SBA Checklist: Government Contracting -- Where do I start?

The Small Business Alliance(SBA) has provided the following checklist to help you prepare to bid on private and government procurement opportunities:

• Get a computer and get on the Internet! Even if you don’t have your own website, you must at least have an e-mail address to conduct business with the government.
• Find your DUNS (Data Universal Numbering System) number. Get this number by calling Dun & Bradstreet at 866-705-5711 or visit their website at http://fedgov.dnb.com/webform/displayHomePage.do. This free of charge and the process only takes a few minutes.
• Find your NAICS(North American Industry Classification System) code. The code describes what your business does. Go to http://www.census.gov/eos/www/naics/ to determine your NAICS code. Be sure to keep these codes handy, as you may need them when filling out government registrations or searching for bids.
• Register your business with the System for Award Management (SAM, formerly Central Contracts Registration). Their website is www.sam.gov. Companies who want to do business with the Federal Government are required to be registered in SAM.
• After signing up for SAM, be sure to complete your ORCA (Online Representations and Certification application) at https://orca.bpn.gov. This registration allows you to enter your reps and certs information for use on all future government contracts.
• After signing up for SAM, be sure to fill out the additional information to register in the Dynamic Small Business Search at the SBA website http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm. This database can be used by government contractors and prime contractors when they are looking for vendors.
• Be sure to keep track of your CAGE code. If you don’t have a CAGE code, you will get one when you sign up for SAM. The Federal Government may use this code when it pays you for goods and services.
• Find your local Procurement Technical Assistance Centers (PTAC) by visiting the website at http://www.dla.mil/HQ/SmallBusiness/PTAC.aspx. PTACs provide local, in-person counseling, and training services for small business owners. They are designed to provide technical assistance to businesses that want to sell products and services to federal, state, and/or local governments. PTAC services are available either free of charge, or at a nominal cost. PTACs are part of the Procurement Technical Assistance Program, which is administered by the Defense Logistics Agency. PTACs also assists with registrations, answer questions and offer workshops.
• Minority and women-owned business should apply for certification through their State Offices of Minority and Women’s Business Enterprise (OMWBE). See a list of SBA state resources at https://www.sba.gov/about-sba/sba-locations/headquarters-offices. OMWBE certification helps you get contracts with state and local agencies and schools. Their special loan program also has discounted interest rates.
• Your company may qualify for SBA procurement certifications such as HubZone or 8(a). The SBA Learning Center has many assessment tools and learning modules for small business that may meet special procurement certification requirements. For example, take a look at the Pre-8(a) Business Development Program Module 1 - Setting Expectations (https://www.sba.gov/tools/sba-learning-center/training/pre-8a-business-development-program-training-series)
• In addition, most Federal agencies have government contracting specialists. Go to the Department of Commerce’s Office of Small and Disadvantaged Business Utilization (OSDBU) (http://www.osdbu.gov) to find agency reps who work with small businesses.
• Visit the FedBizOpps website at https://www.fbo.gov You can also register as a vendor and have bids e-mailed to you.
• Visit General Services Administration at www.gsa.gov. Check out GSA schedules and see the variety of goods and services listed. Consider applying for a GSA contract (called a “schedule”), which allows government buyers to purchase from you at a prearranged price.
• Don’t forget about your local government agencies and entities. Check with your local cities, ports, school districts, counties, and other local agencies for information on their purchasing practices, small works rosters, vendors’ lists, etc.

Tips to Remember

• Print out online applications and fill them out on paper before doing them online.
• Always keep copies of applications you have done online and/or mailed and faxed in. And be sure you write down the dates you submitted the applications on the copies.
• Always write down and keep any passwords, registration numbers, MPINS, or TPINS. These can be very hard to replace if you lose them!
• Don’t hesitate to call the help lines on websites if you have questions. Once again, keep track of who and when you called.
• If you call a help line and aren’t satisfied with the person you are talking to, document the call, hang up, call back and talk to someone else.
• Keep documentation of everything! You may need it in the future.

