Georgia Tech Procurement Assistance Center

Congressional Research Service publishes updated report on SBA’s 8(a) program

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The 8(a) Business Development Program—commonly known as the “8(a) Program”—provides participating small businesses with training, technical assistance, and contracting opportunities in the form of set-aside and sole-source awards.  A set-aside award is a contract in which only certain contractors may compete, whereas a sole-source award is a contract awarded, or proposed for award, without competition.  In FY2019, 8(a) firms were awarded $30.4 billion in federal contracts, including $8.6 billion in 8(a) set-aside awards and $9.9 billion in 8(a) sole-source awards.  Other programs provide similar assistance to other types of small businesses (e.g., women-owned, HUBZone, and service-disabled veteran-owned).

8(a) Program eligibility is generally limited to small businesses “unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of and residing in the United States” that demonstrate “potential for success.”

Members of certain racial and ethnic groups are presumed to be socially disadvantaged, although individuals who do not belong to these groups may prove they are also socially disadvantaged.  To be economically disadvantaged, an individual must have a net worth of less than $750,000 at the time of entry into the program and less than $750,000 for continuing eligibility.  In determining whether an applicant has good character, the SBA takes into account any criminal conduct, violations of SBA regulations, or debarment or suspension from federal contracting.  For a firm to demonstrate potential for success, it generally must have been in business in its primary industry classification for two years immediately prior to applying to the program.  However, small businesses owned by Alaska Native Corporations, Community Development Corporations, Indian tribes, and Native Hawaiian Organizations are eligible to participate in the 8(a) Program under somewhat different terms.  Each of these terms is further defined by the Small Business Act, Small Business Administration (SBA) regulations, and judicial and administrative decisions.

This report examines the 8(a) Program’s historical development, key requirements, administrative structures and operations, and the SBA’s oversight of 8(a) firms.  It also discusses two SBA programs designed to support 8(a) firms, the 7(j) Management and Technical Assistance Program and the All Small Mentor-Protégé Program, and provides various program statistics.  It concludes with an analysis of the following current 8(a) Program issues:

  • The SBA’s decision to address recent declines in the number of program participants by revising and streamlining the program’s application process, an action which the SBA’s Office of Inspector General (SBA OIG) reports “may erode core safeguards that prevented questionable firms from entering the 8(a) Program.”
  • Reported variation in 8(a) Program service delivery.
  • Reported deficiencies in the oversight of 8(a) Program participant’s continuing eligibility.
  • Disagreements concerning the financial thresholds used to determine economic disadvantage, including the SBA’s decision to exclude equity in a primary residence from the calculation of an individual’s net worth.
  • The adequacy of the performance measures used to evaluate the program’s effectiveness in meeting its statutory goals.

Read the full report here:  https://crsreports.congress.gov/product/pdf/R/R44844

Minority-owned small business government contracting guides

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The blog Government Contracts Insights has published a series of posts (4 total) specific to federal government contracting as a minority-owned small business.  You can find links to the four posts below:

  1. Roadblocks inherent to the public procurement process for minority-owned businesses
  2. Overview of SBA contracting assistance programs
  3. Guide to the 8(a) and HUBZone programs
  4. Access to capital opportunities for minority-owned businesses

SBA interim final rule allows certain 8(a) program participants to extend participation for one year

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On January 13, 2021, the U.S. Small Business Administration (SBA) issued an interim final rule (effective immediately) to allow certain 8(a) Business Development (BD) program (the “program”) participants to extend their program term by a period of one year.  The interim rule implements a provision in the Consolidated Appropriations Act of 2021 and the National Defense Authorization Act for Fiscal Year 2021, which permits businesses that were in the program on or before September 9, 2020, to extend their participation in the program for a period of one year.

Continue reading at:  Pillsbury

See also related article at Bradley’s Buildsmart blog.

GSA announces STARS III IT contract for small businesses

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The General Services Administration released a draft solicitation Friday to replace an expiring governmentwide acquisition contract (GWAC) for small IT businesses.

The 8(a) Streamlined Technology Acquisition Resource for Services (STARS) III GWAC will replace its predecessor, 8(a) STARS II, when that ends Aug. 30, 2021.

Agencies will issue task order requests via 8(a) STARS III for information technology services from active participants in the Small Business Administration’s 8(a) Business Development program for startups.

