The federal government claims each 8(a) application will be evaluated in 105 days or less, but this is a little bit of a game, and a time estimate you should ignore completely.
- The 105 day estimate is just that: an estimate. It’s not a guarantee, and it never was.
- This 105 day estimate assumes the SBA will declare your application to be complete nearly immediately. It won’t, no matter what you send the SBA the first time around. (Expect multiple rounds of correspondence. Just expect it.)
- There is no punishment if the government exceeds its own deadline–the agency is not really held to account by anyone. There might be a mild tongue lashing from Congress or the GAO once in a while, but nobody suffers a punishment if an 8(a) application takes more than 105 days to be processed. The metric is tracked, but failure to meet the metric comes without consequences; hence, there is no incentive to move faster.
- The department in the SBA that evaluates 8(a) applications is understaffed, and has been understaffed for a few decades now. There won’t be any new staff members added (in terms of numbers of staff) anytime soon because no dollars have been added to the budget to hire them. (Sure, a staff member might leave and be replaced now and again, but no new personnel get added into the system).
- The most recently passed annual budget required the SBA to promote its 8(a) program more and more to get more people interested and to churn up more 8(a) applications. But…see #4 above (lack of staff). The equation is very simple and very obvious:
More 8(a) applications + same number of people to process them as before = slower application process.
(This is a great example of an “unfunded mandate” from Congress–Congress tells the SBA to do something, but does not think through all of the financial consequences and costs before enacting the mandate. Sure, Congress threw some dollars over the fence for the SBA to host more “get 8(a) certified!” seminars, but Congress failed to fund the other piece of the equation: staff members to actually process these extra incoming documents. Oops.)
So, if an 8(a) consultant promises you stars, unicorns and a 30-day 8(a) application process, enjoy your laugh for the day and walk away now, because they are full of [censored].
What’s a realistic projection for the time is takes to get 8(a) certified in 2014?
Assume you won’t get certified until 6 or more months from today.
Assume half a year or more.
Don’t promise your customers you will be certified in a jiffy–you won’t.
8(a) certification is a slow process.
Really, really slow.
Just mentally prepare yourself for the slow process now so you won’t be disappointed and you won’t look like a jerk by over-promising and under-delivering to your customers.
After much discussion and careful thought, the senior partners at Government Certification Specialists Inc. have decided to make some major changes at the company.
We are discontinuing our full 8(a) application service in lieu of an a la carte menu of specific 8(a) services. Here are a few reasons why we think you will like this new a la carte approach better:
1. Lower prices. Most GCS clients don’t want to pay several thousand dollars for a full 8(a) application service. The recession might technically be over, but small businesses in America still have tight budgets and narrow profit margins to maintain. We hear you loud and clear! Our goal is to offer you 8(a) products and services you can actually afford.
2. Only buy the 8(a) help you need. Most GCS clients are highly educated professionals who are perfectly capable of executing routine 8(a) application tasks on their own; they don’t need a consultant’s help to execute that stuff. What our clients actually want and need is targeted, highly specific 8(a) help that addresses discrete obstacles, anomalies and unusual problems. You want succinct answers, and you want them quickly. That is what we will aim to provide.
3. Emphasis on DIY resources. As independent business owners, GCS clients typically want full control over their own 8(a) applications. We understand this, so we have developed a series of inexpensive kits, templates and examples that we have available for download over on our site http://www.8aapplication.com. If you don’t see a kit you want, email us your kit suggestion and we will consider putting it into production if we receive enough requests.
Also, the SBA keeps on improving and refining the information it provides you free of charge on its site, http://www.sba.gov. If you have not been there in a while, go check out the SBA’s progress and read their new 8(a) resources. We think you will find them easier to understand than past SBA literature about the 8(a) program. Of particular value is this page every 8(a) applicant should read before beginning the application process:
Over the next several weeks, you will see our new menu of a la carte 8(a) services emerge on the main GCS Inc. website, http://www.get8acertified.com.
