Women, Minority, and Veteran Certification — Does it Matter?
Do women or members of a disadvantaged minority group, including: African American, Asian Pacific American, Hispanic American, Native American, or Subcontinent Asian American own or operate at least 51% of your company? Do you advise any companies owned and operated (at least 51%) by a disabled veteran? If so, it might be time to take a deeper look at obtaining a women-owned, minority-owned, or veteran-owned business certification. If taxes and basic financial reports from the prior three (3) years are available when applying, the process should be completed in a couple of hours. Applications are typically online and can be completed digitally. While state and federal programs are free, other third-party certifiers (TPC’s) or networking groups charge an application fee or membership dues. Here I will review the free options. Check out Blissness School for a full review of paid certification and how to determine if that’s the right choice for your business.
Why get certified?
Certification is an excellent way to lead with personal values, allowing others to identify and align with your business immediately. Increasingly, private companies have diversity requirements imposed by diversity and inclusion officers, including hiring a certain percentage of vendors that are women- or minority-owned businesses. These certifications allow private companies to fulfill their internal diversity requirements, which means increasing your business’s bottom line. Public image has never been more important than in our global digital economy, so the ability to showcase a certification both on your website and social media profiles, and at your physical business location provides a compelling marketing justification, alone. The federal government has pledged to not only to offer a percentage of their contracting dollars to certified businesses, but also provides valuable training and introductions to key administrators for qualified businesses. The bottom line: certifications can provide a true leg-up in a clearly inequitable playing field for women, minorities, and disabled veterans.
What are the federal options and specific benefits?
The U.S. Small Business Administration (SBA) offers several federal options for free certification. The main program for women-owned businesses is the Women-Owned Small Business (WOSB) Federal contract program. As stated on their website, “The federal government’s goal is to award at least 5% of all federal contracting dollars to women-owned small businesses each year.” That a lot of money available, and certification allows your company to become an eligible recipient. The government recognizes the inequity faced by women- owned businesses simply based on gender, and limits competition for certain contracts to businesses that are WOSB-certified. These contracts are known as “set-asides.” Provided they are eligible, WOSB-certified firms can still compete for contract awards under other socio-economic programs, including 8(a) and HUBZone. It is important to note that WOSB-certification benefits only apply to federal contracting opportunities, rather than those in the private sector. Not only will certification allow businesses access to “set-aside” contracts in designated industries in and sectors in the North American Industry Classification System (NAICS), but the certified business can also register with multiple databases such as the Department of Defense’s System for Award Management (SAM). This all means — BIG money opportunities.
Before jumping into certification, take a look at the NAICS codes to see if your business qualifies. The list is extensive and includes some less common but also some very common services, such as:
Soybean farming
Wheat farming
Mushroom production
All other grain farming
Nursery and tree production
Chicken egg production
Animal slaughtering
Hunting and trapping
Drilling oil and gas wells
Residential remodelers
Chocolate and confectionery manufacturing from cacao beans, as well as non-chocolate confection manufacturing
Retail & commercial bakeries
Commercial screen printing
Music publishers
Sound recording studios
Media streaming distribution services, social networks, and other media networks and content providers
Mortgage and nonmortgage loan brokers
Portfolio management and investment advice
Insurance agencies and brokerages
Offices of real estate agents and brokers
And on and on.
8(a) program for disadvantaged persons
Sections 7(j)(10) and 8(a) of the Small Business Act (15 U.S.C. §§ 636(j)(10) and 637(a)) authorizes the SBA to establish a business development program, which is known as the 8(a) Business Development program. The 8(a) program is a robust nine-year program created to help small businesses owned and controlled by socially and economically disadvantaged individuals. The 8(a) certification qualifies businesses as eligible to compete for the program’s “sole-source” and competitive “set-aside” contracts.
Qualified participant businesses receive training and technical assistance designed to strengthen competitive ability in the American economy. Alaska Native corporations, Community Development Corporations, Indian tribes, and Native Hawaiian organizations are also eligible to participate in the 8(a) program. Small business development is accomplished by providing various forms of management, technical, financial, and procurement assistance. The SBA partners with federal agencies to promote maximum utilization of 8(a) program participants ensuring equitable access to opportunities in the federal marketplace. The 8(a) program is designed for experienced socially and economically disadvantaged small business owners who have been in business for at least two years or more, and are interested in expanding their footprint in the federal marketplace. The SBA notes:
While the 8(a) certification does not guarantee contract awards, [it is] a dynamic tool to pursue and capture new opportunity from the government.
8(a)-certified businesses can:
Efficiently compete and receive set-aside and sole-source contracts
Receive one-on-one business development assistance for their nine-year term from dedicated Business Opportunity Specialists focused on helping firms grow and accomplish their business objectives
Pursue opportunity for mentorship from experienced and technically capable firms through the SBA Mentor-Protégé program
Connect with procurement and compliance experts who understand regulations in the context of business growth, finance, and government contracting
Pursue joint ventures with established businesses to increase capacity
Qualify to receive federal surplus property on a priority basis
Receive free training from SBA’s 7(j) Management and Technical Assistance program
The government authorizes sole-source contracts to 8(a) participants for up to $7 million for acquisitions assigned manufacturing North American Industry Classification System (NAICS) codes and $4.5 million for all other acquisitions. Entity-owned 8(a) program participants are eligible for sole-source contracts above these thresholds, but the Department of Defense requires approval of a formal justification if the 8(a) sole-source contract exceeds $100 million; all other federal agencies require
approval for sole-source 8(a) contract actions that exceed $25 million. 8(a) program participants are eligible to compete for contract awards under other socio-economic programs or small business set-asides they qualify for.
To qualify for the 8(a) program, businesses must meet the following eligibility criteria:
Be a small business
Not have previously participated in the 8(a) program
Be at least 51% owned and controlled by U.S. citizens who are socially and economically disadvantaged (as defined per Title 13 Part 124 of the Code of Federal Regulations)
Have a personal net worth of $850 thousand or less, adjusted gross income of $400 thousand or less, and assets totaling $6.5 million or less
Demonstrate good character
Demonstrate the potential for success such as having been in business for two years
8(a) certification lasts for a maximum of nine years. The first four years are considered the development stage and the last five years are considered the transitional stage. In order to remain in the program, businesses must remain in compliance with program requirements. If you are considering 8(a)-certification, first use the Am I Eligible? tool on SBA’s Certify website.
To learn more about certification, check out the Hubzone and veteran minority certification article. You can find this article in it’s entirety in the upcoming March 2023 issue of the Oregon State Bar Business Law Section’s quarterly newsletter. The full article was written by Melissa Jaffe, of Law Offices of Melissa B. Jaffe, PC and Meghan Williams, of The Wildwood Law Group.