Excerpts from 2011 Seattle, WA SBA Small Business Resource Guide

www.sba.gov/wa

https://www.sba.gov/sites/default/files/articles/2011SBASeattleDO_ResourceGuide_June.pdf

Did You Know the Federal Government Has Prime Contract Goals that Help Small Businesses?

The Federal government has specified annual prime contracting goals for designated small businesses. The current, government-wide procurement goal stipulates that at least 23% of all federal government contracting dollars should be awarded to small businesses. In addition, targeted sub-goals are established for the following small business categories:

• Women Owned Small Business – 5%
• Small Disadvantaged Business – 5%
• Service-Disabled Veteran Owned Small Business – 3%
• HUBZone – 3%

What Are Set-asides?

Small business set-asides are a powerful tool for helping small firms win federal prime contracts. 

Federal contract information for total small business set-asides states that purchases “shall be set-aside for small business unless the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality, and delivery”. This is done for contracts worth over $3,000 but under $150,000 which are automatically reserved exclusively for Small Businesses. A contract over $150,000 can also be won by a small business but those contract opportunities are no longer exclusive to small businesses.

Given certain conditions, Federal Contracting officers may set-aside solicitations to allow only Women Owned Small Business (WOSB) Programs and/or Economically Disadvantaged Women Owned Small Businesses (EDWOSB) to compete.

A contracting officer may set-aside a requirement for WOSBs if:

• The North American Industry Classification Systems (NAICS) code assigned to the solicitation, invitation for bid, or quote is in an industry in which SBA has designated that WOSBs are substantially underrepresented.
• The contracting officer has a reasonable expectation that two or more WOSBs will submit offers. This is sometimes referred to as the “rule of two”.
• The anticipated award price of the contract does not exceed $5 million in the case of manufacturing contracts and $3 million in the case of all other contracts.
• In the estimation of the contracting officer, the contract can be awarded at a fair and reasonable price.

A contracting officer may set-aside a requirement for EDWOSBs if:

• The NAICS code assigned to the solicitation, invitation for bid, or quote is in an industry in which the SBA has designated that WOSBs are underrepresented.
• The contracting officer has a reasonable expectation that two or more EDWOSBs will submit offers. This is sometimes referred to as the “rule of two”.
• The anticipated award price of the contract does not exceed $5 million in the case of manufacturing contracts and $3 million in the case of all other contracts.
• In the estimation of the contracting officer, the contract can be awarded at a fair and reasonable price.

Set-Aside and Sole Source Programs

Government contracts can also be set-aside for small businesses in the following certification programs and socio-economic categories:

• 8(a) Business Development
• HUBZone Program
• Women Owned Small Business (WOSB) Program (includes Economically Disadvantaged Women Owned Small Business (EDWOSB) concerns)
• Service-Disabled Veteran Owned Program (SDVO)

Reference: A Small Business Resource Guide

(https://www.sba.gov/sites/default/files/articles/2011SBASeattleDO_ResourceGuide_June.pdf)

MySetAside (MSA) will guide you through the small business government contracting process and help you connect with federal and state authorities that offer opportunities that are specifically targeted for Small Businesses. MSA databases offer opportunities from well-known resources such as www.grants.gov and www.fbo.gov, in addition to other valuable resources such as the System for Award Management (SAM) and the General Services Administration (GSA).

Federal business opportunities for contractors are listed at www.fbo.gov. Federal agencies are required to use this site to communicate available procurement opportunities and their vendor requirements to the public and interested potential vendors for all contracts valued over $25,000.

The Grants.gov system houses information on over 1,000 grant programs and veterans grant applications for federal grant-making agencies, awarding a total of more than $500 billion annually.

For more information see: Government Contracting 101, Part 1 – Overview of Small Business Programs

https://www.sba.gov/sites/default/files/gc101-1_workbook.pdf

According to SBA, small is the equivalent to 500 employees or $7.5 million in annual average receipts (with exceptions).

What are SBA Size Standards?

The SBA establishes small business size standards on an industry-by-industry basis. It uses the North American Industry Classification System (NAICS) codes to identify the various industries. NAICS classifies all economic activities into 20 sectors.

(NAICS codes are available at https://www.census.gov/eos/www/naics/).

