opportunity. To assess this the founder must:
    • Have a net worth less than $750,000, 2) must have
    • Have an average income over the past three years less than $350,000
    • Not own assets worth more than $6 million.
  • Social disadvantage: Per the SBA this means that the founder is part of a group that has had “racial or ethnic prejudice or cultural bias.”
    • Founders who are African Americans, Asian Pacific Americans, Hispanic Americans, Native Americans, and Subcontinent Asian Americans are presumed to meet this criteria
    • Other founders can meet this criteria if they can demonstrate that they have been disadvantaged

Qualifying: 8(a)

  • Qualify as SDB: The company must qualify as SDB
  • Have a strong chance of being successful: The company must have been in business for at least 2 years
  • One time only: The company (and the founders) can not have participated in the 8(a) program before

Key notes on 8(a)

  • Only lasts 9 years: Companies can only be in the 8(a) program for 9 years
  • If you are new to the federal market DO NOT apply for your 8(a): The 8(a) program is only helpful if you already have established relationships with customers and partners. So if you apply for your 8(a) early, and then spend the next two years building relationships then you’ve just wasted about 20% of your 8(a) time
  • Not what it used to be: 8(a) companies used to receive significant sole-source and mentor protege advantages that companies with the other set-asides did not. However, those benefits have largely been extended to companies with other set-asides degrading the 8(a)’s value.

SDB and 8(a) core data & benefits

  • SDB spending target: Government agencies have a 5% spending target with SDBs so:
    • 5% of prime award spending should go to SDB
    • 5% of subcontract spending should go to SDB
    • NOTE: There is no 8(a) spending target beyond the SDB target, but since all 8(a)s are also SDB, for every dollar that goes to an 8(a) the government builds their SDB spending goals
  • Sole Source Limit (SDB): N/A SDB are not eligible for sole source awards
  • Sole Source Limit (8(a)): 8(a) can receive sole-source contracts up to:
    • $7.5M for manufacturing contracts
    • $4.5M for other contracts
  • Estimated number of SDB & 8(a):
    • SDB: ____ companies
    • 8(a): ___ companies
  • 8(a) benefits: In addition to the sole-source and set-aside benefits, 8(a)s can receive additional business development support and training from the SBA

SDB/8(a) spending v. Target (%)

SDB/8(a) spending by agency ($M)

SDB/8(a) spending by products ($M)

SDB/8(a) spending by services ($M)

For the full data analysis download the excel spreadsheet in the class materials section