Is 8(A) Doing The Two-Step?

Proposed changes to the SBA program would expand to include white business owners

The Small Business Administration recently announced proposed changes to the 8(a) minority procurement program designed to level the playing field in securing federal contracts. Yet, one of the proposals has many minority contractors crying foul.

The proposed new rule would allow non-minority 8(a) applicants to meet a lesser standard to establish social disadvantage. “Clear and convincing” evidence would be replaced by a “preponderance” of evidence. While the change in wording might seem insignificant to some, others see it as opening the floodgates for non-minority firms seeking 8(a) business.

“This change would conform SBA’s rules and procedures to the Department of Justice’s post-Adarand guidelines,” explains the SBA’s Darryl Dennis, counselor to the administrators. According to government statistics, of the 6,000 firms enrolled in the program, only nine are currently owned by white women. With the change, it’s widely believed — and feared in some circles — this will encourage Caucasian women to compete much more aggressively for 8(a) contracts.

“We are very bothered by that,” says Sam Carradine, executive director of the National Association of Minority Contractors. “Unless there’s a significant increase in the pie, some of the work that would have gone to minority contractors will now go to female white contractors.”

William W. Davis Sr., CEO of Pulsar Data Systems (No. 4 on the BE INDUSTRIAL/SERVICE 100 list) agrees. “My gut feeling is that there will be some negative impact because the rules will create more competition for companies that have been struggling all along to find business.”

Other SBA changes include a proposed rule limiting the amount of non- competition, or sole-source, contracts a firm can receive. That limit is triggered when a company exceeds its primary standard industrialization code, which is based on either revenue or size. However, it would not apply to contracts under $100,000 or to 8(a) firms that were certified before January 1, 1997.
Dennis says this will help firms still eligible for competition and small business set-asides to get accustomed to competing. “If all your 8(a) contracts are sole-source, it’s possible at graduation you won’t have developed skills to compete for and capture business,” he warns.

A proposed mentor-protege program that requires a one-year commitment will enable 8(a) participants to tap into the expertise and capital of 8(a) graduates and companies that have successfully advanced in the program. Although major corporations often mentor smaller firms, the new rule is based on recommendations from 8(a) graduates who felt emerging firms would benefit more from the critical lessons they learned as 8(a) participants.

Increasingly, federal agencies have begun to bundle, or aggregate, a number of small contracts into single, large awards of $10 million or more. Not only have 8(a) and other firms too small to compete lost out on those opportunities, but also they cannot re-compete for their own expired contracts that will be bundled. Another proposed regulation would give these businesses more leeway to form joint ventures so they can compete for larger contracts.

Carradine applauds the SBA’s efforts but says, “They will not lessen the impact minority contractors will feel with white

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