ensure that the program is administered equally. Once certified and listed on a public online registry, a firm is eligible for a price adjustment of up to 10% for SDBs bidding as prime contractors in selected industries. In 1998, the federal government awarded $5.9 billion in contracts to SDBs, or about 3% of the total procurement budget of $200 billion.
“There was no clear definition of what an SDB was, so people said they were disadvantaged when they weren’t,” says B. J. Holland, president of BJ Concepts in Fairfax Station, Virginia, which provides business strategy and management consulting sources and is a private certifier. “Now you must fill out
several forms and provide certain corporate and personal documents. If you’re already an established small business, most things you already have in place. But if you’re a small business, it can be time-consuming.”
About 7,000 businesses have been certified out of 30,000 in the U.S. The deadline for certification for prime contractors to use the SBDs to receive credit toward their subcontracting goals was September 30.
“A lot of small businesses don’t understand the program. If they’re not in the 8(a) program, they don’t want to do the paperwork,” says Holland. “They don’t understand the positive aspect-prime contractors must comply and work with SDB firms or face the possibility of being pen
alized, and small businesses can take advantage of marketing to these primes.”
Some fear the program will make it easier for majority-owned firms to qualify as SDBs by lowering the standard of proof to a preponderance of evidence rather than clear and convincing evidence. Also, some worry that those who already opposed minority programs will shut them down altogether.
“I think the certification process is great because the SBA is able to eyeball and see who is truly disadvantaged, but I hope this will help minority companies and not hinder our growth,” says Gloria Smith, president of Smithlain Enterprises, a technical support services firm in Huntsville, Alabama. “There’s too much emphasis on third-party certifiers. Small businesses can do the paperwork themselves; I did it myself and worked with an SBA specialist.”
Another issue on the table involves the National Minority Supplier Development Council (NMSDC), a New York-based organization that matches more than 3,000 corporations nationally with certified minority suppliers. NMSDC’s businesses must be 51% minority owned, operated and controlled, but it’s considering an option for those privately held minority businesses that are interested in or capable of attracting venture capital from institutional investors. These firms would be able to own less that 51% of stock but management and control would still have to be in their hands. At press time, NMSDC was to vote in October to recommend creating the option for some minority businesses. NMSDC contends that the 51% requirement limits growth and capital opportunities for minority businesses.
Harriet Michel, president of NMSDC, says minority suppliers are most likely in need of venture and equity capital rather than debt financing to grow. This money can come from both nonminority and minority sources. She says the rule