With the passage of the FY21 NDAA, government-wide SDVOSB verification is coming. Check out the Koprince Law, LLC article on what to expect: https://smallgovcon.com/service-disabled-veteran-owned-small-businesses/congress-approves-government-wide-sdvosb-certification-requirement-transfers-cve-to-sba/
Posts Tagged SBA
From page 400 of the FY2021 NDAA (Public Law No: 116-283):
“SEC. 889. EXTENSION OF PARTICIPATION IN 8(A) PROGRAM.
(a) IN GENERAL.—The Administrator of the Small Business Administration shall ensure that a small business concern participating in the program established under section 8(a) of the Small Business Act (15 U.S.C. 637) on or before September 9, 2020, may elect to extend such participation by a period of 1 year, regardless of whether the small business concern previously elected to suspend participation in the program pursuant to guidance of the Administrator.
(b) EMERGENCY RULEMAKING AUTHORITY.—Not later than 15 days after the date of enactment of this section, the Administrator shall issue regulations to carry out this section without regard to the notice requirements under section 553(b) of title 5, United States Code.“
It’s important to be aware of the SBA’s new certification process for WOSB/EDWOSB. As of October 15, 2020, all new WOSB/EDWOSB set asides posted in this socio-economic category will only be awarded to firms who have officially applied for, and were approved by, the SBA on their new site, https://beta.certify.sba.gov/. If you are only self-certified in the old site, certify.sba.gov, you will not be qualified to bid on new set asides and still need to apply through the new site. If you are third party certified, you still need to apply on the new site and need to upload your 3rd party certifier certificate.
As a PTAC client, assistance in the certification process is part of the service we provide free of charge. We have already assisted dozens of firms to successfully navigate the application process so please allow us to go through the process with you. If you want to know more about how we may assist with this process please reach out to your counselor or email us directly at firstname.lastname@example.org. Not yet a client? Learn more: https://virginiaptac.org/services/counseling/
Statewide Director of the Virginia PTAC
A fundamental building block of your company’s government contracting existence. The NAICS codes define you, quite literally, by associating your offerings with a certain segment of the universe of products and services sold in North America. Then why are they so difficult to get right?
First, let’s define the problem.
According to the U.S. Census Bureau, NAICS, or “North American Industrial Classification System”, is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. NAICS was developed under the auspices of the Office of Management and Budget (OMB), and adopted in 1997 to replace the Standard Industrial Classification (SIC) system. It was developed jointly by the U.S. Economic Classification Policy Committee (ECPC), Statistics Canada, and Mexico’s Instituto Nacional de Estadistica y Geografia to allow for a high level of comparability in business statistics among the North American countries.
As of February 2016, there are 1045 active NAICS codes. 536 of them refer to services (from banking to industrial launderers to fur-bearing animal production), 509 refer to wholesalers and manufacturers (from music stores to dental labs to fasteners/buttons/needles).
And there must be one out there that perfectly describes you, and if you find it, everything is smooth sailing…
Not so fast.
Federal contractors need to look at NAICS Codes, much like they need to look at everything else they’re doing in pursuit of business: from their customer’s viewpoint.
So here are some best practices for figuring out what your NAICS codes should be.
Step I: Easy Stuff
- The Obvious ones. Go to naics.com, type in a keyword or two for what you do, and a couple will pop up. There might be even several that are close enough or fall within the range of your products and services. Write them all down. You don’t have to pick a “primary” one yet.
- Follow the Leader. What NAICS are your teaming partners and competitors using? Look at their websites, business cards, capabilities statements – the numbers aren’t a secret code. They’re a common denominator for associating similar products/services. If your direct competitors are using them, you might want to.
- Procurement History. I happen to love award analysis and historical data – it’s the best prediction of future behavior in government entities, because they tend to follow similar processes when doing the same work. So if you look at usaspending.gov and www.fpds.gov and even www.fbo.gov, you’ll find that the NAICS codes associated with most of the work they’re going to be procuring are NAICS codes they’ll use again and again. Much of the time, the NAICS codes will be the same as you found in steps 1 and 2. So why bother?
Step II: Secret Squirrel Methodology [The logic behind seemingly illogical coding]
When you searched procurement history, you probably came across NAICS Codes that did not make sense. I have found “frozen foods” purchases coded as IT services. I recently even ran across a Piano purchase that was coded as an armored vehicle (Contract # VA24416F6918 if you want to see for yourself). There are 2 things you need to think about: why does that happen, and what do you need to do about it.
First, Why, oh why, do NAICS codes used by my customers make no sense to me?
