Category Archives: Doing Business with the Federal Government

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8a Certification Advantages

8a certification is a valuable marketing vehicle for socially and economically disadvantaged small businesses to access the federal government marketplace. Initially, contracting under the 8a Program may seem more difficult than other methods. However, it is no more complicated than contracting under full and open competition through the sealed bid procurement process and it presents many advantages for both the government and the 8a contractor.

Advantages to the Government

A big advantage for government procurement personnel in selecting the 8a contracting method is that the agency does not have to solicit bids and may choose a specific 8a contractor to fulfill its requirements. For sole-source requirements under the competitive thresholds, the contracting agency can identify the 8a company to perform a contract by simply naming that company in an offering letter to the SBA. Of course this does not happen by itself. The 8a firm must actively self-market with the contracting agency or be introduced to the contractor through a referral. For competitive 8a requirements, the contracting agency does not have the same ability to choose a contractor, although the competition can be limited to eligible 8a companies within a certain geographic area or participation stage.

Another advantage for the government is that they can often get what they need faster by contracting though the 8a Program. This is because competitive requirements must be synopsized in FedBizOpps and the resulting solicitation must be open on the street for a minimum of 30 days. This process for full and open competition can take several months. 8a contracts have no synopsis requirements (except for competitive 8a contracts) and contracting agencies are not required to allow 8a firms 30 days to respond to the solicitation. Therefore 8a contracts can be finalized much faster.

Advantages to the 8a Contractor

The advantages to an 8a company are great. An 8a company can obtain federal contracts on a sole-source or limited competition basis much faster than in a full and open competition. For many small businesses, the costs of preparing proposals are very prohibitive. If the contract is a sole source, the 8a firm does not have to endure the costs associated with preparing a competitive proposal and participating in subsequent rounds of discussions with the contracting agency’s contracting officer.

Once the buying agencies are aware of the advantages of the 8a process and have a good experience with your 8a firm, they will most likely prefer to extend future contracts to you. The SBA plays a role in the beginning of the contracting process by verifying and approving the requirement for the 8a company. Once the requirement is in place, the 8a company and the federal agency deal directly with each other during negotiation of the contract and during performance of the contract.

Looking for help with Getting 8a Certified?

8a Application Accelerator

For our clients who are comfortable navigating the SBA 8a application process with a little less help than most, we have conceived an easy-to-use 8a Application Accelerator. As the nation’s #1 selling 8a application completion tool, we guarantee that no other program makes the process faster or easier. This interactive, web-based program takes you step-by-step through the creation and compilation of all the documentation necessary to submit your SBA 8a certification application. Moreover, the tool shows you how to organize your 8a application in the preferred SBA format. Every item and area within your 8a application will be identified and separated using our proven method, so your SBA reviewer can find, review and approve your SBA 8a application fast.

Other Services

For clients who are too busy running their businesses to complete the application themselves, we understand you don’t have time to look over the 8a checklist and that you would rather have a group of trusted 8a program experts more involved in your application. Cloveer offers other services including an 8a Application Review, and for those who would like their entire 8a application completed and approved in record time, a full 8a Application Completion Service.

No matter which option you choose, Cloveer guarantees that no other company will work harder or faster to assist you in getting your business SBA 8a certified. We have been assisting clients to obtain their 8a certification and maintain their 8a program eligibility for over 10 years. As such, we know the SBA 8a program regulatory requirements, 8a standard operating procedures and Office of Hearings and Appeal cases that affect the 8a program better than 99.9% of anyone else out there.

At Cloveer, we believe in treating you the way we want to be treated. We go the extra mile to make sure your experience with our company is outstanding. Contact us today to discover what Cloveer can do for you.

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8a Program Eligibility – The $250,000 Adjusted Net Worth Requirement

Among the many 8a business development program eligibility requirements, the applicant for 8a Certification must have a personal adjusted net worth of less than $250,000 at the time of 8a Application Submission.

What is the definition of Adjusted Net Worth?