SBA has established two widely used size standards –500 employees for most manufacturing and mining industries, and $7.5 million in average annual receipts for many nonmanufacturing industries.

Five hundred employees (500) is the most prevalent size standard for many popular industries such as:

• Manufacturing; mining industries; hydro-electric power generation; natural gas distribution; wholesalers or distributors; water transportation; publishing industries (excepting software and internet publishers); research and development in bio-technology; physical, life sciences; environmental remediation services; dental offices; health practitioners; etc.

Almost all of these industries have 500 employees.

The average annual receipts for service industries and other non-manufacturing industries is $7.5 million, including;

• Agriculture industries, retail trade industries, office of real estate agents and brokers, activities related to real estate, architectural services, specialized design services, education, arts, entertainment and recreation, accommodation and food services which all have an average of $7.5 million in gross annual receipts over the last three fiscal years.

These all must have an average of $7.5 million in gross annual receipts over the last three fiscal years.

Reference:  https://www.gpo.gov/fdsys/pkg/CFR-2015-title13-vol1/pdf/CFR-2015-title13-vol1-sec121-104.pdf

Businesses Can Grow from Small to Medium Before Losing Benefits

For most industries, a company that does not exceed these size standards is considered “small.” While a business with 500 employees or $7.5 million in average annual receipts may not seem small, the purpose of setting the size standard at these levels is to allow small businesses to grow into thriving “medium” businesses before losing the benefits of their small business size status. However, the usual 500 employees/$7.5 million size standards do not apply to all industries. The SBA has set these size standards after determining the average size of the firms in each industry and the amount of competition within each industry.

The contracting officer selects the appropriate NAICS code and size standard for the supply or service he or she intends to purchase, and he or she may include this information in FAR 52.204-8, Annual Representations and Certifications.

The contracting officer’s selection can determine whether a company is allowed to participate in a small business set-aside. The contracting officer’s decision will determine whether companies with between 500 and 750 employees will be able to participate in the set-aside.

Non-Manufacturer Rule

Simply put, the Non-Manufacturer Rule allows a small business to offer a product that it did not manufacture under a small business set-aside if SBA has offered a waiver.

The non-manufacturer rule is an exception to the requirement that small business contractors supplying goods to the government on set-aside contracts must perform at least 50 percent of the cost of manufacturing the items. The rule allows a small business contractor to supply products it did not manufacture so long as the products come from another small business.

Under statutory authority, the SBA may grant a waiver to this rule and allow a large business to perform more than 50 percent of the cost of performing manufacturing contracts if it finds no small business exists in a particular industry.

Qualifying as A Non-Manufacturer

In order to qualify as a non-manufacturer, a small business must have less than 500 employees, be primarily engaged in the retail or wholesaletrade, normally sell the type of item being supplied, and supply the end item of a small business manufacturer, processor, or producer made in the U.S.

In 2011, the SBA updated its regulation to include an additional requirement to be a non-manufacturer:

• The small business must take ownership or possession of the item(s) with its personnel, equipment, or facilities in a manner consistent with industry practice.

This update to the requirements was intended to eliminate confusion at procuring agencies and prevent practices contrary to the intent of the Small Business Act. More specifically, the change seeks to eliminate situations where the SBA has waived the non-manufacturer rule and the prime contractor essentially subcontracts all services, such as warehousing or delivery, to a large business without taking possession of the products. Additionally, the non-manufacturer rule applies only to procurements that have been assigned a manufacturing or supply North American Industry Classification System (NAICS) code—NAICS Sectors 31-33.

Individual Waivers

Individual waivers are issued when there is justification that no small business manufacturer exists that can meet the requirements on a specific solicitation. This type of waiver is solicitation-specific and applies only to the primary contract.

The SBA will consider granting an individual waiver after reviewing a Contracting Officer’s small business determination, including conducting market research. This determination states that no small business manufacturer or processor can reasonably be expected to offer a product meeting the specifications, including period of performance, required of an offeror or by the solicitation. An individual waiver is applied narrowly to a select contract line item or items for a specific solicitation. The waiver must be in place prior to the receipt of offers in order for a non-manufacturer to qualify as a small business for set-aside purposes. Only Contracting Officers can request an individual waiver for a specific solicitation.

