When looking to do work for the federal government, there are a number of advantages to being a small business. The federal government mandates that 23% of the products and services they use must come from small businesses, with a percentage of this being allocated to certain types of small businesses.
The government struggles to meet many of their small business goals each year partly due to the fact there are so many small businesses offering their products/services commercially that are not registered to do business with the government.
Many contracting opportunities are set aside only for small businesses to bid on and complete; large businesses are not even allowed to bid on that specific job. A number of these small business solicitations are set aside only for a certain type of small business to bid on and complete; these businesses must prove they fit into that small business category before bidding on the work. For most, this requires an application and certification process.
For purposes of government contracting, it is not a simple answer to determine if your business is “small,” as it depends on the type of work you do. The SBA publishes a “Table of Small Business Size Standards Matched to North American Industry Classification System Codes (NAICS)” that is used to find the size standard for your business industry.
One of the factors determining small business types is ownership and control. Who really owns the company and who controls the long-term and day-to-day operations? There are times that ownership of a business can be tied to a trust, or decision making can be tied to a board of directors, and the individual who says they own the business does not really have complete control of the business.
Below is a list of some of the available small business certifications:
Woman Owned Small Business (WOSB):
- 5% of the solicitations awarded by the Federal government must be awarded to a woman owned small business (WOSB).
- In order to bid on this type of work, a business must be considered small and certified as a WOSB.
- Work can be set-aside for WOSBs only when it fits into one of the industry codes listed here.
- To be certified as a WOSB, at least 51% of the company must be unconditionally owned and controlled by a woman who is a US citizen.
Economically Disadvantaged Woman Owned Small Business (EDWOSB):
- 5% of the solicitations awarded by the Federal government must be awarded to an economically disadvantaged woman owned small business (EDWOSB).
- All of the WOSB criteria applies to EDWOSBs, but an EDWOSB also has financial limitations/qualifications.
- Work can be set-aside for EDWOSB/WOSBs only when it fits into one of the industry codes listed here. EDWOSBs are eligible to bid on both WOSB and EDWOSB contracts.
Service Disabled Veteran Owned Small Business (SDVOSB):
- 5% of the solicitations awarded by the Federal government must be awarded to Service Disabled Veteran Owned Small Businesses.
- The Service Disabled Veteran (SDV) must have a service-connected disability that has been determined by the Department of Veterans Affairs or Department of Defense. (NOTE: Individuals with disabilities listed at 0% are eligible for this certification.)
- To be a certified SDVOSB, at least 51% of the company must be unconditionally owned and controlled by a US Veteran or Veterans.
Historically Underutilized Businesses Zone (HubZone):
- 3% of the solicitations awarded by the Federal government must be awarded to small businesses that are HubZone certified.
- The business’ principal office must be in a certified historically underutilized business zone (HubZone) & 35% of the “employees” working at this location must live in a HubZone.
Small Disadvantaged Business(SDB)/8(a) Business Development Program:
- 5% of the solicitations awarded by the Federal government must be awarded to Small Disadvantaged Businesses (SDB).
- SDBs who are also a part of the 8(a) Business Development Program have sole source contracting opportunities, specialized training and counseling assistance, and ability to form joint ventures when bidding on government contracts.
- To be a certified 8(a)/SDB, you must prove that at least 51% of the company is owned and controlled by socially and economically disadvantaged individuals.
Attorney Adam Zuwerink has experience in reviewing your business structure to see if your business is set up to be certified as a particular type of small business. Once that is determined, we can assist in compiling, completing and submitting the necessary paperwork for you to become a certified small business. If you believe your business qualifies for one of the above programs and would like more information, please give us a call.