Contracting

Some small firms doubt efficacy of SBA assistance

businesspeople running track

More than three quarters of the small and disadvantaged businesses questioned in a recent study doubted the value of a Small Business Administration business development plan aimed at helping them garner federal contracts.

According to a study released by Washington, D.C.-based Eddy Communications Corp. in late January, 87 percent of the participants of the SBA’s popular 8(a) business development program that aims to help small socially and economically disadvantaged businesses were not sure their participation had brought any advantages, even after completing nine-year terms in the program.

The study's author said it showed that the 8(a) program didn't adequately prepare new contractors for their growth, from a small business into the larger, more competitive environment for federal contracts.

“We knew about the challenges of 8 (a) graduates face when they move into full and open competition—for years, many of our clients have sought us out to help them navigate that growth stage,” said Jennifer Eddy, founder and chief strategist of Eddy Communications. “But the results of this study reveal how overwhelming the government market can be to newcomers who don’t have anyone in their corner.”

The 8(a) set-aside is one of several SBA programs aimed at helping socially and economically disadvantaged small businesses get federal contracts.

The program is divided into two phases -- a four-year developmental stage and a five-year transition stage -- in which small businesses are certified and participate.

Less than half of survey participants said they would confidently recommend the program to a friend in their industry, and nearly 10 percent said they self-terminated their affiliation with the 8(a) program early after determining the burdens of participation outweighed the benefits.

For its part, the SBA said in its fiscal 2014 budget justification that from January 2009 to January 2013, it has supported more than $106 billion in lending to more than 193,000 small businesses. from January 2009 to September 2012, the agency said it helped counsel and train more than three million small business owners and entrepreneurs through its resource partner network and through September 2011 helped small businesses access more than $286.3 billion in federal contracts. That is, SBA said, $32 billion more in small business contracting than the previous three years, even as overall contract spending decreased.

 

About the Author

Mark Rockwell is a staff writer covering acquisition, procurement and homeland security. Contact him at mrockwell@fcw.com or follow him on Twitter at @MRockwell4.

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Reader comments

Fri, Feb 7, 2014

Alaskan. Native Companies that are in the 8a program further muddy the water with the ridiculous advantages they have, like spinning off another 8a after they graduate. Great example - look up CSC's current protégés, and the first one listed is Arctic Slope Management Services, an 8a spinoff off of the parent company ASRC, a BILLION dollar company. If they have a parent organization that is bringing over a billion dollars, why do they need to be in a Mentor Protege with CSC???? I hope this comment gets posted so more people see this.

Tue, Feb 4, 2014 Chuck Blakeman

Unfortunately, the SBA has abandoned small business, and is now more unhelpful than anything. 28 million of the 28.2 million businesses in America, 98%, have 1-19 employees. They need loans of $50-$200,000. In 2007, the average SBA loan was $180,000 and 24% of all SBA loans were under $100,000. Today, the average SBA loan is $485,000 and only 9% are under $100k, and declining. The 98% have been left behind while the SBA supports the 2%. Almost every time the SBA gives out a loan now, it goes to giant businesses who use it to crush the small ones who can’t squeeze a dime from the SBA’s banks. How did we get here? In the last five years under Karen Mills, the SBA aggressively ad proactively expanded the definition of "small" to allow tens of thousands of very large businesses (500+ employees, $30+ million in revenue) to be reclassified as small. As a result, the banks and the SBA can now give a lot fewer loans to much bigger businesses, and still blow their horn that they support small businesses. Nothing could be farther from the truth. The banks and the venture capitalists (like Startup America) have been lobbying for years to get the SBA to abandon small business in favor of the 2%; the largest businesses in America. It's working. Their next step is to convince the politicians to fold the SBA into the Commerce Department, where it will get lost in the Commerce Department's focus on the top 1/2 of 1% of the largest businesses. The new SBA leader is a venture capitalist, so this is not likely to get fixed. The SBA world is upside down.

Tue, Feb 4, 2014 OccupyIT

Big surprise. SBA is one of the gatekeepers and road blocks to legitimate small businesses. They make it almost impossible for any real business to qualify, expect you to line the pockets of the ex-staffer-now-consultants to make the list, and then don't do anything. Really too bad given they could be so helpful it they would, well, actually help....

Mon, Feb 3, 2014 gm Fresno,ca

get 8a certificate its waste time and money for the last two years i don't see no help

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