WHEN SHOULD YOU SEEK 8A STATUS?
Back in the day, following the Small Business Administration’s (SBA) implementation of the 8(a) sole source set-aside award, companies around the Washington Beltway set up shop to garner these contracts. It was a free-for-all with companies immediately “getting their 8(a)”.
Today, this is not the case and many firms ask when they should enter into the 8(a) Program. The 8(a) program is a robust nine-year program created to help firms owned and controlled by socially and economically disadvantaged individuals. While nine (9) years seems like a long time, it will go by quickly so this is not a program to squander by entering the program while ramping up your small business.
The government authorizes sole-source contracts to 8(a) participants for up to $7 million for acquisitions assigned manufacturing North American Industry Classification System (NAICS) codes and $4.5 million for all other acquisitions.
We suggest small businesses choose the path of crawl, walk, run. Companies that are in their initial years need to build up competencies and a history of past performance in subcontracting roles to where they are ready to pursue a prime contract(s). Once a prime contract or two is underway with solid delivery performance, this is the time to apply for entry into the SBA 8(a) Program. At this point, having the ability to pursue and win sole source work will bolster a company’s revenue trajectory allowing strategic use of this program.
The first four years are considered a development stage when a company needs to focus on leveraging the program and building up the company’s status to win more work. The last five years are considered a transitional stage when a company needs to solidify their plan to grow towards becoming a mid-tier company which means preparing for a much more competitive business environment competing against large businesses.
Following graduation from the 8(a) program companies can continue a solid growth trajectory or choose to remain small. We have many examples of successful companies in both camps. Whichever path your company chooses with regard to 8(a) program certification and participation, Catapult Growth Partners can assist you in achieving your revenue and growth goals.
Written by: Fran Vogel, Partner, Catapult Growth Partners