Continue reading at:  Fedscoop

Five ways small, minority-owned construction firms can build success

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To spread the economic benefits that construction projects generate more fairly across communities, government agencies reserve some public work for contractors owned or operated by traditionally disadvantaged groups.

Federal, state and even city and county agencies have special programs that give qualified minority and woman-owned business enterprises (MWBEs) and other disadvantaged business enterprises (DBEs), such as service-disabled veterans, a chance to bid on and win certain construction projects ranging from small to mega.  That is, if they are certified.

The Small Business Administration, for example, runs the 8(a) certification program, which is probably the most well-known among government contractors, but other agencies have renditions as well.  Most certifying agencies require that a qualified business be owned by at least 51% minority or disadvantaged owners.

African Americans, Hispanics, Native Americans, Asian-Pacific and Subcontinent Asian Americans and women are presumed to be socially and economically disadvantaged, according to the federal government.  Other individuals can also qualify as socially and economically disadvantaged on a case-by-case basis.

But while certification provides some opportunities, it doesn’t mean that MWBEs and DBEs get to skip over all the hard work that goes into building a business.  “That’s not the way it works,” said Dan Moncrief III, CEO and chairman of certified minority commercial contractor McDaniel’s Construction Corp. in Columbus, Ohio, and president of the National Association of Minority Contractors.

“You have to work harder than you’ve ever worked and stay up later than you’ve ever stayed up to get your first job,” he said.  “And once you get a first job, it may be a long time before you get the second one.  So, it’s a constant grind.  If you don’t have the fortitude for it, you might want to do something else.”

Continue reading at:  Construction Dive

SBA denies 8(a) status based on applicant’s ability to successfully overcome gender-based discrimination in her field

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OHA recently affirmed the 8(a) status denial of a 100% woman-owned small business performing in the historically male-dominated renewable energy field.  The applicant—who SBA called an “advocate” and “mentor” to women in the industry—detailed specific instances of gender-based-discrimination that plagued her education, employment, and career.  But SBA was unmoved, instead focusing its analysis on the applicant’s triumph over these obstacles—apparently an indication that she was not socially disadvantaged in the first place.  

Continue reading at:  SmallGovCon

SBA and Atlanta MBDA to host 8(a) training event May 13th

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The SBA Georgia District Office and Atlanta MBDA Business and Advanced Manufacturing Centers will be jointly hosting a half-day event related to the SBA’s 8(a) Business Development Program.  The purpose of the event is to foster new 8(a) applicants and to provide instruction to current 8(a) participants on how to maximize the impact of their 8(a) program experience.  The event will also provide training on how 8(a) participants can prepare for transitioning out of the program successfully at the end of their program term.

Topics Include:

  • The Federal Contracting Market and the 8(a) Program
  • 8(a) Program Best Practices
  • 8(a) Program Eligibility and Application Process
  • Effective Marketing to Federal Agencies
  • Capacity Building Tools / Resources for Current 8(a) Participants

There is no fee to attend.  But seats are limited, so registration is required.

Date:  Monday, May 13, 2019

Time:  9:00 a.m. to 12:30 p.m. ET

Location:  Georgia Tech Research Institute Conference Center, 250 14th Street NW, Atlanta, GA 30318

Register here:  https://www.sba.gov/event/1640787

Bribery, fraud indictment issued for $15 million in set-asides for disabled-veteran and other small businesses

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Five men have been charged in a 71-count indictment with engaging in conspiracies to defraud several federal agencies by paying bribes and fraudulently obtaining at least $15 million in government contracts they were not entitled to though disabled-veteran set asides and other small business programs.

Indicted are: James A. Clark of Chipley, Florida, who owned several businesses, including Enola Contracting Services, Inc.; Eric L. Hogan of Bonaire, Georgia, who owned P&E Construction, LLC; Kenneth A. Latham of Albany, Georgia, who was employed by the U.S. Navy as a civilian engineering technician; James K. Alford, 55, of Bowling Green, Kentucky, who owned K&S Constructors, Inc., and Harvey Daniels, Jr. of Marianna, Florida, who owned HDJ Security, Inc.

The charges include conspiracy to commit honest services wire fraud, conspiracy to commit wire fraud, wire fraud, conspiracy to submit false claims, false claims and major fraud.

Construction projects detailed in the indictment include contracts at the Marine Corps Logistics Base in Albany, Georgia, the VA Medical Center in Louisville, Kentucky, and the NASA Plum Brook Station near Sandusky, Ohio.