- Government is buying something to Meet Their Mission. Like I said earlier, put yourself in your customer’s shoes – they are not buying landscaping or cloud software because they want that particular product. They’re buying it because it is part of their mission – and the agencies’ budgets are allocated into big buckets to be spent on missions. It’s much easier to budget, track, award, and maintain contracts in those same buckets, therefore the NAICS Code will often reflect the customer’s end goal, not the (product/service) means they are using to meet it. If you are building a data center to support a mission to Mars, it might be coded as a data center – but it’s a lot easier for your customer to track the expenditures and justify to Congress an expense that is aligned with a mission vs. just a purchase for the back office.
- Mistakes Were Made. Government entities have procurement cycles, when something expires, they buy it again. If the NAICS Code powers change the code and you missed it, you might be buying something under an expired code without realizing it. Or maybe you transposed a digit and typed 12 where you meant to type 21. And now you have a whole new NAICS code and that’s how pianos get turned into tanks.
- “Small” Business affinity. NAICS Codes aren’t uniform, they have many different standards for determining whether an entity is small. While they vary across individual codes, the two major delineations are:
- For services, the standard is the average of the last 3 years annual revenues
- For products / manufacturers / wholesalers, it’s the number of employees
Let’s say there’s a $20 million dollar business that has been doing great work and when the contract comes up for recompete, the government customer wants the company to be included in the competition – have a chance to win the work. Would the government ever put that procurement, if it’s a small business set-aside, under a NAICS code where the small business threshold is $6M? No, because that would preclude them from competing altogether.
So what do you do? Stay calm and do research. When you are searching for opportunities and past awards, use a variety of search cirteria – keywords, agencies, vendors, not just NAICS, because if that’s the only criteria – it will be both too broad, and at the same time, too limiting as you are likely to miss good opportunities.
The long-anticipated, much applauded, expanded SBA All Small Mentor Protege Program is here…not to be confused with the SBA 8(a) Mentor Protege Program … or the Department of Defense Mentor Protege Program*
So what? What does it mean to your small business? How do you take advantage of it?
The mechanics: Mentor Protégé Program (MPP) is an agreement between typically a large business (mentor) and a smaller business (protégé) whereby the mentor provides:
- Management and Technical Assistance
- Financial Assistance
- Contracting Assistance
- Trade Education
- Business Development Assistance
- General and/or Administrative Assistance
to the protégé, essentially investing resources into the company’s growth and infrastructure. It’s not a direct government-to-small-biz program: there’s no application that small businesses fill out to ‘get in’ – but there is a checklist. It’s an agreement between two businesses that is regulated and approved by either the SBA (for civilian agencies) or the DOD.
A few reasons large businesses are incentivized to become mentors:
- Agencies will apply subcontracting “Credit” to mentors when under consideration for awards. This can also help mitigate gaps in subcontracting requirements Mentors can get credit for their protege’s accomplishments because the implication is that the mentor’s help was instrumental in getting the company ready. For example, the protege’s wins as a prime at the same or different agency, the protege’s win as a subcontractor for other prime contracts at the same or different agencies – if the mentor protege agreement was instrumental in building capacity / ability of the protege company to win the additional work.
- Dept of Defense also administers reimbursement agreements (as well as credit agreements) but some DOD agencies will award dollars directly to the mentor to invest in the protégé. The financial benefit is obvious to both – the mentor isn’t spending internal resources helping the protégé, but rather the DOD’s money.
- Ability to form Mentor Protege Joint Ventures that enable access to set-aside contracts without triggering affiliation rule. Win-win:
- Protege can pursue set-aside contracts that would’ve been otherwise out of reach of the protege due to capacity, past performance, clearances, or other requirements that they don’t have
- Mentor is able to participate in set-aside awards – and retain 60% of at least 50% of total contract amount. Here’s the math: the “prime” contractor in a set-aside award has to do 50%+ of the work… the joint venture is the prime contractor. The mentor company can do 60% of the work because it’s a mentor.
- Investment / Merger & Acquisition strategy (great explanation here with many more finance details, thanks Elvis Oxley!) – mentors can take up to a 40% stake in the protege company — and the ability to reap the benefits of that investment as they develop that protege’s capabilities. In the event of a future M&A, that 40% stake of a much more substantial business makes for a decent profit margin.
There are risks and considerations, to be sure. A meeting of the minds is essential – to ensure both parties set expectations and have a plan to meet them. Proteges are limited to 3 MPP agreements per program in their lifetime (that’s 3 SBA AllSmall and also 3 DOD); Mentors can only have 3 Mentor Protege Agreements per program concurrently. A MPP agreement is thus never formed by strangers – the companies have to have solid business reasons for entering into the arrangement; most often, there’s a prior relationship of subcontracting or other business relationships that forms the baseline of mutual interest and sets the ground for pursuing a more strategic joining of forces.
For small businesses seeking to become proteges, the essential question is: What do you bring to the table? What would be an incentive for another entity to invest their time, resources, and dollars into developing your company’s capabilities? If you can answer those questions, you probably have a good idea of who to approach for mentorship.