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Anyone Can be 8(a) Certifified – The Definitive Tutorial October 6, 2010

Greater Washington Procurement Conference. Anyone Can be 8(a) Certifified – The Definitive Tutorial October 6, 2010. OBJECTIVES. What is 8(a)? – A historic perspective What are the benefits? – It’s more than just sole source contracts!

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Anyone Can be 8(a) Certifified – The Definitive Tutorial October 6, 2010

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  1. Greater Washington Procurement Conference Anyone Can be 8(a) Certifified – The Definitive Tutorial October 6, 2010

  2. OBJECTIVES • What is 8(a)? – A historic perspective • What are the benefits? – It’s more than just sole source contracts! • What are the demographics? – You have to follow the money! • What are the myths and misinformation? – Separating the understandable from the “evil” reasons for these untruths • 8(a)- Are you qualified?- You may be surprised! • Becoming 8(a) certified – You have some options – Beware of the scams, and amateurs! • How can EZCertify assist you to become certified in record time?

  3. What is 8(a) – A Historic Perspective • SBA administered Federal business assistance program for small and disadvantaged businesses • Named after Section 8(a) of the Small Business Act • CFR Title 13, Part 124, Subpart A defines the program • Targeted at small businesses that are unconditionally owned by: • Socially and economically disadvantaged persons • Good character • U.S. Citizens • Demonstrate a “potential for success” • Program is over 40 years old, under constant attack by foes of “affirmative action” • When all is said and done, “the most coveted of all government certifications”

  4. What are the Benefits of 8(a) Certification? Here’s just 10 of the many benefits: 1. Sole source or non-competitive contracts of $3.5M for services or $5.5M for manufacturing; no ceilings on “set-asides” 2. Reducing the number of your competitors by about 99.99% in your market area 3. Decreasing the amount of time to book a contract from about a year to about a month 4. Making it about 90% easier for your prospective customer to buy from you versus from your competitors 5. Virtually eliminating the potential for “sore-loser” protests of your hard- earned winning bids

  5. What are the Benefits of 8(a) Certification? (cont.) • Never having to compete on price alone or having to be the “cheapest guy in town” 7. Being awarded contracts that are typically more than 4 times larger than those awarded to other small businesses • Becoming a favored subcontractor to the “big guys” and received with open arms by them simply because you can help them to win contracts not available to them or their competitors 9. Favored customer of banks and other lenders, just because they too recognize the above advantages that you and not everyone enjoy 10. Real potential to be among the top 90% of all small businesses that are similar to your own and among the top 25% of all Federal contractors

  6. What are the Demographics of 8(a)? The “Big Picture” • 9462 firms were participants in 2008; 9476 today • Total revenue of participant firms - $10.3 billion • $6.3 billion or 61.2% derived from 8(a) program • 191,973 jobs contributed to the Nation’s economy • Program falls under the Office of Business Development, located in the Office of Government Contracting and Business development • Total of 182.5 FTE’s manage this program;31 at Headquarters and 151.5 in District Offices • Less than 10 FTE’s, located in only 2 “Evaluation Centers” are assigned to 8(a) application review process • 400 applications received by these 2 Centers per month • Over 70% of all applications are rejected; More than 90% are questioned, at least once • SBA claims that average application processing time is “80 days”; In reality it approaches 12 months from initial application to successful certification • 12%-15% of certified companies are terminated each year

  7. What are the Demographics of 8(a)? Their Locations- Top 10

  8. What are the Demographics of 8(a)? Top 10 NAICS Codes

  9. What are the Demographics of 8(a)? Ethnicity and Gender of Participants

  10. What are the Demographics of 8(a)? Personal Net Worth of Participants Range of Personal Net Worth – ($108,954-$2,278,635) Median Personal Net Worth - $165,166 Average Personal Net Worth $227,881

  11. What are the Demographics of 8(a)? Size of Firms

  12. What are the Demographics of 8(a)? Top 8(a) Funding Federal Agencies

  13. What are the Myths and the Truths About 8(a)? … Why the myths? Understandable reasons: • Complex regulations difficult to understand • Once in a lifetime activity for most • Amateur, uninformed, non-qualified advisors • Discomfort with doing Federal government business • Lack of visible success stories and role models • Service-Disabled Veterans and Women haven’t yet “gotten the word” Questionable reasons: • “Let’s keep the competition out” • “Fixed pie-size” theory • Sour grapes from “unsuccessful 8(a) and non-8(a) companies • “Don’t need any more workload here at the SBA” • Ineffective promotion of 8(a)/SDB programs • Race and gender-based exclusions • “Competing procurement assistance program” myopia