In the mean time, here is a fast rundown of our a la carte 8(a) services and their new prices, all of which will remain in effect until at least 12/31/2014:
- Personal narrative statement of economic disadvantage–$600 prepaid (usually 3 pages)
- Personal narrative statement of social disadvantage–$1,200 (usually 15-20 pages)
- 8(a) Application Length of Time in Business Waiver–$500 prepaid
- 8(a) Annual Update–$795 prepaid (does not include updates to your business plan)
- 8(a) Business Plan on SBA Form 1010C–$2,800
- Hourly consulting rate for senior specialist help, $150/hour, with mutually agreed upon cap on hours
- Hourly consulting rate for junior specialist help, $60/hour, with mutually agreed upon cap on hours
- 8(a) business 1-page Capability Statement (text only)–$500 prepaid
- 8(a) Request for Reconsideration–price will vary based on individual circumstances; ask for quote
- 8(a) Correspondence Service–price will vary based on individual circumstances; typical letter averages around $300-$600
If you are interested in any of these a la carte 8(a) services, please send us an email, and one of our specialists will respond to you:
We do have a telephone number, but it rings constantly, so we recommend email for first contact to get a faster response from us. Thank you and we look forward to hearing from you.
You’ve been 8(a) certified and you have started your networking, sales and business development efforts in earnest. Before you get too far, however, take a moment to organize your 8(a) paperwork so you will be in good shape in one year when it is time to submit your 8(a) annual update.
Place your signed 8(a) Participation Agreement and your most recent version of your 1010C business plan in a safe place, and refer to them often. Know the 8(a) rules in and out so you don’t accidentally violate a key rule or regulation. Bear in mind your 8(a) business plan goals as you market and sell during the year.
Keep track of all of your marketing, sales and business development meetings. Some Business Development Specialists demand to see a detailed log of marketing visits as a part of the annual update.
Also keep track of your bidding activity. You will want to know how many local government, state government, federal government and commercial projects you bid on during the year. You will want to keep track of how many bids you win and how many you lose.
When tracking your federal bids and wins, categorize them as 8(a) sole source awards, 8(a) competitive awards, full and open competition awards and other sole source awards (for example, an SDVOSB sole source project for the VA).
All of this data will get reported in your 8(a) annual update, so start your program year off right and maintain detailed records from the start to save yourself a lot of aggravation later.
Need help with your 8(a) application or business plan? GCS Inc. offers you free and low-cost kits and information on our site http://www.8aapplication.com.
Many clients of GCS Inc. have either complained about or been unnecessarily frightened by the tone of the response letters they have received from the SBA after submission of an 8(a) application.
Don’t take the tone of these SBA 8(a) response letters personally. The agency processes hundreds of applications per year and often uses boilerplate language to respond to you that sounds rather stern. Some people even feel the tone verges on mean or vindictive. This is just a matter of perception, because the agency is not trying to be mean or vindictive. The fact of the matter is that the “bureaucratic voice” of a government agency can sound rather cold, but that is not intentional, and it certainly is not meant as a personal attack.
When you receive your SBA 8(a) response letter from the SBA–which is entirely normal, and not an indicator of any particular problem–simply write back in a calm and matter-of-fact way. Many times the SBA just wants to gain a better understanding of your paperwork or something you said in your paperwork.
That being said, sometimes the agency could possibly be a little more diplomatic… For example, this month, one of the major 8(a) application forms changed. Every 8(a) applicant must complete the copy of the new form, as a matter of course. Here are how two different SBA staff members communicated this change to applicants.
SBA Staff Member #1:
“Provide an updated SBA Form 912. This form can be found on SBA’s website. The form must have an unexpired OMB control number.”
- Makes it sound like the applicant submitted old data, which the applicant did not
- Forces the applicant to hunt for the document, which is somewhere on the SBA’s vast website
- Implies the applicant purposefully used an expired form, which they did not
In contrast, here is the same directive issued from SBA staff member #2:
“Each of you must provide new SBA Form 912’s, “Statement of Personal History”. Note that the forms initially provided with the application expired February 28, 2013 and have not yet been updated in our on-line application. For your convenience, attached are copies of this form. Also note that questions 7, 8 and 9 have been changed. Please answer accordingly.”
- Explains that a form changed and therefore new forms should be completed
- Provides a copy of the changed form for the applicant’s convenience
- Notes areas in the form that have altered wording so the applicant won’t accidentally miss the changes
The first approach implies blame and error on the part of the applicant; whereas the second approach is polite, helpful and considerate. As we all learned in elementary school, sometimes the magic word “please” makes a world of difference. Likewise, communicating to 8(a) applicants in a polite and respectful manner results in better responses from the applicants.
