Frequently Asked Questions

1. I'm just starting my firm and hope to get 8(a) someday. Is there anything I should looking out for?

If you are a one owner firm which is home based, has no loans, are not getting help from others, and anticipate having multiply clients then your firm should be in good shape to eventually become 8(a) certified. A firm in with this criteria can focus on specific issues closer to when they are ready to apply.

First that do not fit into this category can have many areas where they can create issues that have the potential to derail their 8(a) application attempt conducted at a later date. The most common issues is that additional owners have the potential of creating a control/affiliation issue. Other trouble areas include, how the firm is initially funded, who the firm’s clients are, where/how you barrow any money/equipment, what address you use, and how you initial set up your legal documents. We offer a startup strategy service to help guide a newly forming firm through these pitfalls.

2. How many 8(a) certified firms are there?

Approximately 6,500 however in the last decade there has been as many at 10,000 and as few as 5,500

3. What is the percentage of ownership in a different firm that a previous owner of an 8(a) firm can have, and not affect the new 8(a) applicant’s firm eligibility?

Under 10% and the previous owner does not have to make any disclosure about their ownership interest in the 8(a) applicant firm.

Between 10% and 20% can be owned, but the previous 8(a) firm owner must disclose their ownership. This does not necessarily bar the 8(a) applicant firm from a successful application, however, increased scrutiny will be placed on the firm.

20 Percent or more ownership from the previous 8(a) owner, and the 8(a) applicant firm will be barred from entry into the 8(a) program.

4. How long does an 8(a) firm remain certified?

Generally an 8(a) firm remains in the program for a 9 year period. An 8(a) firm can voluntarily leave the program early, early graduation by meeting the firms program directives, or be terminated for not adhering to the program guidelines.

5. Do I have to recertify my 8(a) firm with the SBA every year?

There is an annual review process, however this process does not have the same level of documentation required as during the extensive application phase.

6. What does it mean to be affiliated with another firm??

Affiliation occurs when the SBA views two entities as acting with a similar or same interest. This can occur for many reasons, including a 20% or more shareholder having a second similar business in the same or nearly the same industry. Firms that share assets or employees are considered affiliated. A firm that is located at the same location as another firm in the same industry are considered affiliated. A firm that has a substantial amount of its revenue come from a past employer of the 8(a) applicant firm’s owner is considered affiliated and the control of the applicant firm is questioned. Any other actions that the SBA could deem link two firms together.

7. Can a woman or service disabled veteran obtain the 8(a) certification?

Yes – however these two groups are not presumed to be socially disadvantaged, therefore they are required to submit stories about how gender bias or their physical handicap have affected their ability to compete in the American economy. Generally 6-10 stories are needed with corroborating evidence.

8. Can a member of a Middle Eastern country that in not in an SBA classified presumed group get classified as socially disadvantaged and become eligible for the 8(a) certification?

Yes – these members are not in a presumed group but if they can show a history of discrimination then they can prove social disadvantage and gain entry into the 8(a) program.

9. What is the basis for determining my personal income for proving economic disadvantage in the 8(a) process?

The SBA uses your adjusted gross income from your individual 1040 tax return for the past 3 years. They will remove all amounts that flow through from a K-1 or Schedule C that were deposited back into the company bank account as retained earnings as well as money used to pay the tax on those funds.

10. When do my retirement accounts no longer have exempt status from my net worth for my 8a calculation?

When an individual no longer has a penalty for removing funds from the account the SBA then includes those amounts as part of the 8(a) applicant’s net worth. Generally for most IRAs and 401Ks the age is 59.5 years of age.

11. How much in gross sales (revenue) is required in order to qualify for a 2-year waiver for early 8(a) application?

There is no set number however in our experience we have found that the SBA is more amicable to 8(a) applications when the firm has greater than $150,000 in revenue since the firm’s inception.

12. How do I market my firm once I am 8(a) certified?

There are several ways to market a firm once the 8(a) firm is certified. First, the firm’s assigned Business Opportunity Specialist, in most cases, will send out letters of introduction on behalf of the 8(a) firm to best fit targets within the federal government. The 8(a) firm can also provide a list of targets for the SBA to help them target, and lists can be generated for the 8(a) firm to target on their own, based upon publically available information. Our firm can build target market lists for 8(a) firms, as well as provide training to firms that would like this capability in-house.

13. What amount of bonding capacity do I need in order to apply as an 8(a) firm in the field of construction?

Generally an 8(a) construction firm needs to be able to demonstrate at least $50,000 in bonding in order to enter the 8(a) program.

14. What is the best industry to be with regard to federal sales as 8(a) certification holder?

There is no set industry that is best for doing well within the 8(a) program. The largest two industries are Construction, with approximately 35% of 8(a) firms; in Information Technology with approximately 30% of 8(a) firms. Both of these industries tend to do well within the federal 8(a) space, however many niche industries out-preform these more mainstream industries.

15. If I obtain an 8(a) certification, should I also obtain a GSA Schedule?

A GSA Schedule can greatly aid an 8(a) firm in the marketing of its goods and services. This is because GSA Schedules are the predominant method of purchasing most federal procurement officers go, in order to do market research. Past studies have shown that 8(a) certified firms do 3-times the amount of business of that a non-8(a) firm showing the advantage of the combination.

16. What is the 8(a) Stars Program?

The 8(a) Stars and 8(a) Stars 2 program is a GWAC (Government Wide-Acquisition Contract) for Information Technology 8(a) firms that offer on-ramp approximately every 2-5 years. These firms have access to billions in additional contracting opportunities over the duration of their enrollment in the 8(a) Stars programs.

17. What is a Federal IDIQ contract and is it good for an 8(a) firm to be placed on these types of contracting vehicles?

Federal IDIQ contracts are Indefinite Delivery, Indefinite Quantity contracts. The advantages of an 8(a) firm gaining access to these contracts is that a certain percentage of these contacts are set-aside for 8(a) firms. Many 8(a) firms forgo IDIQ contracts and focus on sole source 8(a) contracts because they are administratively easier to obtain. However, IDIQ contracts can be the source of large amounts of 8(a) revenue for firms. This is such a largely overlooked area with 8(a) firms that we have an in-house specialist that focuses on helping 8(a) firms identify and obtain IDIQ contracts.

18. What is the best geographical location for an 8(a) firm?

The Washington DC or Metro-DC area has the largest concentration of 8(a) firms. A large number of IT, Consulting and many other 8(a) firms are located in the DC Area. Because 80% of all federal construction spending occurs at DoD facilities (Army, Navy, Air Force, Marines), construction firms located near military facilities often yield higher federal revenue streams. 8(a) firms have been successful in all 50 States and US Territories at obtaining federal contacts.