According to the indictment:

  • Federal departments and agencies, as directed by Congress, work with the Small Business Administration to award portions of contracts to small businesses, with specific goals for small disadvantaged business, including service-disabled veteran-owned small businesses.
  • Businesses must register and meet a number of criteria to be classified as small disadvantaged business – also known as the 8(a) program – such as being at least 51 percent owned and controlled by socially and economically disadvantaged individuals. Businesses must also meet a number of criteria to be classified as a service-disabled veteran-owned small business, such as being at least 51 percent owned by a veteran with a service-connected disability who controls the management and daily operations of the company. Service-disabled veteran-owned small businesses are permitted to enter into joint ventures with other companies but must meet specific requirements to do so.
  • The defendants and others engaged in several criminal schemes designed to deprive the government of its right to honest services of its employees through bribes and kickbacks, and to submit false claims and defraud the United States by obtaining government contracts set aside for qualified companies to which they were otherwise ineligible to obtain by fraudulently using proxy and pass-through companies.
  • P&E, through Hogan and Clark, made false statements, misrepresentations and omissions of facts. Hogan on several occasions certified P&E was a service-disabled veteran-owned small business. It also registered as a joint venture with Enola, with Hogan listed as president and Clark as vice president of the joint venture. HDJ Security was enrolled in the 8(a) program. Daniels self-identified as the president of HDJ, the sole owner of the company and to be socially disadvantaged.

In one scheme, Latham accepted a series of bribes and kickbacks from Hogan and Clark – including cash, meals, a hunting trip,  a fence, and an all-terrain vehicle – in return for Latham using his official position with the Navy to benefit Hogan, Clark and their businesses. These benefits included assistance in finding and securing government contracts, approval of invoices for payments to pass-through companies used by Hogan and Clark to obtain set-aside contracts for which their companies were not otherwise eligible, and concealing Clark and Hogan’s use of pass-through companies to obtain bonding.

Another scheme involved defrauding the VA and the TK by fraudulently representing that P&E and Hogan independently qualified for the service-disabled veteran-owned small business program despite Clark’s involvement in providing bonding for and equity ownership in P&E.

Clark, Hogan, Alford, Daniels and others defrauded the government by using purported service-disabled veteran-owned small businesses and 8(a) businesses as proxies to bid on and obtain set-aside contracts.

Arrow Construction, which was registered in the 8(a) program, was awarded a $2.8 million contract for work at the Marine Corps Logistics Base in Albany, Georgia, in September 2011. Clark and Arrow officials Kent Reynolds and Jennifer Dillard agreed that about 90 percent of the value of the contract was passed through to Clark and Enola, in violation of the 8(a) program.

HDJ was awarded a contract for work at the Marine Corps Logistics Base in Albany, Georgia, in September 2012. HDJ was paid approximately $2.6 million. Clark, Hogan and Daniels agreed to pass through approximately 95 percent of the value of the contract to Clark, Hogan, Enola and P&E, in violation of the terms of the 8(a) program.

The VA in June 2011 awarded a contract to P&E Construction for work at the VA Medical Center in Louisville, Kentucky. The VA paid P&E approximately $4.5 million that the company would not have received if the VA knew P&E was acting as a pass-through for K&S and that it was back-bonded by Clark and Enola.

P&E submitted a winning bid in February 2013 for a contract for construction services at the NASA Plum Brook Station near Sandusky, Ohio. NASA paid P&E approximately $5.6 million that the company would not have received if NASA knew it was acting as a pass-through for K&S and that P&E was back-bonded by Clark and Enola.

If convicted, the defendants’ sentences will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation.  In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

This case was investigated by National Aeronautics and Space Administration’s Office of Inspector General, the Defense Criminal Investigative Service, Naval Criminal Investigative Service, Department of Veterans Affairs’ Office of Inspector General, Small Business Administration’s Office of Inspector General, the Defense Contract Audit Agency, and the Air Force Office of Special Investigations.

Readers are reminded that an indictment is only a charge and is not evidence of guilt.  A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

Small Business Mentor-Protege Program fuels cooperation

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Small businesses are underutilizing a mentor-protégé program that streamlines their access to the federal marketplace, say government officials. Known as the All Small Mentor-Protégé Program, or ASMPP, the effort provides small businesses with a new avenue into federal contracting.

