Federal Small Business Certification
Before you can begin business with the government, your business must obtain the proper certifications. Small business certifications are like professional certifications, they document a special capability or status that will help you compete in the marketplace. Unlike permits and licenses, you do not need to obtain certifications to legally operate. However, in order to take advantage of business opportunities, such as government contracts, you may need to obtain some certifications.
Federal, state and local governments offer business opportunities to sell billions of dollars with of products and services. Many government agencies require that some percentage of the procurements be set aside for small businesses. Having your business certified can definitely aid in you successfully competing for government contracts.
Benefits of a Small Business Certification:
- The ability to bid on small business set-aside solicitations
- 23% of all federal contracts are mandated to be awarded to small businesses
- It puts you in the running for “no-bid” contracts valued under $25,000
As part of the registration process, you will be required to enter information about your company in the System for Award Management (SAM) database. In SAM, you may self-certify yourself as a small business, but you must meet the federal governments definition of a small business
The U.S. Small Business Administration defines a “small business” in terms of the number of employees over the past year or average annual receipts over the past three years. Size standards vary by industry
- Must be considered a small business by SBA standards
- Must have listed the proper NAICS codes in SAM Registration
- Must not surpass average annual revenue based on NAICS codes
- Must not surpass number of employees based on NAICS codes
USEFUL FACTS ABOUT SMALL BUSINESSES & GOVERNMENT CONTRACTING:
- 23% of Federal Contracting Dollars are Set-Aside for Small Businesses
- Federal Contracts $150,000 and under are commonly called “Small Business Set-Asides” (70% awarded via Simplified Acquisitions)
- Only 30% of these Small Business Contracts are found and won on Federal Contract Boards (70% directly awarded to Small Businesses)
- Contracts below $25,000 are not mandated to be publicly posted, commonly called “No-Bid Contracts”
The Federal Government has mandated that 23% of all Federal Contracts must be awarded to a Certified Small Business (Small Business Certification). Most people do not know that Federal Contracts under $150,000 are Set-Aside for Certified Small Businesses and Federal Contracts below $25,000 are not posted to the public (so how do you win these?). State level governments and large distributors/retailers follow similar rules in some categories (each state differs). Contracting Officers have annual quotas they must meet for specific Set-Aside categories including:
- Small Business Simplified Acquisition Procedures — “No-Bid” Contracts below $150,000
- Small Business Certification
- Woman Owned Small Business
- Economically Disadvantaged Woman Owned Small Business
- Veteran Owned Small Business
- Service Disabled Veteran Owned Small Business
- HUBZone Certification (Historically Underutilized Business Zone)
- 8(a) Program (Minority Owned Small Business)
Small businesses need to have an Official Certification from the proper certifying agency for that category (multiple agencies involved). Then more importantly, once a business has obtained a Certification, it must be reflected accordingly so Contracting Officers are aware of it. Contracting Officers use multiple databases when searching for, verifying, paying and working with vendors. We are still in the growth and organizational phases of Government Procurement and the procedures used online. It is imperative for Certified businesses to have the correct registrations, certifications, detailed profiles in multiple databases, registered with specific agencies (industry dependent) and have consistent profiles overall that have the most up-to-date detailed information listed across all government procurement platforms.
Contracting Officers do proactively call Certified Small Businesses to directly award “No-Bid Contracts” which are Federal Contracts below $25,000 or Small Business Set-Asides under $150,000 via Simplified Acquisition Procedures (70% of Contracts below $150,000 are not publicly posted). These “No-Bid Contracts” are not mandated to be posted to the public nor do they have to obtain multiple bids or check Past Performance. Small Businesses employ 80% of the U.S. workforce and that is the reason Small Businesses are protected and have regulations in place to ensure they receive 23% of Federal Contracting Dollars. USBRI can help these Small Businesses to position themselves to be found for these Simplified Acquisition Contracts as well as locate and win contracts in all levels of the government.