Non-Manufacturer Rule Waiver

If the SBA finds that no small business manufacturers exist in a particular industry, it may issue a waiver to the non-manufacturer rule. The waiver permits a small business to provide the product of any domestic firm, regardless of size. There are two types of waivers to the non-manufacturer rule: (1) an individual contract waiver, and (2) a class of products waiver. 

The SBA Office of Government Contracting provides primary oversight of non-manufacturer rule waivers. This office reviews and grants, if applicable, individual waivers and it maintains the Class Waiver List.

Important Clarifications about the Individual Waiver to the Non-Manufacturer Rule:

• Waivers do not apply to service contracts.
• Waivers do not apply to small business HUBZone procurements.
• Waivers cannot be granted after bids on a solicitation have been received.
• Waivers only apply to supply contracts over $25,000.
• For contracts below $25,000, if two or more small business manufacturers cannot be identified, a small business non-manufacturer (including a Historically Underutilized Business Zone (HUBZone) manufacturer) can supply the product of any domestic business (large or small).
• Proper NAICS and size standards must be designated for each waiver requested — which includes selecting the NAICS code which best describes the principal purpose of the product being acquired. 
• The Contracting Officer cannot assign a wholesale or retail trade NAICS to a procurement for supplies.
• The waiver does not exclude the requirements of the Buy American Act, status requirements, or other issues related to bidding on Federal procurement opportunities.

Source: U.S. Small Business Administration, Office of Inspector General (Report Number 14, August 2014)

Class Waivers

A class waiver is issued only when no small business manufacturer exists within a specific industry. Once approved and added to the Class Waiver List, such a waiver is applied to all set-aside solicitations, except for HUBZone set-asides, and is used in combination with a Product Service Code number. A class waiver also applies to all items in a class of products, which is defined as a subcategory within a six-digit NAICS code. 

New Online Reps and Certs Process

In 2012, the paper based Annual Representations and Certifications was replaced by an automated system designed by the Integrated Acquisition Environment (IAE). The e-government initiative Online Representations and Certifications Application(ORCA) replaced the paper-based Representations and Certifications process. These Representations and Certifications (colloquially referred to as Reps and Certs) included a contractor’s information, which the government stored and made available to purchasing officers and government buyers. Completing this information at the outset eliminated the need for a contractor to submit this same information each time he or she bid on an opportunity. Before ORCA, contractors had to do just that – submit the same information each time he or she bid on an opportunity.

ORCA was folded into the government’s System for Award Management (SAM) Registration database in 2012. Contractors complete their Reps and Certs when they complete their SAM Registration. The government then validates this information.

Contractors include in their Reps and Certs information about their business (including its size, corporate structure, personnel, annual revenue, products, services, etc.), and each year must review this information and make sure that nothing has changed. If contractors do not update their Reps and Certs when information changes, the government will not award them a contract.

Contractors are also responsible for updating their Reps and Certs when the government changes a requirement. In 2016, the government changed more than 100 requirements, and contractors were required to review their Reps and Certs and make sure their information complied with these changes.

Along with Reps and Certs and an active, valid, and complete SAM Registration, contractors also must have on file with the government a Marketing Partner Identification Number (MPIN) and a DUNS number.

A private company, US Federal Contractor Registration (USFCR), maintains Reps and Certs for their clients. Each time the government makes a change, USFCR reviews client information and updates it when and as necessary. USFCR also reviews this information each year for clients when their SAM Registration is up for renewal.

Note: The US Federal Contractor Registration is a third-party registration firm who charges to complete a full-service System for Award Management (SAM) Registration. Their service includes a dedicated case manager to physically process the SAM paperwork on a client’s behalf. The Government offers free registration forms at SAM.gov, but SAM will not physically process the forms for a client. (See website for more information: https://uscontractorregistration.com/.)

Sign-up now and start getting small business set-aside contracts and other insider information about government contracting. Contact MySetAside at info@mysetaside.com or 703-831-0705 if you need assistance or more information.

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