Thursday, June 4, 2009

The Different Types of Set-Aside Programs

As mentioned in our previous post, set-aside programs are designed and intended to help disadvantaged businesses get a leg up in the government contracting arena and to make the bidding process more competitive. There are several programs that the Small Business Administration (SBA) has created to give advantages to certain types of small businesses; one that we’ve already mentioned, but today we’re going to discuss two of the biggest ones: woman- and minority-owned small businesses. Please note that businesses can only qualify as a woman or minority owned business if they also meet the SBA standards for a small business. The following two categories fall under the Minority and Disadvantaged Business Owners.

Woman-Owned Small Business

A business qualifies as a woman owned business if at least 51% of the company is owned by one or more women, or at least 51% of the stock must be owned by one or more women. In addition, one or more women must have majority control over the daily business operations and management. One of the many goals of having this certification is to help teach woman how to market to the government and bring them into the federal contracting marketplace, and the procurement benefits are usually delivered through the Office of Government Contracting.

The certification “woman-owned business” can be of significant help in the government contracting arena. In 1994 President Clinton signed Public Law 103-335, which established a government-wide goal of having no less than 5 percent of all prime and sub-contracts awarded each year given to women-owned businesses. The law added women-owned companies as a separate class for subcontract goals and required agencies to meet minimum standards.

Another benefit of being a woman-owned business (in addition to the contracting preference) is that the SBA offers training courses and counseling in owning or managing a business as a woman, including financial, management, marketing and technical assistance, and procurement training. There are at least 70 women’s business centers in 40 states and an additional location in the Washington, D.C metro area. Part of the benefit of these courses is that they will help teach women how to market effectively to the government while still having the agencies’ preference.

Minority-Owned Small Business

As a part of the small disadvantaged business development program, businesses that are owned by people of a ‘socially disadvantaged ethnic group’ are given additional procurement advantages. What the government considers socially disadvantaged individuals, completely disregarding the person’s individual qualities or talents, are those who have been subject to ‘racial or ethnic prejudice or culture bias because of their identity in relation to being a member of a group.’

To obtain the minority status, one must be able to present a clear and well-supported case. First off, the applicant, who must be a US citizen, must own at least 51% of the company. Secondly, the individual must be able to prove that they are at a social or economic disadvantage based upon their color, national origin, gender, physical handicap, long-term residence in an insolated environment away from American society, or other similar instance that was beyond the individual’s control. The discrimination the individual faced must have happened in America and not another country, and the social disadvantage must have had a negative impact on their entry into the business world. In addition, one must be able to prove that they are indeed suffering a disadvantage from the aforementioned differences and that disadvantage must be constant and chronic.

Just as women have their own centers for training and counseling, so do minority owned businesses. These small business development centers offer counseling and management advice and are in every state. Visit the main SBA website at for more information.

Some of the many ways these opportunities are presented are through contracting officers, the SBA, and from the Office of Small and Disadvantaged Business Utilization (OSDBU). Contracting officers are required to give a certain percentage of all small business contracts to minority owned businesses, both as a primary contractor and as a sub-contractor. In addition, there are different loans and advance payment structures that may be available to program participants.

A huge benefit of working with Gateway to Government is that we have both of these certifications, giving our company several advantages over many others. The preference that we have makes government contracting a breeze for your company to get started bidding on – and winning – government contracts. Uncle Sam is required to favor businesses with these certifications, so why not work with Gateway and participate in a program legally required to help your business grow!

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