SBA Programs and Other Programs Analyzing Programs for Small Disadvantaged Businesses

About the Firm 2 McMahon, Welch and Learned, PLLC represents many small and mid-sized federal services contractors in Northern Virginia, DC and Maryland, including small- disadvantaged firms, veteran-owned firms, women-owned firms and Hub Zone qualified firms. We also have a strong corporate and acquisitions-support practice which focuses on general business legal matters of significant interest to the broader business community.

Presenter 3 Kevin R. Learned, Partner Mr. Learned’s practice focuses on advising clients on general corporate and securities matters, including company formation and governance, buy-sell agreements, operating and stockholder agreements, mergers and acquisitions, private offerings of debt and equity securities (including friends and family, angel, venture capital and private equity investments), corporate divorces and other reorganizations, joint ventures, small business certifications (including 8(a), SDVO, WOSB, HUB Zone and MBE/DBE certifications), executive employment and equity matters, deferred compensation plans, franchise agreements, trademarks, and other commercial contracts and agreements.

Small Disadvantaged Businesses 4  The federal and state governments, as well as private businesses, have adopted numerous programs designed to support and encourage the growth of small disadvantaged businesses. The primary questions are:  What is a small business?  What is a disadvantaged business?

Small Business Programs 5  Small Business Set-Asides  No Disadvantaged Status Required  Special Preferential Programs Administered by SBA  8(a) Program  SDB  SDVOSB  WOSB  HUBZone  MBE/DBE Certification  Supplier Diversity Programs

Why Size is Important 6 Small Business Set-Asides  Procurements can be set-aside for small business competition  Company size must not exceed the size standard set for the procurement  NAICS Codes (North American Industry Classification System)  A code is assigned by industry and/or products/services to be provided to almost all federal solicitations, procurements or RFPs  Each NAICS code is associated with a size standard that has been set by the SBA

How Does SBA Determine Size? 7  Size Standards  Determined by NAICS Codes  Personnel/Staff  Receipts/Total Receipts – includes pass-through income.  Period of Measurement  Average of Most Recently Completed Three Fiscal Years  Self-Certification  Certification each time you sign the representations and certifications that accompany your offer  Criminal penalties for false certification of size

Special Size Considerations 8  Affiliation  Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both  It does not matter whether control is exercised, so long as the power to control exists  Size Protests  A legal challenge of a prospective awardee’s size  Usually occurs in the context of a procurement and only after a company has been selected for award

SBA Programs 9  Each of the set-aside programs limit competition  Each has its own qualifying requirements  All require that you be small as defined in the solicitation  All require that the 51% owners be U.S. Citizens

8(a) Program – Minority Small Business Development Program 10  Arduous application process  Looks closely at other owners  Need to prove likelihood of success  Requirements:  51% ownership;  Social disadvantage; and  Economic disadvantage ($250k income and $250k net worth, excluding retirement funds, personal residence and business – $4 million cap)  9 year program participation

SDB – Small Disadvantaged Business 11  Easier than the 8(a) application process  Not a set-aside program, but instead gives preferential treatment in bidding  Requirements:  51% ownership;  Social disadvantage; and  Economic disadvantage ($750k net worth, excluding retirement funds, personal residence and business)

SDVOSB – Service Disabled Veteran Owned Small Businesses 12  Self-Certification for non-VA procurements  CVE Verification Required for VA procurements  CVE also certifies VOSB status  Two year recertification requirement Be careful about mid-term audits  Requirements:  51% ownership, by  Disabled Veterans

WOSB – Women-Owned Small Business 13  WOSB vs. EDWOSB  Specified NAICS Codes  Self-Certification vs. Third Party Certification  Requirements:  51% ownership, by  Women; and  Disadvantaged (if EDWOSB) ($350k income and $750k net worth, including retirement funds but excluding personal residence and business – $6 million cap)

HUBZone – Historically Underutilized Business Zones 14  Most Difficult SBA Program to Maintain  Requirements:  Principal office in a HUBZone; and  35% of Personnel reside in a HUBZone  Must keep track of employees  Use of part-time employees  40 hours per month minimum

MBE/DBE Certification 15  MBE – Minority Business Enterprise  State Programs  Requirements vary from State to State  Certification Required  Programs generally favor (or set quotas/goals for) contractors who are owned by minorities and/or women  DBE – Disadvantaged Business Enterprise  Program sponsored by the Department of Transportation, but administered by the States  Requirements fairly standard among States  Certification Required  Programs generally favor (or set quotas/goals for) contractors who are owned by minorities and/or women

Supplier Diversity Programs 16  Commercial Programs  No Government Involvement  Requirements vary from Company to Company  Programs generally favor (or set quotas/goals for) vendors who are owned by minorities, women, veterans, people with disabilities and/or LGBT  Generally self-certifying and unregulated

Questions? 17 M C MAHON, WELCH AND LEARNED, PLLC 2100 Reston Parkway Suite 450 Reston, VA Main: Direct: