“Maximizing your HUBZone certification through the 8a program” THE RANDALL GROUP, LLC. “Maximizing your HUBZone certification through the 8a program”

Federal Contracting The world’s largest buyer of goods and services is the Federal Government, with purchases in 2018 totaling approximately more than $400 billion for the fiscal year. Contracts exist for many areas. Government purchases just about every type of product & service Federal agencies are required to establish contracting goals, with at least 23 percent of all government buying targeted to small firms. 

Federal Contracting Of the $447,900,640,611 indicated above estimated: Fiscal Year Contracts Grants Loans Other Financial Assistance Total 2019 $TBD 2018 $447,900,640,611 2017 $509,580,381,954 $662,706,241,255 $990,032,563 $1,467,000,789,678 $2,640,277,445,449 2016 $473,957,562,622 $668,199,243,614 $2,431,708,614 $1,926,325,365,504 $3,070,913,880,354 2015 $438,222,749,018 $618,924,006,778 $4,381,224,220 $1,786,830,326,366 $2,848,358,306,382 2014 $444,681,491,299 $603,655,382,774 $6,224,734,303 $1,715,452,867,211 $2,770,014,475,586 2013 $462,588,939,385 $521,763,425,691 $1,945,253,640 $2,953,238,079,511 $3,939,535,698,227 2012 $519,692,928,823 $542,217,087,096 ($126,275,597) $2,780,504,952,385 $3,842,288,692,707 2011 $538,092,610,956 $571,948,794,652 $2,449,072,788 $2,177,665,178,357 $3,290,155,656,753 2010 $558,921,983,127 $622,845,385,032 $2,814,552,384 $1,318,644,489,865 $2,503,226,410,408 2009 $539,142,971,690 $675,672,261,187 $692,186,541 $1,731,543,482,366 $2,947,050,901,784 2008 $540,217,478,599 $420,738,830,388 $438,530,307 $1,122,121,266,840 $2,083,516,106,134 Of the $447,900,640,611 indicated above estimated: HUBZone Set-Aside & HUBZone Sole Source Awards - $688,939,689 8(a) Sole Source & 8(a) Competed Awards - $811,027,3408 8(a) Award with HUBZone Preference - $0

Prime Contracting Procurement Goals Small Business (SB) - 23% Small Disadvantaged Business (SDB) - 5% Women-Owned Small Business - (WOSB)- 5% HUBZone Small Business – 3% Service-Disabled Veteran-Owned SB (SDVOSB) - 3%

Government-wide Overall - 2017 spending Score Card Links: https://www Goal Category Eligible Dollars Actual Dollars Goal % Actual % Small Business $442.6B $105.7B 23 % 23.87 % Small Disadvantaged $442.6B $40.2B 5 % 9.09 % Business Women-Owned $442.6B $20.8B 5 % 4.71 % Small Business Service Disabled Veteran $442.6B $17.9B 3 % 4.05 % Owned Small Business Certified HUBZone $442.2B $ 7.3B 3 % 1.65 %

Small Business Program Parity Unrestricted Competition SBA HUBZones Update Small Business Program Parity 8(a) HUBZone Woman-Owned Service-Disabled Vet Small Business Unrestricted Competition Over $150,000 Under $150,000 – Set-aside for small business (simplified acquisitions) Dwight.Johnson@sba.gov SBA Office of Government Contracting, Omaha 402.221.7206 6

What is the 8(a) Business Development Program?

8(a)BD Program Objectives (Sec. 204 of Public Law 100-656) “to promote the business development of small business concerns owned and controlled by socially and economically disadvantaged individuals…” “to promote the competitive viability of such concerns…” “to clarify and expand the program for procurement by the United States…”

Term of Participation START = date of approval Year 1 2 developmental 3 stage 4 Year 5 6 transitional 7 stage 8 9 Continuation in the program is dependent on the firm’s continuing eligibility as a socially and economically disadvantaged owned/operated firm and continued compliance with the 8(a)BD participation agreement. * Exception: military reservists who are called to active duty may suspend their participation in the program under certain circumstances. 13 CFR §124.404 and § 124.305

Eligibility Criteria

Eligibility Criteria for 8(a) Program Must be Socially Disadvantaged Must be Economically Disadvantaged Must have Majority Ownership and be a US Citizen Must Control and Management business on a full-time basis with “NO” outside employment Must be a small business as defined by primary NAICS Code. Firm is only certified under their primary code. Be legally in business for 2 years as evidenced by federal tax returns. Firm can request a “TWO YEAR IN BUSINESS WAIVER” as long as the firm has generated revenues on at least 1 tax return and the owner’s resume demonstrates substantial experience in the industry. Social Disadvantage (13 CFR §124.103) Economic Disadvantage (13 CFR §124.104) Ownership (13 CFR §124.105) Control and Management (13 CFR §124.106) Size (13 CFR §124.102)

Social Disadvantage

Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities. The social disadvantage must stem from circumstances beyond their control. Ref: 13 CFR §124.103(a)

Individuals are presumed to be socially disadvantaged if they are a U Individuals are presumed to be socially disadvantaged if they are a U.S. Citizen and a member of one of the following designated groups: Black American Asian Pacific American Hispanic American (includes individuals of Spanish & Portuguese descent). Native American (as evidenced by a tribal membership card) Subcontinent Asian American And members of other groups designated from time to time by SBA according to procedures set forth in 8(a) regulations. Being born in a country does not, by itself, suffice to make the birth country an individual's country of origin for purposes of being included within a designated group. Ref: 13 CFR §124.103(b)

If you are not a member of one of the designed Social Disadvantage Groups, majority owner(s) applying for 8(a) certification MUST provide preponderance of Evidence demonstrating such. Decision will be made on a case-by-case basis. 15

Persons not members of designated groups must: Establish their case by a preponderance of the evidence to support all claims, which can include the following: The disadvantage may stem from race, ethnic origin, gender, physical handicap, long term environmental isolation, or other similar causes; The applicant must have personally suffered disadvantage in the United States; The disadvantage must be chronic & substantial; The discrimination must have negatively impacted on business advancement. Ref: 13 CFR §124.103(c)

What is “Preponderance”? Generally, preponderance is evidence of a quality and quantity which leads the decision maker to objectively conclude that the existence or truth of the facts asserted is more probable than not.