Although the first SBA staff member’s tone was rather brusque and off-putting, it was not intended as a personal insult or attack by any means. The motive was the same as staff member #2’s motive: to simply update some forms.
This example shows that the agency has different ways of communicating its messages and regardless of which tone of voice is used, the end goal is the same: to analyze important information to render a certification decision.
So if the letter you received from the SBA initially upsets you, ignore its tone entirely and focus instead on the facts and the discrete action items you need to complete to move your application forward through the 8(a) review pipeline.
GCS Inc. receives questions every week from individuals who are confused about the SBA 8(a) “70 Percent Rule,” which addresses potential economic dependence between an 8(a) applicant firm and its customer(s).
To answer these common questions, GCS Inc. prepared a 6-page PDF document called The SBA 8a 70 Percent Rule; you can download it straight from this post (there is no fee or charge for the download).
If the download does not work for you:
1. Make sure you have the most recent version of the Adobe Reader installed on your computer.
2. Switch your Internet browser and try the download again using a different browser. Many Google Chrome users experience difficulty with downloading PDF files, so try Internet Explorer or Firefox instead.
If you have more questions about the SBA 8(a) 70 Percent Rule, the best way to reach GCS Inc. is via email:
The SBA will look at your personal federal income tax return for the 3 most recent consecutive years and calculate your 3-year average Adjusted Gross Income (AGI) to determine if you are economically disadvantaged for the 8(a) program.
To get into the 8(a) program, your AGI needs to be under $250K.
This means it should not be at $250K–it must be less than $250K.
You can find your AGI on your personal tax return, line 37:
When you apply to any federal government program or bid on any federal contract intended for small business participation only, be sure your business really is small under the federal government definition of small before you apply.
Here is what the federal government has to say about how it determines your company size:
“When you calculate the size of your business to determine if you are a small business, you must include the annual receipts and the employees of your affiliates.
“Affiliation is determined by the ability to control.
“When the ability to control exists, even if it is not exercised, affiliation exists.
“The SBA determines affiliation in accordance with 13 CFR 121.103 in its Small Business Size Regulations.
“Be sure to read the SBA’s affiliation discussion as well.”
The federal government typically views affiliation in a negative light, because the ability to control your business means your affiliate might exert negative control over your decision-making as a business owner. Note that the negative control does not have to even exist–only the potential to exert negative control has to exist.
A general rule of thumb is: take precautions to eliminate any affiliations you can before applying for federal small business programs, certifications, contracts or benefits.
In some situations, affiliation cannot be avoided and there is nothing you can do about it.
For example, businesses owned by immediate family members are de facto affiliates of your business by virtue of the fact you are family members.
This is not something you can discuss, negotiate or argue with the federal government–immediate family member owned businesses are automatically affiliates of your company, period.
Now, there are exceptions to every rule, but these exceptions are rare and are not guaranteed.
For example, imagine your immediate family member–a brother–owns a huge $300 million corporation. Under normal circumstances, this would knock you out of eligibility as a small business because (through affiliation), your little $100K company is now “other than small.”
“Other than small” means you can’t declare your company as a small business anymore, at least in government programs, unless–and here is where the rare exception comes in–you can prove a “clear line of fracture” between your business and your brother’s business.
A clear line of fracture would consist of conditions like: you and your brother are estranged and no longer on speaking terms; your brother operates his company in a different state from you; your brother operates a business in one industry and you operate your business in a wholly unrelated and altogether dissimilar other industry, your two companies have never contracted with each other before, your two businesses don’t share anything (e.g., employees, insurance, loans, office space, etc.)
Don’t count on being an exception. Take into the consideration the risk that affiliation poses to your company size when you check to see if you are eligible for federal certifications, contracts, programs or benefits set aside for small business.
Are you concerned about how affiliation, negative control and related factors affect your business size and eligibility for small business certifications? Our specialists can help sort out the situation. Send an inquiry to email@example.com and one of our specialists will reach out to help you. Include as much detail as you can about the affiliation and/or negative control problem in your email.