Why Eligible Companies Shouldn’t Always Pursue 8(a) Certification Right Away
The SBA’s 8(a) Business Development Program can be an exceptional avenue into the public sector for small, disadvantaged businesses. We’ve talked at length about the benefits and opportunities the Program can provide for companies that understand how to make the most of it. Check out virtually any of our other blog posts if you want to learn more about those.
Here, we’re talking about why not to pursue 8(a) certification right away.
We’ll start by debunking a few myths and misconceptions about the Program that are especially common among prospective participants.
Myth #1: As long as I meet the program qualifications, I’m in.
As a socially and economically disadvantaged small business, you’re eligible to apply for the program. That’s it. Unfortunately, the 8(a) application process is anything but straightforward, and simply submitting your application can feel like a monumental accomplishment once you’ve accounted for all of the government’s requirements. Even then, there’s no guarantee you’ll get accepted.
Myth #2: I can rely on 8(a) set asides to keep me in business once I’ve obtained certification.
The government does set aside billions in contract awards for 8(a) companies, and we advise clients to pursue as many of these as possible—especially in the early stages of certification. However, the value of a single 8(a) contract is capped at $4 million ($7 million for manufacturing awards), and the SBA requires you to earn revenue from competitive bids to maintain eligibility. There’s a lot of other 8(a) companies out there going for the same requirements.
Myth #3: Competitive bids won’t be hard to win since I’m not going up against the big players.
Yes, you’ll have the advantage of competing within a smaller pool, but competition for 8(a) contracts is intense. Only the top 8(a) companies are able to consistently win these awards.
Reality Check
In the world of government contracting, there’s no such thing as a free lunch. If you’re thinking about apply to the 8(a) Program, the first thing you should do is let go of any of the above misconceptions.
But…many of the benefits you’ve heard about aren’t myths, and the 8(a) Program does give socially and economically disadvantaged businesses a path to winning more government contracts. If that’s you, why pass on the opportunity?
Here are three reason to hold off on your application:
1. You’re not prepared to compete for contracts. Establishing an effective business development infrastructure for winning government contracts requires a significant investment of time and money. You need to be able identify opportunities, market your services, respond to RFIs/RFPs, and handle the countless other functions necessary to secure awards. While you don’t have to be a contract-winning machine, you should at least start building out these capabilities before pursuing certification.
2. Your survival depends on winning new business now. Almost every 8(a) business owner we talk to says the same thing: the contracts don’t start coming until at least two or three years into the 8(a) lifecycle. Don’t try to hire a “rockstar” business development consultant to make you the exception. If you need to win now, stay in the private sector where you’ll have more opportunities…unless you have government contacts ready to help you land sole source contracts right away. Which brings us to…
3. You’ve never worked with government customers. Serving the federal government can be a nightmare for companies used to doing business in the private sector. Moreover, most contracting officers still want to see evidence of past performance—even if you’re a young 8(a) firm. If you don’t have any credentials, consider skipping the 8(a) Program for now and instead try to start gaining experience as a subcontractor. The initial revenue from these projects won’t make you rich, but you’ll be able to start learning how government contracting works and begin cultivating a network of contacts within federal agencies.
For companies that aren’t fully prepared to dive into government work, 8(a) certification can be a long road to nowhere. For those that take the time to build a solid foundation in the public sector prior to starting the 8(a) Program, certification can be a platform for lasting growth.