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SBA 8a Net Income Calculation-II

8a applicants we have been talking with recently have expressed concern that the 8a certification will lose its effectiveness if there are future cuts in federal spending due to the economy. A blanket cut in federal spending would reduce the dollar targets 8a firms receive as the federal target for 8a procurement is 5% of total spending. Below we consolidated state by state federal contract spending (leaving out entitlement and other non-relevant spending) to determine what contract dollars 8a firms would look like on a per firm bases if spending levels went back to 2006 levels. You can see that the average reduction in contracting would be around 18.5% if we went back to the 2006 levels or $2.5 million per 8a firm instead of the $3.0 million dollar average that currently exists. The conclusion that can be drawn from this data is that an 8a certification will be an effective protection against another economic downturn as the contracting levels would still be high

 

 

 

 

 

State

2011

Active

8a Firms

 

 

2011

U.S. gov

Contract

Spending

(In billions) 

2006

U.S. gov

Contract

Spending

(In billions)  

2006-2011

Contract

Spending

Increase

 

2011

Targeted

8a Sales per

firm at

5% goal

2006

Targeted

8a Sales per

firm at

5% goal

Alabama

155

11.4

8.3

37%

3,677,419

2,677,419

Alaska

224

2.3

2.1

10%

513,393

468,750

Arizona

162

14.4

10.6

36%

4,444,444

3,271,605

Arkansas

32

1.3

1.2

8%

2,031,250

1,875,000

California

863

52.9

43.8

21%

3,064,890

2,537,659

Colorado

199

9.9

7.4

34%

2,487,437

1,859,296

Connecticut

19

12.9

8.1

59%

33,947,368

21,315,789

Delaware

11

0.7

21.0

-97%

3,045,455

95,454,545

D.C.

194

19.5

15.8

23%

5,025,773

4,072,165

Florida

482

16.4

13.5

21%

1,701,245

1,400,415

Georgia

345

10.3

10.0

3%

1,492,754

1,449,275

Hawaii

149

3.1

2.3

35%

1,040,268

771,812

Idaho

39

3.0

1.5

100%

3,846,154

1,923,077

Illinois

212

9.4

6.1

54%

2,216,981

1,438,679

Indiana

57

4.9

5.2

-6%

4,298,246

4,561,404

Iowa

12

1.7

1.8

-6%

7,083,333

7,500,000

Kansas

41

2.6

2.5

4%

3,170,732

3,048,780

Kentucky

41

6.9

6.0

15%

8,414,634

7,317,073

Louisiana

145

4.5

9.7

-54%

1,551,724

3,344,828

Maine

11

5.2

2.2

136%

23,636,364

10,000,000

Maryland

810

26.1

22.3

17%

1,611,111

1,376,543

Massachusetts

49

16.7

10.4

61%

17,040,816

10,612,245

Michigan

123

5.0

5.4

-7%

2,032,520

2,195,122

Mississippi

70

7.3

6.9

6%

5,214,286

4,928,571

Minnesota

40

2.6

2.4

8%

3,250,000

3,000,000

Missouri

80

11.0

10.8

2%

6,875,000

6,750,000

Montana

21

0.6

0.5

20%

1,428,571

1,190,476

Nebraska

27

1.1

0.9

25%

2,037,037

1,629,630

Nevada

75

2.5

2.2

14%

1,666,667

1,466,667

New Hampshire

10

1.6

1.3

23%

8,000,000

6,500,000

New Jersey

134

9.3

7.1

31%

3,470,149

2,649,254

New Mexico

163

7.2

7.6

-5%

2,208,589

2,331,288

New York

172

11.3

10.9

4%

3,284,884

3,168,605

North Carolina

146

5.9

4.4

34%

2,020,548

1,506,849

North Dakota

13

0.7

0.4

71%

2,500,000

1,461,538

Ohio

170

7.5

8.0

-6%

2,205,882

2,352,941

Oklahoma

127

3.2

2.6

23%

1,259,843

1,023,622

Oregon

44

1.5

1.1

36%

1,704,545

1,250,000

Pennsylvania

113

19.3

10.4

86%

8,539,823

4,601,770

Puerto Rico

0

0.6

0.7

-8%

N/A

N/A

Rhode Island

6

0.9

0.5

67%

7,500,000

4,500,000

South Carolina

66

6.6

5.1

29%

5,000,000

3,863,636

South Dakota

23

0.7

0.6

18%

1,543,478

1,304,348

Tennessee

83

9.5

6.9

38%

5,722,892

4,156,627

Texas

759

38.8

34.8

11%

2,555,995

2,292,490

US Virgin Islands

2

0.6

0.0

6233%

14,250,000

225,000

Utah

64

3.5

3.2

9%

2,734,375

2,500,000

Vermont

1

0.5

0.8

-42%

24,500,000

42,000,000

Virginia

950

59.8

42.0

42%

3,147,368

2,210,526

Washington

149

12.0

7.9

52%

4,026,846

2,651,007

West Virginia

18

1.7

1.0

70%

4,722,222

2,777,778

Wisconsin

65

6.7

3.0

123%

5,153,846

2,307,692

Wyoming

9

0.3

0.3

4%

1,611,111

1,555,556

 

Averages

7,975

476

401

18.5%

2,982,947

2,517,110

*data taken from small business dynamic search and USA Spending websites.

If you have any questions about the 8a certification or would like for us to qualify you for the 8a certification please feel free to give us a call at 513-843-4288.