The algorithm used to determine Adjusted Net Worth for 8a Certification purposes is:

Adjusted Net Worth = Assets – Liabilities – [Equity in primary residence + value of ownership interest in applicant business + value of any IRA/401(k) or other retirement account that is subject to a penalty for early withdrawal]

If  the applicant is married and the asset or liability is jointly held, you split the value 50/50. If the applicant is married and lives in a community property state, you split all assets and liabilities 50/50 unless you have a transmutation or pre/post nuptial agreement that states otherwise.

How can I determine my Adjusted Worth?

You can easily determine your Adjusted Net Worth by using our online calculator.

What is required to be submitted within the 8a Application to prove the applicant’s Adjusted Net Worth?

Each applicant, and their spouse, must submit a separate SBA Form 413, Personal Financial Statement. Along with the SBA Form 413 you must also submit statements for each asset or liability supporting the amounts reported. These statements cannot be any older than 30 days at the time of 8a Application submission.

Are there any ways to reduce an applicant’s Adjusted Net Worth below the $250,000 threshold?

For more information, contact us.

*Important* You cannot transfer an asset out of the applicant’s name within two years of the time your apply for 8a Certification for less than fair market value. Doing so will result in the full amount of the asset being re attributed back to the applicant.

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3 options to get your 8a application certified in the least amount of time possible

Option 1 – 8a Application Accelerator - $99.00

  • This interactive, web-based program is designed to guide you through the SBA 8a application process with ease.  The program takes you step-by-step through the creation and compilation of all the documentation necessary to submit your SBA 8a application. Moreover, it shows you how to organize your 8a application in the preferred SBA format.  As the nation’s #1 selling 8a application completion tool, we guarantee that no other program makes the process faster.

Option 2 – 8a Application Review  – $1,750.00

  • For those who wish to complete the application on their own, either using the 8a Application Accelerator or by other means, we offer an 8a Application Review service.  Here, one of our 8a program experts will review your entire application, checking it for missing documents and potential eligibility issues.  We will then advise you as to how best to modify your application to ensure it will be approved an SBA reviewer.

Option 3 – 8a Application Completion Service - $3,900.00

  • The majority of our clients however, prefer a little more of a hands-on approach.  They recognize the expertise we have accumulated in the over 12 years we’ve been assisting clients obtain 8a certification, and want us to put it to use for them.  If you opt for our 8a Application Completion Service, we will work one-on-one with you to ensure that your 8a Application is 100% complete and compliant so the SBA can review and accept it the first time.

With 12 years and over 1,600 successful applications under our belt, we can assure you that no matter which option you choose, Cloveer will work harder and faster to get your business SBA 8a certified.  Contact us today to discover what Cloveer can do for you.

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15 8(a) Application Killers

Spending the time upfront to ensure that your firm meets all of the eligibility requirements for 8(a) Certification can save you countless hours of frustration, the expense of putting the application together incorrectly and the difference between obtaining formal 8(a) Certification or not.

Below are just 15 of the 8(a) Application “Killers”. These will immediately tell you whether you have an issue that may prevent you from qualifying for 8(a) Certification.

1. The applicant (51% of more owner) must be a US Citizen when they apply.

2. The applicant must devote full time to the business concern that is applying for 8(a) Certification when they apply. This means the applicant must work at least 40 hours per week in the business concern without any outside employment.

3. The applicant must hold the highest management position within the business concern. Generally this is the CEO, President or Managing Member.

4. The applicant must be able to demonstrate that they are the highest compensated. Generally the SBA will deny your 8a application if you cannot demonstrate the applicant currently is the highest compensated or there is a very good reason why they have elected not to be.

5 The applicant must have an adjusted net worth of less than $250,000 at the time they apply. Adjusted net worth = Personal Assets – Personal liabilities – (Equity in primary residence + value of ownership interest in business concern + IRA/401(k) or Other Retirement Accounts subject to a penalty for early withdrawal). To determine if your adjusted net worth is lower than $250,000 use our adjusted net worth calculator.

6. The applicant’s AGI (Adjusted Gross Income) cannot be more than $250,000 averaged over the last three tax years.

7. The applicant must generally hold all licenses or professional certifications required to operate the business concern. If they do not, another equity owner cannot be the holder of the required licenses.

8. If the applicant has ownership in another business concern, other than the business concern that is applying for 8(a) Certification, the SBA may very well likely determine that you do not devote full time and therefore deny your 8(a) application. The only exception would be for ownership in an LLC for holding, managing and protecting real estate. There are ways to solve this issue and they vary depending on your unique condition.

