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Your business will be considered disadvantaged if you meet two conditions, demonstrating both social and economic disadvantage. Social disadvantage is determined by tracing racial or ethnic heritage to named minority groups, such as African American, Hispanic American, Native American, Eskimo, Aleut, Asian Pacific, and Subcontinent Asian American. The Word minority is predominantly used by local and county level programs. State and Federal programs usually use the more encompassing term, disadvantaged.
Once social disadvantage has been established, economic disadvantage is determined if personal net worth does not exceed $750,000, excluding money invested in the business and equity in a personal residence. For the 8(a) program, the cutoff for economic disadvantage is $250,000 net worth, excluding money invested in business or equity in a primary residence.
Proposed changes in determining disadvantaged standing could broaden the definition to include non-minority women, the physically challenged, and those who are considered to be minorities, but aren't designated within the named groups. However, proposed changes could also narrow the range of industries for which set asides are allowed.
Current federal regulations set a goal of 20% of government contracts awarded to small businesses. Of that amount, the goal is to award one quarter to women-owned businesses and another quarter to disadvantaged businesses.
To be considered either a disadvantaged or woman-owned business, your company must be at least 51 percent owned and operated by qualifying individuals.
The 8(a) program gets its name from Section 8(a) of the Small Business Act. It is a business development initiative designed to help SDBs overcome social and economic disadvantage and transition them into the economic mainstream. The 8(a) businesses are assisted through a combination of management and technical assistance and increased access to federal contracting opportunities.
While being certified as 8(a) does not guarantee a firm government contract, it greatly enhances the participant's chances of getting them either through non-competitive award or by winning a bid. In the 8(a) process, the Small Business Administration works with the federal purchasing agents and functions as a prime contractor, subcontracting work to the 8(a) firms. The program runs for a maximum of nine years. During this time, participants must complete an initial four year development phase and gradually wean themselves away from dependance on special 8(a) contracting opportunities.
Because of the wide variety of programs and other special opportunities available, it's a good idea to pursue a number of avenues in seeking them out. Follow these suggestions:
