Set-Aside Alert exclusive research:

SBA’s 8(a) business development: mixed reviews in exclusive survey

Sole-source contracts and set-asides cited as major benefits

Nearly half of 8(a) business owners recently have won 8(a) federal contracts, while the other half were not as successful.

That is just one of the findings of Set-Aside Alert’s exclusive survey of 214 participants in the Small Business Administration’s 8(a) Business Development Program.

See the full Set-Aside Alert 8(a) survey results HERE

While 48% of the 8(a) company executives surveyed reported winning at least one 8(a) federal contract in calendar 2015, the other 51% said they won no 8(a) federal contracts last year.

There were mixed assessments of the 8(a) program as a whole.

“Too many unnecessary hurdles,” wrote a respondent.

“I am not there yet - I need help!” wrote another.

“If (you) have the right connections, 8(a) is a valuable tool,” was another view.

Overall, 53% of the survey participants said they would recommend the 8(a) program to others, while 7% said they would not recommend it, and 36% said “it depends.”

The greatest benefits of the 8(a) program cited by participants included access to sole-source contracts, set-asides and teaming opportunities.

The most difficult obstacles cited by the most participants included identifying and targeting contract opportunities and developing a winning bid package.

The Set-Aside Alert survey

Set-Aside Alert offered the confidential survey online to 8(a) business owners last month, and 214 people filled out our questionaire.

The goal was to obtain insight into the benefits and shortcomings of the 8(a) program, which was authorized by the Small Business Act of 1968 and later amendments.

The 8(a) program is targeted to small and disadvantaged businesses, many of which are owned by minorities. It offers access to federal set-asides and sole-source awards, as well as a mentor-protege program, training, counseling and financing. Participants must graduate after nine years.

8(a) benefits

Set-Aside Alert offered respondents an opportunity to rank the advantages of the 8(a) program.

The highest-ranked benefit selected by the 8(a) respondents was “access to 8(a) sole-source contracts.”

Here is the full ranking of the Top 10 8(a) benefits, based on survey responses, and their weighted average scores on a scale of 1 to 10 (1 being the greatest benefit):

1. Access to 8(a) sole-source contracts, score 3.2
2. Access to 8(a) set-asides, score 3.3;
3. Access to teaming opportunities, score 5.0;
4. Access to subcontracting opportunities, score 5.4;
5. Networking connections with government agencies, score 5.8;
6. Assistance, advice and training from the SBA, score 5.9;
7. Access to the 8(a) Mentor-Protege program, score 6.1;
8. Networking connections with prime contractors, score 6.6;
9. Networking connections with other small businesses, score 6.7
10. Access to Financing, score 7.1;

8(a) obstacles

Set-Aside Alert also asked the 8(a) respondents to rank the most difficult obstacles they have experienced in the 8(a) program.

Here is the full ranking, from most difficult to least difficult, with their weighted average scores from 1 to 10 (1 being the most difficult):

1. Identifying and targeting contract opportunities, score 4.3.
2. Developing a winning bid package, score 4.7;
3. Lack of 8(a)-specific opportunities to bid on, score 4.7;
4. Lack of support from agencies, mentors, primes or teaming partners, score 5.2;
5. Limited assistance, advice and training from the SBA, score 5.5;
6. Understanding federal bidding processes and procedures, score 5.6;
7. Understanding federal contract requirements and terms, score 5.6;
8. Security clearances or access to facilities, score 6.1;
9. Lack of access to capital or lines of credit to fund payroll/materials, score 6.3;
10. Complex invoicing requirements and/or slow pay on receivables, score 7.1;

Other findings

Of the respondents, 49% said they received half or more of their revenue in calendar 2015 from federal prime contracts.

That broke down into these categories: 12% who said about half; 20% who said three-quarters; and 17% who said all of their revenue was from federal contracts last year.

In addition, 34% said none of their revenue came from federal contracts last year.

A large percentage of the respondents, 42%, are new, having seven to nine years until graduation; 27% have four to six years until graduation, and 18% have one to three years until graduation.

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