Government Contracting and Minority Owned Business

Maybe you’ve heard about minority owned business status before. Maybe you’ve heard of the 8(a) Business Development Program and wondered if it would help you get a leg up on the competition. Or maybe you’re new to the whole idea of government contracting and want to know how you can make it work for you. Whatever your goals, you’re probably interested in the Set Aside funds and micro-purchases the federal government has ready for small businesses like yours.

MINORITY OWNED BUSINESSBefore I mention anything else: 5 percent of the federal government’s contracting budget is reserved for minority-owned businesses. (To give you an idea of how much money that is, bear in mind that $23.85 billion were set aside for minority-owned businesses in 2011 alone!)

In order to be competitive for that exclusive share of government contracts, businesses must not only be registered with the System for Award Management but also apply and be accepted for registration under minority owned business status. So it’s definitely worth your while to consider it!

With this article, I want to give you a quick overview of the minority owned status and give you an idea of whether or not your organization qualifies. I’ll tell you a little about the registration process and keep you informed on some of the added benefits of minority owned business status. After that, I’ll close up with a couple of remarks about SAM registration and government contracting in general.

What is it, and What Does MINORITY OWNED Business STATUS Mean?

First, a little background: under the Small Business Act, 23 percent of federal government contracts are required to be rewarded to small businesses. (In 2011, for example, out of a budgeted $477 billion, $109.71 billion worth of government contracts went to small businesses.) So there’s plenty of cash up for grabs for minority owned small businesses.

Now, 5 percent of that federal government contract budget is allocated specifically to businesses that are owned by members of economically or socially disadvantaged groups. This is part of the 8(a) Business Development Program, which aims to help organizations owned by members of minority groups remain competitive in the government contracting market.

(In addition, there are also specialized statuses for women owned businesses, veteran owned businesses, people with disabilities, and young entrepreneurs, just to name a few).

 All businesses must show a demonstrated potential for success (more on that later) to qualify for minority owned business status, so it’s a real mark of distinction.

In short: the 8(a) Business Development Program aims to foster diversity and competition in the marketplace by reserving a portion of federal contracts for minority-owned businesses. Next, we’ll get into a little more depth about the requirements for organizations that want to register with the program.

How Can I Qualify To minority owned business certification?

You can take a look at the full list of requirements on the Small Business Administration’s website, but I’ll give you a brief overview here. The main requirement to qualify for minority-owned status is that the business is majority-owned by individuals who suffer from social or economic disadvantages. The SBA specifies such groups as African Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans.

However, it’s not absolutely necessary that an applicant is a member of one of those groups. The main requirement is the ability to prove both social and economic disadvantage. So as long as you can prove that your business has suffered on account of bias or discrimination, you’ve got the potential to qualify.

The other requirements are fairly straightforward and include the requirement that the business must be a small business, principals must be American citizens who show good character, and that the business must demonstrate a potential for success (defined in detail in the link). Proving potential for success is the most involved part of the registration process and can take as long as two years.

(Note: for businesses owned by American Indians, Native Alaskans, Native Hawaiians, and Certified Development Companies, there is another set of requirements for minority-owned status.)

Why Should I Register?

You may be wondering why you should register for minority owned business status. You’ve already got a competitive organization, don’t you? Why should you bother with all the fuss and red tape involved in applying for another government registration if you’re perfectly able to compete as is?

First off, just let me mention that 5 percent again. Five percent of government contracts are reserved for small minority owned businesses. So if your company fits the bill and you’re not registered, you’re kissing any chance of competing for that share of the market goodbye. (Remember: that was almost $24 billion in government contracts in 2011.)

If you’re one of those great-hearted souls who passes up a chance at that slice of the pie, that’s your decision. But I think you’re the type who jumps on an opportunity when you see one.

And if that’s not enough reason for you, minority owned business status gives you exclusive access to many other competitive advantages. The SBA offers specialized training programs and mentoring to registered organizations, free of charge. You also get admitted to opportunity fairs and networking events through the National Minority Supplier Development Council. Don’t you think you should grab the chance?

If you’re still here, I’m assuming you’re interested in taking a closer look at the registration process and that’s where we’ll be going next.

How Can I Register?

Granted, working with the government means a lot of paperwork, but it also means the chance to compete for exclusive contracts. The SBA guide to 8(a) registration and annual review covers the process in more detail, but I’ll give you a quick overview here. (Feel free to skip the next couple of paragraphs if you’ve already registered with the System for Award Management.)

The SBA recommends that you start out with Module 1 – Setting Expectations to give you a clear idea of whether or not your business qualifies. After that, you’ll need to get copies of all important documents (such as licenses, operating agreements, stock certificates, etc.). Then you’ll need to get in touch with Dunn and Bradstreet for a free D-U-N-S number, and with the IRS to get a Tax Identification Number (TIN) or Employer Identification Number (EIN).

Once you’ve gotten that prep work done, you’ll need to register with the System for Award Management (SAM). SAM registration is a requirement for all government contractors, so you’ll need to be registered for that before you register for minority-owned status.  

Registering for SAM is a fairly involved process, so make sure you’re prepared.

Now that you’re registered with SAM, you can get a login to the SBA system and begin the free application for 8(a) minority-owned status. If you run into trouble at any point in the application process, feel free to visit your local SBA office.

Finding Government Contracts

After you’ve registered for SAM and 8(a) minority owned business status, the next step is finding the government procurements themselves. These are easily found on the TendersPage database, where you can find as many as 50,000 public daily tenders, all ready for your bids. We’ve even made it easier for you by adding a filter to let you jump to the Set Aside tenders! And if you chose to, you could receive specific bids in your mailbox daily.

Even though registering for government contractor status and minority owned business status can seem like an involved (and long) process, the time investment is well worth it for the many opportunities you’ll find.

The 8(a) Business Development Program helps foster a diverse marketplace by encouraging growth in minority-owned small businesses. I hope you’ll consider it, and I wish you best of luck in all your endeavors.

Important Links: 

SETASIDE Funds https://www.sba.gov/contracting/government-contracting-programs/what-small-business-set-aside

Micro Purchases https://startupnation.com/start-your-business/get-inspired/securing-government-micro-purchases/

Requirements: https://www.sba.gov/contracting/government-contracting-programs/8a-business-development-program/eligibility-requirements/8a-requirements-overview

Potential for success https://www.gpo.gov/fdsys/pkg/CFR-2006-title13-vol1/xml/CFR-2006-title13-vol1-sec124-107.xml

Businesses owned by American Indians, Native Alaskans, Native Hawaiians, and Certified Development Companies, there is another set of requirements for minority-owned status : https://www.sba.gov/contracting/government-contracting-programs/8a-business-development-program/eligibility-requirements/ownership-eligibility

National Minority Supplier Development Council http://www.nmsdc.org/

SBA Guide to register https://sba8a.symplicity.com/downloads/BDMIS_UserGuide.pdf

SBA TRAINING SERIES: https://www.sba.gov/tools/sba-learning-center/training/pre-8a-business-development-program-training-series

Register with SAM https://eweb.sba.gov/gls/help/sbabusinesspartnersgls-1.pdf

list of Local SBA Offices https://www.sba.gov/tools/local-assistance/districtoffices

Search For Tenders With TendersPage https://tenderspage.com