Some small firms doubt efficacy of SBA assistance

The Small Business Administration’s 8(a) program fails to prepare potential vendors for the competitive environment of federal contracting, says a new study.

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.

 

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