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Minority Owned Business
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Article 3: How the SBA 8(a) Program Works
The SBA 8(a) Business
Development Program has become an essential
instrument for helping socially and economically
disadvantaged entrepreneurs gain access to the
economic mainstream of American business.
Over the years, the 8(a) Program has helped
thousands of aspiring but disadvantaged
entrepreneurs gain a foothold in the federal
procurement arena. In fiscal year 2002, more
than 7,625 firms participated in the program and
were awarded $5.6 billion in federal contracts.
The SBA maintains close contact with federal
agencies to keep them informed of the 8(a)
Program’s goals and procedures, and requests
that specific contract opportunities be reserved
for the 8(a) Program.
Once approved for 8(a) participation, businesses
are responsible for marketing themselves to
federal agencies, with assistance from their
assigned Business Opportunity Specialist (BOS).
Although the SBA can’t guarantee a specific
amount of procurement business for an 8(a) firm,
it does maintain data on government requirement
trends that can help firms anticipate the nature
and volume of future business opportunities.
Participation in the 8(a) Program is divided
into two phases over a nine-year period: a
four-year development stage and a five-year
transition stage. After nine years, companies
must graduate from the 8(a) Program.
As part of the 8(a) Program, the SBA has
recently implemented the new Mentor-Protégé
Program. Through the program, new 8(a) companies
can learn from more experienced business owners
(who are usually 8(a) graduates themselves)
about competing for federal contracts. The
benefits of this program to protégé firms are
many:
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Technical and management
assistance — The protégé can tap into
the mentor’s expertise, resources and
capabilities.
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Financial assistance —
This may take the form of loans or even
equity investments, as mentors are allowed
to own equity interest of up to 40 percent
in a protégé firm.
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Prime contracting and
subcontract support — Mentors can enter
into joint venture arrangements with
protégés to compete for government contract.
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