  14. Debunking the Myths Myth #1:You have to be in business for two years before applying The Facts: • 8(a)BD Certification: “Potential for Success” application criteria includes Length of Time in Business Requirement of 2 full years…or an applicant may seek a waiver by addressing: • A.Substantial business management experience • B.Demonstrated technical experience to carry out its business plan • C. Adequate capital to carry out the business plan • D. Record of successful performance on contracts • E. Ability to timely obtain start-up personnel, facilities and equipment Out of the Box Tip#1: Buy a company that meets the 2-year test! Conclusion: Your length of time in business need not prevent you from 8(a)BD Certification

  15. Debunking the Myths (Cont.) Myth #2: Federal Government doesn’t purchase what my business sells The Facts: Out of the Box Tip#2: See how much was spent in your business area by going to http://www.ezcertify.com/sic/index.asp or www.fpds.gov Conclusion: Federal government is the largest customer in the world, buying almost everything that you can imagine

  16. Debunking the Myths (Cont.) Myth #3:Most small business owners are too wealthy to qualify The Facts: Out of the Box Tip#3: Invest in your business or personal residence to reduce your “adjusted net worth”. Both are safe harbors! Conclusion: Vast majority of small business owners can readily prove their economic disadvantage

  17. Debunking the Myths (Cont.) Myth #4: You can’t pay yourself well and also be certified The Facts: • There are no regulatory requirements establishing maximums for income of applicants for the 8(a)BD programs, although income is one of several factors used to determine economic disadvantage. You’re probably safe under the following conditions: Annual IncomeAnnual Sales of Applicantof Company $150,000+ Taxes $0 - $1.0M $200,000+ Taxes $1.0M - $2.0M $300,000+ Taxes >$2.0M • $200K average two year compensation exceeded by only two percent of all US taxpayers Out of the Box Tip#4: You must avoid excessive withdrawals in order to remain in compliance with your “Participation Agreement” Conclusion: You can compensate yourself very well while participating in the SDB or 8(a) programs

  18. Debunking the Myths (Cont.) Myth #5: Only small dollar contracts are available to certified contractors The Facts: In FY 2009, the average 8(a)BD award was $140K, verses an average for all awards of $21K Out of the Box Tip#5: Convincing your prospective client that “8(a) competitives” can meet their penchant for competition while avoiding the pains of “full & open” can yield large 8(a) contracts. Conclusion: 8(a) Contracts need not be limited to $3.5M or $5.5M

  19. Debunking the Myths (Cont.) Myth #6: There is not much business set-aside or awarded to small or certified companies The Facts: FY2009 Actual Performance: Small Business -$77.8B; $23K/Award Average SDB -$20.6B; $85K/Award Average 8(a)BD -$14.9B; $140K/Award Average Woman-Owned -$13.6B: $20K/Award Average SDV -$5.3B; $41K/Award Average Out of the Box Tip#6:If you’re not focused on at least one of the above top 10 agencies, you are “chasing rainbows” Conclusion: Small, SDB and 8(a) contracting represents more than 1/3 of all Federal government procurements

  20. Debunking the Myths (Cont.) Myth #7:Non-minority service-disabled veterans and women business owners cannot apply for the 8(a) certification The Facts: • The above is just NOT TRUE! Non-minority service-disabled veterans and women (those who are not members of one of the designated groups), can, under the new regulations (since 1998), more easily prove their social and economic disadvantage. • The door has been opened by the change in the evidentiary standard to prove their “social disadvantage” Out of the Box Tip#7: There’s no longer a need for the “Polaroids and signed confessions evidencing handicap or gender prejudice. However, the incidents of prejudice must address when, who, what and so what! Conclusion: Successfully claiming and proving disadvantage is no longer a “virtual mission impossible”

  21. Debunking the Myths (Cont.) Myth #8: It costs too much, takes too much time, is too complex and the probability of success is too low The Facts: Out of the Box Tip#10: If you believe that the 8(a) certification will help your business grow and prosper, get proven professional help! Conclusion: Getting 8(a)/SDB certified in record time is no longer an impossible task

  22. 8(a) – Are You Qualified to Apply? • All Applicants must be U.S. Citizens • The applicants must unconditionally own, in total, at least 51% of the firm • Applicants must be considered Economically and Socially Disadvantaged • Applicants and applicant firm can not have any unpaid financial obligations to the Federal or state government • Applicants who have previously participated in the 8(a) program are no longer eligible • The applicant firm must be considered a small business by SBA size standards • The top management position in the firm must be held by one of the applicants • The top management applicant must work at least 40 hours a week in the business without any outside employment • The firm must not be classified as a broker, a non-profit business or a subsidiary of another firm • The firm must show a “Potential for Success”

  23. A New Paradigm – Anyone Can be 8(a) Certified!...Want Some Proof?

  24. Becoming 8(a) Certified – The Options

  25. How Can EZCertify Assist You to Become Certified in Record Time? “…We offer a full line of software products and services to get you certified and invite you to visit our information rich web site at www.ezcertify.com or to call us, toll free at 866-681-4970.” Over 10,000 Successful 8(a) Applications! Your application completed in as little as 15 days and you certified in another 30days Visit us at Booth Number 10 Today

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