SDBs encouraged to obtain certification

The Small Business Administration has begun to urge companies that want to secure small, disadvantaged business status to obtain government certification. The certification becomes mandatory after July 1 for any company seeking federal business as an SDB subcontractor and already is mandatory for SDBs that want to bid as prime contractors.

Previous regulations allowed a small business to certify itself as an SDB. However, companies now must go through a certification process with the SBA or one of the 62 private companies working on behalf of the SBA to certify firms as SDBs. The change is expected to help prevent fraud and abuse and to ensure that the program is administered fairly.

The SBA also hopes the change will encourage companies to participate in the SDB program, in which about 6,000 SDBs are enrolled, and to help the companies secure government work, said Terri Dickerson, acting associate administrator at the SBA's Small Disadvantaged Business Certification and Eligibility Office.

Once an SDB is certified and listed in the SBA's Procurement Marketing and Access Network, which maintains an electronic profile of each registered small business, the company will be eligible for preferences under new federal procurement regulations. The main benefit is a price evaluation adjustment of up to 10 percent for SDBs bidding as primes in certain industries. This means that other non-SDB proposals will be considered 10 percent higher than SDB proposals. The rules also benefit large businesses, which receive credits and monetary incentives by including SDB subcontractors on federal contracts.

"Any company that is interested in the $200 billion federal marketplace...should take a good look at" the SDB program, Dickerson said. "If it turns out that they want to do business, we want to make sure they are prepared so there is no delay in terms of getting their contract."

The SBA recently kicked off a series of nationwide conferences explaining the changes and encouraging companies to join the program.

Self-certification will end July 1 for SDBs that want to compete as subcontractors on a federal contract. Self-certification ended last October for SDBs that want to bid on a federal contract as prime contractors. Firms that qualify as SDBs must meet certain criteria, including having an individual net worth below $750,000 and having had the experience of racial or ethnic prejudice or cultural bias. All 8(a) firms are automatically certified as SDBs.

Frank Medina, president of Eagle Consultant Services, Pasadena, Calif., which is certifying SDBs, said he has received many inquiries but not many applications. He expects the number of applications to increase closer to July 1.

"A lot of people who I talk to on the phone want to get certified," he said. "I've talked to small-business groups in the Los Angeles area, and they are in favor of certification. It will bring them up to a level playing field."

The process should weed out any firms that have falsely certified themselves as SDBs, Medina added. Dave Anderson, president of Key Group Inc., Fillmore, Calif., said he also has had calls asking about the program, but not many companies are applying for the certification yet. "It's still early in the program," he said. "People are basically shopping around" for the best prices, which range from $50 to $1,500, depending on the private certifier. The Key Group's pricing falls somewhere in the middle of that range, Anderson said.

Andrew Yang, vice president of Compu-Sensor Technology Corp., a 6-month-old 8(a) firm and SDB, said the certification process will be a check against fraud. "There has to be some criteria," he said. "Otherwise anyone can claim to be an SDB."