FAR Part 2: How your small business can benefit in the government contracting arena
by Doug Friedli, Senior Business Development Consultant
As promised, this month we’re taking a slightly deeper dive into how the FAR is designed to help your small business compete. Missed last month’s blog? Take a few minutes to catch up here.
Tucked in Section 19 of the FAR are specific provisions that offer small businesses the advantage not extended to large companies. Specifically, FAR Subpart 19.202:
- Encourages government agencies to divide proposed acquisitions into smaller lots to allow the little guy to compete for part of the business instead of the total.
- Encourages acquisition planners to consider more than one small business concern to perform the work if the work exceeds the amount for which a surety may be guaranteed by the Small Business Administration (SBA). The surety is the security against loss or damage or for the fulfillment of an obligation or loss.
- Requires agencies to establish a realistic delivery schedule to encourage small business participation to the extent possible based on the government’s need.
- Requires prime contractors to submit small business subcontracting plans on acquisitions over a certain dollar threshold—creating opportunities for small businesses to team with the big guys.
And a few words about those special categories or set-asides for small business: Special entitlements come under two main programs: 8(a) and Small Disadvantaged Business or SDB. Generally, socially disadvantaged people are those who have been subjected to racial, ethnic, or cultural bias in American society. Economically disadvantaged individuals are also considered socially disadvantaged. Both programs help businesses owned and controlled by those who qualify as socially and economically disadvantaged—but they offer different sets of benefits.
The 8(a) program helps qualifying businesses with contracting and business development support, while the SDB program focuses solely on contracting. The mechanisms to award contracts are also different. Those in the 8(a) program automatically belong to the SDB program, but SDB program participants are not necessarily members of the 8(a) program. Going through the 8(a) and SDB application and acceptance processes will determine where your business falls.
The FAR gives 8(a) businesses certain further advantages through the SBA. These include training, counseling, marketing help, executive development, and attractive procurement options well worth exploring. One important benefit just for 8(a) is that participants can receive sole-source contracts, up to a ceiling of $4 million for goods and services and $6.5 million for manufacturing. Again, this program can benefit qualifying companies owned and controlled by at least 51% socially and economically disadvantaged individuals.
8(a) businesses can also take advantage of a mentor-protégé program to learn from experienced businesses, large or small. Disadvantaged business firms are able to form joint ventures and teams to bid on larger prime contracts.
Although we have focused on 8(a) and SDB’s in this article, there are other small business categories that benefit from FAR subpart 19.2 such as woman-owned, veteran owned and Service Disabled, Veteran owned as well as HUBZones.
The government’s small business goals are designed to promote a win-win for small businesses in set-aside categories. Help is available so you don’t have to tread the waters alone.
For example, here is a sampling of the statutory goals established by federal executive agencies for award:
- 23 percent of prime contracts for small businesses;
- 5 percent of prime and subcontracts for women-owned small businesses;
- 5 percent of prime contracts and subcontracts for Small Disadvantaged Businesses;
- 3 percent of prime contracts and subcontracts for HUBZone small businesses;
- 3 percent of prime and subcontracts for service-disabled veteran-owned small businesses.
We hope this leaves you some things to contemplate and maybe do additional research. If you have questions, please feel free to give us a call.
Doug Friedli is a senior business development consultant with LSI, a locally based business and economic development firm. As manager of LSI’s economic development contract with the Governor’s Office of Economic Development Procurement Technical Assistance Center, Doug supervises the growth of many small- and medium-sized businesses. He also establishes business outreach events to promote contracting opportunities. Doug holds a bachelor of science degree in business and marketing from Weber State University and a master of arts in organizational management from University of Phoenix.
This blog originally appeared in the Ogden/Weber Chamber of Commerce Nubiz blog. To view this and other Nubiz blogs, click here.