These are 10 reasons why a firm would desire to obtain an 8a certification
Benefit 1 – Sole Sourcing
Sole Sourcing accounts for about half of all 8a sales or approximately $16 Billion dollars annually. A sole source contract functions similar to how contracts are awarded in the normal small business market place where a formalized bidding process is not relied upon. The Federal procurement officer meets with the owner of the 8a firm and they agree to project specifics and price. As long as the 8a firm is not found to be more than 10% above market the federal procurement officer can direct award the contract to the 8a firm. A side benefit of an 8a company’s ability to obtain sole source contracts is that often the 8a firm can obtain contracts from their federal buyers before other businesses are even given notice that an opportunity was present. In many cases 8(a) firms in their third year and beyond do not even respond to bids any more as the relationships they have developed lead to enough sole sourced contract to keep them busy.
Sole-sourcing limits are set at $4 million for goods and services and $6.5 million for manufacturing.
Benefit 2 – Limited Competition
An 8a certification limits the field of competition for bidding on federal contracts. There are approximately 24 million businesses in the United States only 6,500 have successfully completed the process of obtaining their 8a certification. 5% of all federal spending is earmarked for 8(a) firms which accounts to more than $34 billion per year in federal contracts. This is more than $4 million per year in federal spending per 8a firm.
Benefit 3 – Cuts through Federal Bureaucracy
The SBA acts as a liaison with the 8(a) firm in order to help the 8(a) firms obtain federal contracts. This benefits the 8a firm in the reduction of time necessary to achieve its first federal sale. For most 8a firms the SBA will send out letters of introduction which help the 8a firm make initial contact with their targeted market.
Benefit 4 – Large Contracts
Contract size for 8a firms can be large from a small business standpoint. These contracts can be accomplished by teaming with other partners. This is because 8a firms are permitted to partner with other firms in what is known as a joint venture or mentor protégé arrangement. This is often done with large federal prime contractors. This helps expand the 8a companies knowledge on how the government works, allows the 8a firm to be awarded contracts they would not otherwise be able to win as well as helping to build the 8a firms federal performance history so that they can win large contacts without the 8a firm needing to partner in the future.
Benefit 5 – Better Pricing
Due to the limited number of 8a firms and the fact that they are all small businesses 8a firms are able to receive better pricing than their non-8a small business peers.
Benefit 6 – Growth
8a firms have the capability of growing much faster than their peers. The Washington Post publishes the fastest 50 each year made up of the fasted growing federal IT contractors working for the federal government. It is not accident that 31 of the fastest 50 are 8a IT firms.
Benefit 7 – 8a Boosts GSA Schedule Effectiveness
An 8a certification will greatly increase the effectiveness of a GSA Schedule. When a federal procurement officer visits GSA Advantage the web porthole for GSA buying those procurement officers always seek out 8a firms first. This gives 8a firms an estimated 300% advantage over their non-8a GSA Schedule peers.
Benefit 8 – Construction Contractor Friendly
8a firms are very successful in their award of federal construction contracts and therefore outperform their peers. As a result 40%+ of all 8 firms are in the construction field. Additionally because 80% of all Federal Construction occurs at DoD facilities (Army, Navy, Air Force, Marine Bases) the contract dollars are spread throughout the United States and US Territories.
Benefit 9 – FEMA Contracts
When National Disasters strike due to the quick nature of 8a sole source contracting mechanism 8a firms are administratively better equipped to be awarded contracts and help disaster victims. In the past 10 years there have been 560 designated presidential disasters with $11.5 billion spent annually with a large amount of these dollars going to 8a firms.
Benefit 10 – 8(a)s Become Large Business Concerns
Approximately 30% of 8a firms are able to use their performance rating and contacts with the federal government becoming large federal prime contractors once they graduate from the program. These companies are often having annual billing in access of a hundred million dollars.