9. The applicant cannot be on probation or parole. If the applicant has been arrested in the past it does not automatically deny them unless they were convicted of a specific crime. Having an arrest, regardless of how long ago, will severely delay the review of your 8a Application by atleast 90 days.

10. The business concern must have been in business for 2 full years with eavidence of reasonable revenues on its last two tax returns in the industry it is seeking 8(a) Certification for.  If it has not, you must seek a waiver and meet the 5 conditions set by the SBA to overcome this condition. Click here for detailed information on each of the 5 conditions.

11. The business concern and the applicant cannot have any delinquent tax filings or have any unpaid Federal, State or local obligations at the time of application. This condition can be overcome by filing the proper extension for delinquent taxes or by providing evidence of a current re-payment arrangement for unpaid Federal, State or local obligations.

12. The business concern must be at least 51% directly owned by the applicant and must be defined as a “Small Business” by the Federal Government. Your primary NAICS code, gross sales and sometimes the number of employees define your size standard that the SBA will base its determination on.. The business concern must also be a for-profit business and cannot be classified as a broker or be a subsidiary of another business concern.

13. The business concern’s current financial statements must exhibit positive net income, positive net equity and sufficient working capital at the time of 8(a) application submission.

14. The business concern must not earn more than 70% of its total revenue with one single client, within the last 12 months. This does not apply to a business concern if its direct billing client is a Federal or State Government.

15. The applicant or business concern cannot have previously participated as an 8(a) participant. The applicant cannot have any immediate family members who are current or previous participants in the 8(a) Program that are or were affiliated.

These are just 15 of the “Killers” that can potentially prevent your 8(a) Certification application from being successful. There are additional “Killers” and other areas that you should be concerned with prior to making the decision on whether you fully qualify for 8(a) Certification. If you have additional questions or would like to discuss your specific business situation, please call us at 813-333-5800 or visit www.cloveer.com.

Cloveer, Inc. pre-qualifies all of its full service clients prior to preparing their 8(a Certification Application. With over 1,600 successful clients to date. Read some of our testimonials.

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3 SBA HUBZone Application Killers

1. The firm’s Dun and Bradstreet (DUNS) profile does not show the correct company name or primary/physical office address.

Your firm’s Dun and Bradstreet profile must show the exact name of your company as it is shown on your Articles of Formation (Organization or Incorporation) documents. If you operate as a sole proprietor, your Dun and Bradstreet profile should show the full name of the individual and not a dba name (Doing Business Name) or fictitious business name used.

 Additionally, your Dun and Bradstreet profile must show the correct primary/physical office address that you defined within your HUBZone application.

2. Payroll reports provided do not contain all of required information. 

Your payroll report must show all employee names, number of hours worked for that pay period, the beginning and ending date of the pay period, wages, taxes and any adjustments.  

Any employee who has been defined as one the 35% required to meet the SBA regulations must have worked a minimum of 40 hours in the month of the payroll report provided to be considered as full-time and they must appear on the payroll report covering the application date.

3. Articles of Formation (Organization or Incorporation) filed with your Secretary of State show a principal office address at some place other than what you defined in your HUBZone Application paperwork.

If you have changed your principal office address after filing your original or amended formation documents you must ensure that all filed documentation with your Secretary of State shows the principal office address that you have defined within your HUBZone Application.

These are just 3 of many HUBZone Application killers that will get your application denied. A denial of your HUBZone Application results in a minimum of 90 days day’s until you can reapply again. Submitting incorrect or inconsistent information can cause your application to be severely delayed.

If you are looking for assistance in preparing a complete and compliant HUBZone Application so it is submitted correctly and results in a successful HUBZone Certification in 90 days or less, please call us at 813-333-5800 or visit http://www.cloveer.com/hubzone.html.

We have a 100% success rate for all HUBZone Applications prepared and submitted.

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Where to find information on 8(a), HUBZone and Women-Owned Small Business Contracts

The most comprehensive source for information on awarded 8(a), HUBZone and Women-Owned Small Business Contracts is the Federal Procurement Data System (FPDS).

