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Government Contracting : Classifications :
Small Disadvantaged Business Classification
The SBA administers two particular business assistance programs for small disadvantaged businesses (SDBs). These programs are the 8(a) Business Development Program and the Small Disadvantaged Business Certification Program. While the 8(a) Program offers a broad scope of assistance to socially and economically disadvantaged firms, SDB certification strictly pertains to benefits in federal procurement. 8(a) firms automatically qualify for SDB certification.
A Small Disadvantaged Business is a small business concern that is at least 51 percent owned by one or more individuals who are both socially and economically disadvantaged. This can include a publicly owned business that has at least 51 percent of its stock unconditionally owned by one or more socially and economically disadvantaged individuals and whose management and daily business is controlled by one or more such individuals.
- Q. What are the benefits to being certified as a Small Disadvantaged Business?
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Your firm has an advantage to pursuing SDB certification both on prime contracts, and as a subcontractor to other prime contractors.
- Price evaluation adjustment. Under the government's reformed affirmative action rules, small disadvantaged business are eligible for price evaluation adjustments of up to 10 percent when bidding on federal contracts in certain industries.
- Evaluation factor for primes. The program also provides evaluation credits for prime contractors who achieve SDB subcontracting targets. The program is intended to help federal agencies achieve the government-wide goal of 5 percent SDB participation in prime contracting.
- Financial incentive to primes. Negotiated contracts where SDB participation is an evaluation factor can provide monetary incentives for prime contractors that meet specified targets for SDB subcontracting in the SIC major groups.
- Q. What are the basic requirements an Small Disadvantaged Business applicant firm must meet?
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A small business may qualify as a Small Disadvantaged Business if:
It has as a majority ownership (51% or more) which are socially or economically disadvantaged,
- These owner(s) are U.S. citizens,
- These owner(s) own, manage & operate the business on a daily basis,
- The company has been in business at least one year,
- The owner(s) has less than $750,000 personal net worth at the time of application, and during participation in government work.
The following categories of people are automatically considered as socially and economically disadvantaged:
- Asian-Pacific Americans
- Black Americans
- Hispanic Americans
- Indian Tribes
- Native Americans
- Subcontinent Asian Americans
- Q. How do I certify/classify as a Small Business?
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Companies must be certified by the Small Business Administration to qualify as Small Disadvantaged Businesses. You can obtain more information about the SDB Program by contacting any SBA district office , or reviewing the SDB home page, or taking the online training course on SBA certifications.
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