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The U.S. government buys more than $200 billion in goods and services each year from the private sector. Federal policy actively gives contracting preferences to certified small and disadvantaged firms, and many state and local entities follow suit. At the federal level, contracting goals have been established that encourage agencies to spend 23% of their budgets annually with small businesses, 5% with minority- and woman-owned firms, and 3% with service-disabled veteran-owned and underutilized businesses.
Similar goals are in place for state and local government purchases. Many large corporations also have programs that encourage contracting with minority- and woman-owned businesses. These “supplier diversity” programs are often managed by a Small Business Liaison Office (SBLO) who is responsible for ensuring that their internal contracting goals are met. If your small business is at least 51% owned and operated by a minority, woman, or veteran, it could be worth your while to explore getting certified so you can take advantage of set-aside programs.
The purpose of these programs is to give small disadvantaged businesses a more level playing field in competing for government contracts against larger, more entrenched firms. What is Certification? Becoming certified is a way to officially record your business ownership status. Your business may be minority- or woman-owned but if you haven’t been certified as such, you won’t be able to qualify for set-aside contract opportunities. Certification is a review process that ensures a small business is actually owned, controlled, and operated by the applicants.
The application process is administered by a certifying agency which may be a government agency or a private organization depending on the type of certification you are seeking. What are the Benefits? For many small businesses, certification can lead to the right contact within a federal agency and open the door to several state and local government opportunities. It can also help you bypass competition and land “sole source” contracts of up to $5 million. With large commercial businesses, a certified company can pitch its value as a “diversity supplier.” That can help you get contracts in the form of measured set-asides, a percentage of contract awards earmarked for diversity, or simply because of corporate policies.
The work can be awarded directly to your company (so-called Tier 1 contracts) or you can become a subcontractor to other companies that secure such contracts (Tier 2). In addition to contract preference, certification allows a business the advantage of a variety of loan and bonding programs, as well as programs that provide technical assistance. It also provides visibility for your business (through business directories) and some discounts on services and technical assistance.
Basically, becoming certified puts you into position to bid for big, long-term contracts from large corporations and/or from local, state, and federal government agencies. But certification doesn’t give you anything in and of itself. Like any marketing tool, it’s your strategy and plan that gets you the business. What certification can do is increase your chances of being in the room when the deals get done.
Is Certification Required? Certifying your small business is NOT a requirement to do business with the government; rather, it is a way to set your company apart and help you gain competitive advantage. The application process is usually very tedious and there is often a processing fee. Therefore, you need to carefully weigh the advantages to your business of spending the time and effort to get certified. Certification may open doors for you but you need to be willing to knock first.
Who Provides Certification? There are various types of certification from different private organizations and public agencies. Plus, each certifying group has its own form and requires specific information and documentation. Be prepared. This can be a drawn-out process. Before you begin filling out applications, research which certifications will benefit your business.
Many small business owners feel that working with the federal government is difficult, filled with paperwork, and impossible to manage. Although breaking into this market can be tough, it can also be very rewarding. Below are 10 solid reasons why it makes sense to pursue contracting opportunities with the government.
1. $200 Billion annual procurement. The federal government averages about $40 billion annually with small businesses. It must, by law, spend at least 23% of its prime contract dollars with small businesses. In addition, 5% goals also exist for minority and woman-owned businesses.
2. Buys almost any product or service imaginable. You build it or provide it and it’s almost certain that the federal government, the biggest customer in the world, has a need for it, and is already buying it from one of your competitors. Even the Department of Defense (DoD), which accounts for about 60% of all procurements, buys everything from food services, to management consulting, to software, to guard services.not just guns, planes, and ships. Your browser may not support display of this image.
3. Advertises its needs well in advance. The federal government is about the only client you’ll ever meet that describes what they need, when they need it, who to talk to about it, how much they’re thinking about paying for it, and when they’re going to buy it! Most of the major agencies have annual procurement forecasts, web sites, and online procurement bulletin boards to help you identify business opportunities. Your browser may not support display of this image.
4. Purchasing ground rules are clearly specified. Whether you’re dealing with NASA, the Air Force, Treasury, or any other federal government agency, they all follow the same rules-the Federal Acquisition Regulations (FAR). The requirements, advertising, procurement, selection, payment, and other steps are spelled out in these documents, and you don’t have to learn everything from scratch as you do in other markets.
5. Customers can’t refuse to see or listen to you. Federal government workers, whether they’re Generals, Admirals, or GS-7’s all work for you and other American citizens. They want to hear from you, and if you approach them professionally, they can’t avoid your “sales-pitch”. When was the last time that you could say that about a commercial customer?
6. Many organizational friends available to help you. The Small Business Administration (SBA)Offices of Small and Disadvantaged Business Utilization (OSDBU) in every federal government location, Small and Disadvantaged Business Specialists, Procurement Center Representatives, DoD’sProcurement Technical Assistance Centers (PTAC), and even your local Congressional representatives are paid to help you succeed in business. You only have to ask!
7. Pays for work progress along the way. The federal government, through progress payments, milestone payments, and the SBA’s various working capital, and other loan guarantee programs helps you finance the contracts you’ve won.