The FPDS contains historical information on contracts whose estimated value is $3,000 or more.

To gain access to this system you must register. Registration is free.

The FPDS allows you to drill down deep within the data inputted into the system and can provide you valuable information to help in your Federal Marketing efforts.

For example, you can perform the following searches within the system.

1. How much did a specific federal agency spend in the most recently government fiscal year or past years using 8(a), HUBZone or Women-Owned Small Business as the set-aside method.
2. How many 8(a) actions or contracts were awarded within a specific agency. You can also drill down to a specific department, office or region within the agency.
3. Detailed information on the awarded contract such as:

  • The solicitation number
  • Date signed or completed
  • Type of contract
  • NAICS code
  • Product or Service Description
  • Place of Performance (City, State or Zip Code)
  • Competition Information (8(a), HUBZone, Women-Owned, etc.)
  • Name of Contractor

These are just a few of the parameters that you can search on within the FPDS. All of this information can give you a leg up on your competition by allowing you to narrow your marketing efforts to ferderal clients who have purchased your products and services.

Download a report (PDF) that shows the amount spent and the number of contracts awarded with each federal agency in FY 2011.

Here is a summary:
8(a):
Number of Contracts: 117,343
Total Dollars Spent: $16,633,899,024.15

Women-Owned:
Number of Contracts: 318,937
Total Dollars Spent: $16,839,376,300.17

HUBZone:
Number of Contracts: 91,717
Total Dollars Spent: $10,001,960,445.11

For more information on 8(a) Certification, HUBzone Certification or Women-Owned Small Business Certification please call us at 813-333-5800 or visit www.cloveer.com.

 

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The Number One 8(a) Application Killer

The 70% Rule

Is your business concern economically dependent on one commercial client for 70% or more of its revenue, earned within the last 12 months? If so, you will not be able to get 8(a) Certified until you can establish to the SBA that you are below this threshold. One caveat to this disqualifier is if your 70% client is the federal government.

The client is defined as your billable client and not the end client. In many circumstances you may be performing the work for a federal agency but are subcontracting through a prime therefore your billable client is defined as a commercial client. To assist in deteyming whether or not you are below or exceed the 70% threshold, download our MS Excel spreadsheet that will help in determining your percentages.

When you apply for the SBA 8(a) Program you must provide a detail listing of all contract revenue earned within the last two years. You must define the date of contract award, agency/client name, a brief description of the work performed and the total dollar value of the contract.

In addition, you must also provide copies of all key contracts and invoices to support the billing of the revenue earned.

To find out if you meet all of the SBA 8(a) Program eligibility requirements, please call us at 813-333-5800 or visit http://www.cloveer.com for a Free Consultation.

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2 ways to reduce your Adjusted Net Worth below $250,000.

Is your Adjusted Net Worth (Adjusted Net Worth = Personal Assets – Liabilities – [Equity in primary residence + ownership interest in business + IRA/Other Retirement Accounts subject to a penalty for early withdrawal] ) above the $250,000 SBA regulatory threshold limiting your participation in the SBA 8(a) Program?

Not sure what your true Adjusted Net Worth is? Use the Cloveer online adjusted net worth calculator to determine it.

If your Adjusted Net Worth is above the regulatory limit, here are 2(two) possible ways to reduce your Adjusted Net Worth without violating the SBA regulations.

1. Pay down your primary mortgage or HELOC (Home Equity Line of Credit) from your personal checking, savings, stocks or mutual funds. Since the value of your primary residence, mortgage and HELOC do not factor into determining your Adjusted Net Worth, paying down your primary mortgage or HELOC can help reduce your Adjusted Net Worth.

2. Invest funds from your checking, Savings, Stocks or Mutual Funds into the business. You may be allowed to infuse personal funds into the business if your firm meets certain requirements. To determine whether this will be allowable in your unique case, an RMA (Risk Management Association) analysis must be performed.

