SBA 8(a) Firms Poised to Fuel Post-Pandemic Recovery

The American economy depends on jobs created by small businesses, which account for 64% of new jobs created every year. Some of the best-run U.S. small businesses are those participating in the Small Business Administration’s 8(a) program. The annual review required to maintain eligibility in the program can seem onerous to some, but it ensures participating firms are adequately capitalized and operating in a stable manner.

An annual business plan review is beneficial to all companies, but for 8(a) firms, the mandate prompts them to align their efforts with changes in the market to ensure they have a plan to respond. Post-pandemic, this alignment is critical to the continued growth of these firms.

In light of the additional oversight required, 8(a) firms are uniquely positioned to meet the market's needs post-pandemic. Ensuring 8(a) women and minority-owned businesses benefit is a testament to the program’s overarching goals to help socially and economically disadvantaged businesses access America’s “economic mainstream.”

Getting the Recovery Right

One of the complaints businesses had about the American Recovery and Reinvestment Act of 2009, which was enacted to address the economic fallout of The Great Recession, was it benefitted large businesses and left everyone else to fend for themselves. The first round of PPP loans suffered from this problem as well. Large companies had the resources to get their applications submitted quickly before the funds ran out. Thankfully, the second round of PPP has made it much easier for small businesses to participate in the program. PPP loans are a much-needed lifeline, but business owners would rather stay afloat by doing the work they are passionate about.

How 8(a) Can Help

One barrier to 8(a) contracting rarely discussed is the reluctance of some Federal Contracting Officers to issue contracts under the 8(a) program because they fear that they won’t be able to issue re-competes outside of 8(a). While it’s true that the government would like 8(a) re-competes to go to companies in the program, the Contracting Officers we’ve spoken to state their requests to move contracts in and out of the program are rarely denied. Also, much of the pandemic-related work that needs to be done immediately does not fall into most agencies' normal long-term contracting needs. The SBA can make it more likely that Contracting Officers use the 8(a) contracting vehicle by clarifying rules for keeping contracts in the program and highlighting the benefits to COs.

8(a) Reduces Lag Time

Another complaint levied against the post-Great Recession recovery is that it took too long. The speed with which 8(a) contracts can be issued should guide the pandemic recovery effort. Federal 8(a) contracts can be released immediately as sole-source awards, which significantly reduces the award timeline. A Contracting Officer can identify a need and award an 8(a) contract the same day if needed. 8(a) firms are also primed to accept federal contracts and are eager to help with recovery efforts.

8(a) Firms Employ Minorities

As we emerge from the pandemic, the economy is improving, but not for everyone. The unemployment rate among white workers fell to 5.6% in February, below the national rate, while Black and Hispanic workers reported jobless rates of 9.9% and 8.5%, respectively. SBA 8(a) businesses are, by definition, socially and economically disadvantaged. But they also tend to employ more racial and ethnic minorities than non-8(a) businesses since they are often located within minority communities. Minority-owned businesses, like minority workers, have been hit harder by the pandemic than other businesses. Directing Federal contracts to 8(a) firms has the double benefit of helping disadvantaged entrepreneurs while also supporting jobs in minority communities.

Conclusion

During the Great Recession, Rahm Emanuel is quoted as saying, “You never want a serious crisis to go to waste.” The 2020 Pandemic has presented us with a crisis and an opportunity. As the federal government enacts economic recovery efforts, it can amplify the positive effects through strategic contracting. Supporting SBA 8(a)s will create jobs, support historically disadvantaged communities and accelerate recovery. A speedy recovery is a goal we all share. SBA 8(a) firms can make it happen.