Many small business owners are reexamining the certification criteria for the federal 8(a) program. But even if you qualify, is the program right for your industry and your business?

For some businesses in certain industries, 8(a) continues to make sense. While statistics from FY 2011 revealed a drop in 8(a) awards, agencies still directed a respectable 4.6 percent of the government’s total $537 billion contract dollars to 8(a) companies.

Even in a down economy, 8(a) status creates significant opportunities for small business owners willing to tackle the process.

Qualification Requirements

The 8(a) program applies only to small businesses, as defined by the applicable industry NAICS code of the company’s primary service or product. The business also must be owned and operated by “socially and economically disadvantaged persons,” which presumptively includes African-Americans, Hispanics, Native Americans and people of Asian Pacific and Subcontinent Asian descent. In limited circumstances, the program also includes white males and females who can demonstrate evidence of their own social and economic disadvantage.

The applicant’s individual personal net worth, excluding business and personal residence, cannot exceed $250,000 in the initial application year or $350,000 in the remaining eight years of program participation, which is limited to nine years. Issues of “ownership” and “control” are highly scrutinized, and businesses with partners or shareholders who are not economically or socially disadvantaged undergo a vigorous vetting to ensure against front companies.

Severe penalties in the form of the Federal False Claims Act, including treble damages, disbarment and prison time, potentially apply where misrepresentations are made to the government. In some instances, mistake is not a defense, so it’s important to carefully and honestly complete all application questions.

Administrative Requirements

As with all federal contracting, the certification process can be overwhelming. The application requires accumulating detailed information on your company before you even start the process. This information gathering includes your DUNS and FEIN numbers and your applicable NAICS and SIC codes, along with all corporate documentation regarding formation. Download the applicable documents in PDF form into your system

so those same documents can be uploaded to the SBA site during registration. All interested applicants should first use the SBA’s online primer, which will help with many of the twists and turns of the process. Applicants should carve out an entire morning to visit the tutorial at www.sba.gov/content/8a-business-development.

The SBA’s business development specialist in Kansas City, Rhonda Hardin, also provides a wealth of information to companies meeting the above certification criteria. She can be reached at rhonda.hardin@sba.gov.

If you decide to move forward, your next step is to begin CCR registration through the government’s new System for Award Management, or “SAM,” which went live last summer at www.sam.gov. Next, complete the online SBA registration form and upload the required documents for review at www.sba.gov/content/8a-business-development-bd-program-application. The SAM information must be updated on a regular basis to avoid out-of-date information.

When the application is complete, your work still isn’t done. Once certified and registered as a federal vendor, your company must devote substantial time on a daily basis to vetting upcoming procurement opportunities, meeting agency contracting officials, exploring joint venture or mentor/protégé opportunities with key partners, and completing the often cumbersome federal bidding paperwork for applicable projects.

Often, the administrative burden appears to be more than a small business can take on. But remember, an expenditure of $20,000 or so in administrative oversight or management becomes manageable when viewed in light of a $2 million contract award. Good contract relations and performance can significantly grow your business while simultaneously boosting economic development for your employees, neighborhood and city.