We can perform an RMA analysis to see whether or not the SBA would allow you to infuse personal funds into additional Paid-In Capital. This may help drive down your Adjusted Net Worth to below the regulatory limit of $250,000.00. The keyword is “Allow”. The SBA will allow you to infuse additional funds into the business concern if it is found to be economically disadvantaged, by SBA Standards, at the time of the infusion of Additional Paid in Capital. In order for the SBA to determine that the business concern is  found to be economically disadvantaged it utilizes data from the firm Risk Management Association (RMA) and its compiled figures/ratios to see if your firm exceeds 4 or more of the 7 figures/ratios to be discussed below. These figures/ratios compiled from RMA basically allow the SBA to compare your firm to other similar firms which are operating within the same NAICS code and also are within the same sales range (e.g. 0-1MM)  against the following 7 figures/ratios:

1. Total Assets

2. Current Ratio (Current Assets/Current Liabilities)

3. Debt/Net Worth Ratio

4. Net Worth

5. Net Sales

6. Pre-Tax Profit

7. Sales/Working Capital Ratio

For more ways to reduce your Adjusted Net Worth or if you have questions about the SBA 8(a) Program, please call us at 813-333-5800 or visit www.cloveer.com.

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What is the 8(m) WOSB and EDWOSB Program and its benefits

The Women-Owned Small Business Federal Contract Program provides equal access to federal contracting opportunities for women-owned small businesses (WOSB) and economically disadvantaged women-owned small businesses (EDWOSBs). The program allows contracting officers to set aside specific federal contracts for WOSBs and EDWOSBs.

There are over 300 6-digit North American Industry Classification Systems (NAICS) codes that are eligible for Federal contracting under the WOSB Program. Click here to download a a list.

Contracting officers may set aside a requirement for WOSBs if:

  • The NAICS code 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.
  • The anticipated award price of the contract does not exceed $6.5 million in the case of manufacturing contracts and $4 million in the case of all other contracts.
  • The contracting officer believes the contract can be awarded at a fair and reasonable price.

Contracting officers may set aside a requirement for EDWOSBs if:

  • The NAICS code is in an industry in which SBA has designated that EDWOSBs are underrepresented.
  • The contracting officer has a reasonable expectation that two or more EDWOSBs will submit offers.
  • The anticipated award price of the contract does not exceed $6.5 million in the case of manufacturing contracts and $4 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.

For more information on the SBA 8(m) WOSB and EDWOSB program or for assitance with your application, please visiti us at www.cloveer.com/wosb.html.

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How to Determine your Primary NAICS Code

What is a NAICS code?

A NAICS code is a series of numbers (up to six digits) that establishes a specific business activity by the Federal Government.

Your primary NAICS code is the six digit code that represents the largest segment of your business’s revenues earned within its most recently completed fiscal year.

How can I determine what my primary NAICS Code is?

You can use the search feature at www.census.gov/naics. Within the “2007 NAICS Search” box, enter a keyword that describes the services provided by your business. A list of primary business activities containing that keyword and the corresponding NAICS codes will appear. Choose the one that most closely corresponds to your primary business activity, or refine your search to obtain other choices.

The following are two examples:

1. If you are a business in which your largest segment of revenue earned in its most recently completed fiscal year was as a software developer, your primary six digit NAICS code would be 541511.

2. If you are a business in which your largest segment of revenue earned in its most recently completed fiscal year was in commercial construction, your primary six digit NAICS code would be 236220.

What is the purpose of establishing a primary NAICS within my 8(a) Application?

1. It represents to the SBA what your primary business activity is (e.g. what your business does). It is important to note, that your supporting documentation such as the copies of contracts/invoices showing the scope of work performed will backup your establishment of your primary NAICS code.

2. Once you establish your primary NAICS code, the SBA will review your last two years of contracts and taxes to determine if you have earned the largest
segment of your revenues within this NAICS code and if the revenues are deemed to be sufficient to meet the two years in business requirement. If you have not earned the largest segment of revenues within your primary NAICS code for two consecutive years, you will not meet the potential for success criteria established by the SBA unless you seek a two year waiver.

3. Finally, it establishes your SBA size standard limit. You must be classified as a small business concern to participate within the 8(a) Program. You can view more information on size standards at www.sba.gov/content/guide-size-standards

Can you have more than one primary NAICS code?

No. You can only have one primary NAICS code. However, you can multiple secondary NAICS codes listed within your CCR (Central Contractor Registration) or DSBS (Dynamic Small Business Search) profile.

For more information on the SBA 8(a) Program, visit cloveer.com