8. Credit card purchases and simplified purchasing available. Traditionally, federal government purchases of up to $2500 could be made with a government credit card which is just like a regular Visa or MasterCard purchase. Recently, the limit was increased to $250,000, although the ruling is still under scrutiny. This presents a huge opportunity for small businesses that can accept credit card payments, especially because these purchases do not have to be competitively bid.
9. Non-competitive as well as limited competition advantages available to selected businesses. As a certified minority contractor in the 8(a) Business Development program, you can seek and be awarded a contract of up to $5M (for manufacturing) or $3M (for everything else) without having to compete, in the normal sense. If you compete in a set-aside that is open only to minority-owned firms, your competition looks very much like you and not the “big guys”. As a Small Disadvantaged Business (SDB), your price can be up to 10% higher or you can enter a contract competition with up to a 20 point (out of 100) head start. These programs can level the playing field for small, woman- and minority-owned businesses.
10. Rewards large business for working with you. The federal government even provides incentives to the so-called “big guys” to contract with you in full and open competitions. You see, if they do, they are also eligible for the up to 20 points in proposal evaluation credits. Being certified just makes you a more attractive teaming partner with those “big guys
Types of Certifications By Region: Miami-Dade, Broward, State of Florida
This program is a gender/race neutral program replacing Miami-Dade County’s current B/H/WBE program for A&E contracts. It is designed to provide contracting opportunities for small and medium size firms that meet the following criteria:
Average Gross Revenue for last 3 years does not exceed $4 million for architectural, engineering, and surveying and mapping services. 3 yr. average gross receipts cannot exceed $6 million for landscape architecture.
Qualifier owns at least 25% of interest/issued stock
Owner can have only one CBE/A&E certified firm
Renewable annually
DBEs, which have similar requirements, are not required to be located in Miami-Dade County. The DBE program is intended to remedy past and current discrimination against Disadvantaged Business Enterprises, ensure a “level playing field” and foster equal opportunity in Department of Transportation (DOT) -assisted, contracts, improve the flexibility and efficiency of the DBE program, and reduce burdens on small businesses
This program is a gender/race neutral program for firms that are defined as independent construction companies that meet the following criteria:
Located and performing a commercially useful function in Miami-Dade County;
Not exceeding 3 year average gross receipts of $10 million for general building (NAICS 233/SIC 15), $6 million for heavy construction contractors (NAICS 234/SIC 16), and $5 million for specialty trade contractors (NAICS 235,SIC 17);
Qualified by an owner with at least 10% of the firm’s issued stock;
Personal Net Worth does not exceed $1,500,000 for each owner
This program is a gender/race neutral program replacing Miami-Dade County’s current B/H/W program for procurement contracts. It is designed to provide contracting opportunities for firms that meet the following criteria:
Micro Enterprise (ME) Program
If you would like to do business with the federal government, there are several certification programs that can help you gain competitive advantage. To qualify for federal certification as a minority or disadvantaged business, your business must also meet the federal government’s definition of a small business.
Definition of a Small Business The U.S. Small Business Administration defines a small business concern as one that is independently owned and operated, is organized for profit, and is not dominant in its field.
Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period. Examples of SBA general size standards include the following:
Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured. Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided. Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided. For example, most general service businesses may not exceed $6 million in annual receipts while architectural, engineering, carpet cleaning, and dry cleaning have a threshold of $4 million. Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided. General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction. Special Trade Construction: Annual receipts may not exceed $7 million. Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product. If the size of a business exceeds the size standard for its overall industry group, it may still be a small business for the specific type of service provided in that group. Some industries have higher size standards than the general one for the industry group. Check the SBA Table of Size Standards for more specific information.
Certification Programs Once you determine that your business qualifies as a small business, you can explore specific minority- and veteran-owned certification options that provide additional incentives when contracting with the federal government.
Click on the titles to learn more about the benefits and eligibility requirements for each type of program.
Many state and municipal government agencies have certification programs for small and disadvantaged businesses. Generally, these apply to minority- and woman-owned businesses and some states are now adopting contracting programs for veteran-owned businesses.
Almost all states have some type of program for small business enterprises regardless of ownership status. The criteria are based on number of employees and gross receipts rather than the owner’s ethnicity or gender.
Because each state is different, it is important to check into the programs and requirements that apply to your business. Many have combined applications for both small and minority-owned businesses.
To find information on each county or state requirements you could email us or call us at our office. If you qualify, certification can give you an advantage when marketing goods and/or services to local agencies. Once certified, these agencies and most of the prime contractors who do business with the state will provide contracting preference to help you compete. Below is a list of the most common programs available to small businesses.
Several states have adopted contracting preference programs for veteran-owned businesses. DVBE certification increases business opportunities for disabled veterans and provides certain competitive advantages when these firms are competing for state government procurements against non-certified firms.
SBE certification provides small businesses with access to up to 25% of state government contracting dollars. Additionally, some states provide price preference incentives that give small businesses an advantage when bidding against larger firms with more resources.
The DBE program is a federal program managed by individual state’s Department of Transportation (DOT) agencies. DBE contracting goals are established for federally funded projects, generally in public works and transportation, with sub-contracting potential. DBE certification entitles your business to numerous state government procurements.
