Changes are in store for the 8(a) program.
By Cynthia E. Griffin
If changes proposed by the Small Business Administration (SBA) go into effect this month, an estimated 3,000 more small-business owners could be eligible to participate in the SBA's 8(a) Business Development contracting program.
Suggested modifications--which should be finalized by month-end--would lighten restrictions for entrepreneurs who are not American Indian, black, Asian-American or Latino and are trying to prove they are socially and economically disadvantaged, says the SBA's Calvin Jenkins. "[Currently], people who are not members of these groups can possibly get into the 8(a) program if they prove clearly and convincingly they are socially and economically disadvantaged," says Jenkins. "The new proposal lowers the standards to a preponderance of evidence." Among the groups expected to benefit are white women and the disabled.
Some worry that qualifying more people will shut some minorities out or encourage fraud. Fernando Galaviz, vice chairman of the Federation of 8(a) Companies trade association, doesn't totally share those concerns. "Just because you're a white woman doesn't mean you'll be a better manager than a person of color," he says. "[Minority businesspeople] shouldn't be concerned about their ability to succeed."
In addition to the proposed changes, the SBA and Congress are addressing the issue of more 8(a) businesses vying for the same dollars. The SBA is seeking an executive order from President Clinton that would require all federal agencies to increase the percentage of business directed to small businesses from 20 percent to 25 percent. Several Congress members have also proposed increasing the goal, Jenkins adds.
Among other key 8(a) changes being discussed are: establishing a mentor-protégé program to encourage private-sector relationships; changing affiliation rules to enable entrepreneurial firms that create joint ventures to take advantage of small-business benefits; capping the amount of sole-source (non-competitive) 8(a) contracting going to any one firm at five times the company's annual revenue or $100 million, whichever is less, over a nine-year span; allowing the SBA to delegate elements of its 8(a) contracting authority to other federal agencies to expedite procurement procedures; accepting applications from franchise operators; and giving Alaska-native corporations and American-Indian tribes more flexibility when hiring company management. For details on the proposed changes, contact the SBA at (800) 8-ASK-SBA.