Developed by the Small Business Administration (SBA), the ASMPP fits a niche and fills a need that had been a gap for some time, said Lori Gillen, ASMPP director at the SBA. Sandi Clifford, ASMPP deputy director, explained at an AFCEA Small Business Committee presentation that it was modeled and expands on the SBA’s 8(a) mentor-protégé program by opening doors for non-8(a) firms under the umbrella of a single governmentwide program for all small businesses. It does not involve the Defense Department, which has its own mentor-protégé program, nor the Federal Aviation Administration, as neither comes under the purview of the Small Business Act.

“It helps streamline access for small firms to get into the federal marketplace; it helps enhance business capabilities and growth potential through mentoring with large—or other small experienced—federal contractors; it helps increase the protégé firm’s wealth and create jobs through government contracts; and it also helps large mentor firms develop and increase their supply chain through building capable small business contractors,” Clifford declared.

Keep reading this article at: https://www.afcea.org/content/small-business-mentor-protege-program-fuels-cooperation

$3.6 million settlement resolves procurement fraud investigation involving 8(a) firm

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VMJ Construction, LLC (VMJ) and its owner, Colorado resident Michael T. Vigil, as well as Maryland-based Vigil Contracting, Inc. (Vigil Contracting) and its operations manager, John J. Vigil, have agreed to pay the United States $3.6 million to resolve allegations that they defrauded the Small Business Administration (SBA) 8(a) Business Development Program.

The SBA’s 8(a) Business Development Program for economically and socially disadvantaged small businesses serves dual roles.

  • First, the program helps socially and economically disadvantaged small business owners gain access to valuable federal contracts, thereby promoting economic and social mobility.
  • Second, the program saves taxpayers money by spurring a competitive marketplace.  By promoting the development of small businesses, the 8(a) Program helps prevent the formation of monopolies that would stifle innovation and restrict consumers’ ability to negotiate lower prices.

It is important that the 8(a) Program is reserved only for companies that actually meet the program’s criteria because misuse of the program deprives legitimate 8(a) Program participants of valuable economic opportunities and undermines the integrity of the program.

There are several rules that businesses in the 8(a) program must abide by.

  • The socially and economically disadvantaged owner of the business must manage the day-to-day operations of the company and have responsibility for the long-term decision-making for the company.
  • 8(a) Program applicants must also truthfully disclose any affiliation with other businesses so that SBA may accurately assess whether the applicant meets the definition of a small business, and whether the applicant shows potential for success and the ability to perform the requisite percentage of the contracts secured through the Program.
  • Businesses also cannot remain in the 8(a) Program indefinitely; after nine years, they graduate from the program and are no longer eligible to bid on 8(a) contracts.

VMJ was accepted into the 8(a) Program in 2011.  Michael T. Vigil, who is Hispanic, was the 91% owner of VMJ, and was the socially and economically disadvantaged individual upon which VMJ based its application to the 8(a) program.  John J. Vigil was a 9% owner of VMJ.  John J. Vigil was also the operations manager of Vigil Contracting.  Vigil Contracting is a 2011 graduate of the 8(a) Program.  Since 2011, Vigil Contracting has not been eligible to bid for contracts reserved for 8(a) program participants.

The United States contends that VMJ made false statements to the SBA regarding its eligibility to participate in the 8(a) program.  Specifically, VMJ relied almost exclusively upon Vigil Contracting to bid on and complete the work awarded to VMJ under the 8(a) program.  VMJ used Vigil Contracting’s bonding, office space, employees, contractors, software, computers, and vehicles.  Vigil Contracting employees and contractors, including John J. Vigil, made the high-level business decisions of VMJ and managed the day-to-day operations of VMJ.   Michael T. Vigil did not control VMJ, did not set the long-term policy, nor manage the day-to-day management of the business.  VMJ knowingly misrepresented these facts to SBA, in both VMJ’s initial application to participate in the 8(a) program and in an annual update to SBA.  As a result of the deception, the Army, the Navy, and the Department of Agriculture awarded VMJ several federal government contracts set aside for 8(a) program participants.

“The United States uses these set-aside contracts for a clear reason — to help small businesses owned by economically and socially disadvantaged individuals.  This program continues the promise of the American Dream by helping new small businesses get on their feet, and with more businesses on their feet, our markets are healthier and more competitive,” said U.S. Attorney Jason Dunn. “When companies lie about their eligibility to get these contracts, they prevent other deserving small businesses from getting the assistance that Congress intended.”

Source: https://www.justice.gov/usao-co/pr/36-million-settlement-resolves-procurement-fraud-investigation-against-colorado-and

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