Small Business Administration | Performance.gov

Statement:

By September 30, 2017, support more disadvantaged small businesses by increasing the number of approved 8(a)-certification applications by 5% each fiscal year, FY 2016 and FY 2017.

Description:

The 8(a) Program is an essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society. The program helps thousands of aspiring entrepreneurs to gain a foothold in government contracting.

8(a) firms are also provided with business development assistance and can participate in the Mentor Protégé Program to build their competitive and institutional know-how to participate in competitive acquisitions.

A few years ago, the 8(a) Program boasted over 9,000 certified 8(a) participants, but has declined to less than 4,700 due to the administratively burdensome application process.  Though the regulatory guidance provides the SBA approximately 90 days to process a complete application, several firms have endured delays that extend anywhere from 6 months to several years.  Further, the SBA rate of approval for applicants that complete the application process is exceptionally low, under 50%.  While over 2,000 applicants apply each year, the SBA rejects most applications as incomplete or missing documentation.  Historically, only 25% of the applicants or about 500-600 applicants per year get through the burdensome process for a final decision from the Associate Administrator of the Office of 8(a) Business Development.  The SBA’s low rate of approval has led to an industry of third party firms that charge socially and economically disadvantaged applicants anywhere from $5,000 to $75,000 to prepare the application and respond to the SBA processors.  Some of these firms are taking advantage of applicants; and regardless of the amount paid, there is no guarantee of approval because the SBA approval rate is consistently less than 50%.

This Priority Goal is designed to grow the 8(a) Program by improving customer service for the 8(a) applicants and reduce the unnecessary administrative burdens on applicant firms.  Growth of the program will open opportunities for socially and economically disadvantaged entrepreneurs to gain a foothold in government contracting.

The mission of the Office of Business Development is to execute activities authorized under Sections 8(a) and 7(j) of the Small Business Act to provide business development assistance to firms that are owned and controlled by economically and socially disadvantaged individuals. The office fulfills its mission by certifying the eligibility of prospective 8(a) business development firm participants and managing a national program that provides marketing, managerial, technical, and procurement assistance to help eligible businesses achieve their full competitive potential. The SBA will continue to work collaboratively with community development partners, credit unions, minority associations and others to tailor programs to meet their needs and ensure that SBA’s programs remain accessible to underserved communities.

This Priority Goal directly supports SBA’s strategic objectives:

• Strategic Objective 1.2 – Ensure federal contracting goals are met or exceeded by collaborating across the federal government to expand opportunities for small businesses and strengthen the integrity of the federal contracting certification process and data.
• Strategic Objective 2.1 – Ensure inclusive entrepreneurship by expanding access and opportunity to small businesses and entrepreneurs in communities where market gaps remain
• Strategic Objective 3.3 – Mitigate risk to taxpayers and improve oversight across SBA programs

The goals address the ongoing decline in number of 8(a) small businesses.  Through 8(a) sole source and competitive contracting opportunities, the federal government acts as a catalyst for small business growth, innovation, job creation, and supports the national economic security of the nation.

When a small business gets a government contract, the small business is often able to quickly create jobs and spur economic growth.  The government agency often has a “direct line” to the CEO, helping ensure that products and services are meeting or exceeding expectations and serving America’s taxpayers.

Key barriers and challenges:

Many challenges exist for growing the 8(a) program and increasing the total number of application approvals for 8(a) firms. However, the SBA is committed to make smart, bold, and customer focused changes to make the 8(a) program accessible to all firms that meet the eligibility requirements of the program.  Consistent measurement of progress and monitoring of implementation of new and streamlined procedures will be key to avoid reverting to historical trends of rejecting 50% of more of the completed applications.  Challenges include:

• Uncertainty whether competitors will respond favorably to the necessary regulatory changes that will be posted in the Federal Register to remove longstanding but unnecessary burdens on firms.  Some examples are ‘wet signatures’ and a mandatory waiting period of 12 months to reapply after being declined by the SBA regardless of the reason for the decline.
• Potential for low employee engagement or desire for the status quo within the Office of Business Development. The staff assigned to process applications work remotely from the SBA Headquarters in Washington DC and have been trained in current processes that have proven burdensome.
• Office of Field Operation’s Business Opportunity Specialists (BOS) who conduct the day-to-day marketing to 8(a) applicants and provide business development for 8(a) certified firms.  The BOS are assigned other priorities leaving minimal time for 8(a) business development.  The decline in access to business development creates an increase in the number of firms that are terminated each year because they do not stay connected to the SBA and do not meet program requirements for annual reviews.

The SBA programs that contribute to this Agency Priority Goal are: Size Standards, Mentor-Protégé, 8(a) Business Development, 7(j) Technical Assistance.

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