Certifying Your Small Business

For the small general contractor, associated specialty trades and architecture and engineering firms, the past several years have been brutal. That said, small construction companies have a niche market and a distinct competitive advantage when they possess small business certifications. These certifications have value, whether work is “set aside” as a prime contractor or as a subcontracting goal on federal government construction projects.  Following are some of the common small business certifications and set-aside contracting programs that your construction firm may wish to pursue:

  • The 8(a) Business Development Program was created to help U.S. social and economic disadvantaged small businesses compete in the federal marketplace. Qualifying businesses must provide financial and corporate documents and submit an application via the Small Business Administration (SBA).
  • HUBZone Program encourages economic development in historically underutilized business zones or “HUBZones.” To qualify for the program, your firm’s principal office must be located in a HUBZone, and at least 35 percent of your employees must reside in a HUBZone. Qualifying firms must submit an online application and supporting documents via­­ the SBA.
  • 8(m) Program allows federal agencies to set aside contracts specifically for women-owned small businesses (WOSB) and economically disadvantaged women-owned small businesses (EDWOSB). To qualify, at least 50 percent of your firm must owned by a woman. She must have the highest officer position, maintain control of the business and manage the day-to-day operations. Qualifying firms can self-certify simply by declaring your WOSB/EDWOSB status in System for Award Management (SAM) and uploading your corporate and financial documents in the SBA’s General Login System.
  • Service-Disabled Veteran-Owned Small Business Procurement Program provides federal contracting assistance to service-disabled veteran-owned small business concerns. Qualifying businesses are at least 51 percent owned by veterans disabled by a service-related injury. Similar to women-owned certification, you can self-certify in SAM. You may also validate your service-disabled veteran status by completing an online application with the Veterans Administration. When you self-certify, you are still responsible for understanding the regulations and limitations that apply to your business.
The Perfect Customer

The U.S. government is the world’s largest customer, spending  more than $56 billion on construction in fiscal year 2011. This customer reserves a significant portion of its purchasing specifically for companies just like yours and mine and teaches you how to earn and maintain this business.  Obtaining small business certifications of any type is the differentiator in a competitive environment.

Each year, the federal government establishes procurement goals ranging from three to five percent of the total federal budget for small businesses possessing one or more of these certifications. According to the SBA’s procurement scorecard for 2011, the federal government, despite efforts to obtain these goals, missed the mark in four of five categories. This means billions of dollars designated for certified small businesses are being spent elsewhere.

Bigger Does Not Mean Better

There is a misconception that only large businesses have the resources to compete for government contracts. More than 25 percent of total federal government purchasing is directly set-aside or sole source for small businesses. This percentage does not even consider the additional requirements the government imposes on large business to subcontract a portion of its work to qualified small business. Subcontracting opens up a whole other avenue of opportunities for small business.

There are additional advantages to the various small business certifications. For example, HUBZone-certified companies may enjoy a 10 percent price evaluation preference in full and open contract competitions. If your company is certified as 8(a) business, you enjoy the benefits of a business development program courtesy of the SBA and are able to receive sole-source non-competitive bids up to $4 million.

Just Do It

Athena Construction Group had a rough start in 2003 amid significant financial losses. Instead of closing shop, we decided to take bold and decisive action – transitioning out of residential remodeling services to pursue federal work. By getting certified as a SDVOB, WOB or HUBZone construction company and aggressively marketing these certifications, we started to land subcontracting, prime contracting and teaming work, grow through the recession and hire new employees. Today, 90 percent of our revenues are generated through government contracts, and companies now call us regarding opportunities.

Right now, the country needs jobs, and small businesses create jobs. Remember, there is a huge amount of money that is left on the table because there aren’t enough qualified certified small businesses to fulfill the government’s procurement needs. It has to begin somewhere, so take the lead – it’s good for your business and our country.

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