Types of Evidence for Preponderance (1) Court or Administrative findings of discrimination. Statements made under oath to an investigator, in court or in an administrative proceeding. Affidavits or sworn statements by the individual claiming disadvantage. Affidavits or sworn statements by independent third parties. Ref: 13 CFR §124.103(c)

Types of Evidence for Preponderance (2) Documentary evidence which corroborates or supports assertions made by an applicant such as: Personnel Records Payroll Records Rejection letters on job applications. Denials of credit applications. Financial statements. Documents relating to rejected contract offers, i.e., bid abstracts, solicitations. Contemporaneous records memorializing meetings, conversations, negotiations, telephone calls, etc. Documents setting forth company policy(ies) which are alleged to be discriminatory. Ref: 13 CFR §124.103(c)(2)

Types of Evidence for Preponderance (3) Evidence which tends to show generalized patterns of discrimination against a non-designated group or statistical data showing that businesses owned by a specific non-designated group are disproportionately underrepresented in a particular industry may be used to augment an individual’s case. Statistics and generalized patterns are not sufficient by themselves to establish a case of individual social disadvantage. However, an individual’s statement of personal experiences in combination with the generalized evidence may be sufficient to demonstrate social disadvantage. Ref: 13 CFR §124.103(c)(2)

Types of Evidence for Preponderance (4) SBA will consider any relevant evidence in assessing a claim of social disadvantage. In every case, however, SBA will consider the experiences of the individual, where applicable, in education, employment and business history to see if the totality of the circumstances shows disadvantage in entering into or advancing in the business world. Evidence relating to all three areas should be addressed, if applicable to the individual’s case and each circumstance should demonstrate how it has affected the individual’s entrance into and advancement in the business world. The failure to establish disadvantage in any one or two areas does not prevent an individual from meeting the negative impact requirement as long as the totality of the circumstances experienced by the individual demonstrates such disadvantage. 13 CFR §124.103(c)(2)

Economic Disadvantage

Economically disadvantaged individuals are socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business who are not socially disadvantaged. Ref: 13 CFR §124.104(a)

Net worth criterion: After excluding the individual’s equity in the firm, equity in the primary residence ONLY, and excluding funds in an eligible retirement account with a 10% or more penalty for early withdrawal, net worth may not exceed the following: $250,000 for admittance into the 8(a) program and after certification into the program can’t exceed $750,000 NET WORTH less equity in primary residence less retirement/IRA account with 10% penalty or more less equity in business equals adjusted net worth Ref: 13 CFR §124.104(c)(2)

Net worth information, cont’d Personal Income: MUST not exceed an average of $250,000 over the previous three years Total Assets: MUST not exceed $4 million, which includes the equity in the business Exceptions Explanation: Retirement Accounts: will be excluded from adjusted net worth if unavailable until retirement age without a significant penalty (must provide documentation) Personal income received from the company to pay corporate taxes or that was reinvested in the firm will not be counted (must provide documentation) 13 CFR §124.104(c)(3), §124.104(c)(4), & § 124.104(c)(2)(ii)

Spousal Determination Spouse’s financial situation will be considered if: Has a role in the business Has lent money to, provided credit support to, or guaranteed a loan to the business. Under all circumstances – spouse must provide personal financial statement to SBA with application. Jointly held assets and liabilities should be divided equally in half placing ½ on each SBA, 413 Personal Financial Statement form. Applicant & Spouse will complete separate forms. 13 CFR §124.104(b)(2)

Ownership Ref: 13 CFR §124.104

Partnerships: Agreements must reflect unconditional ownership. Owner: At least 51% unconditional ownership by the disadvantaged individual(s). Partnerships: Agreements must reflect unconditional ownership. Limited Liability Company: Disadvantaged individuals must own at least 51% of each class of member interest. Corporations: Disadvantaged individuals must own at least 51% of each class of voting stock and at least 51% of all outstanding stock. Stock option plans for non-disadvantaged individuals will be viewed as if they have been exercised. Ref: 13 CFR §124.105 (What does it mean to be unconditionally owned by one or more disadvantaged individuals) 13 CFR §124.105 (a); and 13 CFR §124.105(b)

Control and Management

Partnerships: Agreements must reflect unconditional management by disadvantaged partner (s). Limited Liability Company: One or more disadvantaged individuals must serve as management members with unconditional control. Ref: 13 CFR §124.106(a)(5)(b); and 13 CFR §124.106(a)(5)(c)

Corporations: How control is established. A. Disadvantaged directors of the board must control the board by actual number of votes and must be able to establish a quorum without the presence of non- disadvantaged directors. OR Ref: 13 CFR §124.106(a)(5)(d)

B. Control without considering the board of directors: A single disadvantaged individual owns 100% of the voting stock. A single disadvantaged individual owns at least 51% of the voting stock, is on the board of directors and no super majority* voting requirements exist. If a super majority* requirement exists, the disadvantaged individual must own at least the percentage of voting stock necessary to overcome any super majority* requirements. If more than one disadvantaged individual, each disadvantaged individual is on the Board of Director and together own at least 51% of the voting stock and no super majority* voting requirements exist, and there are enforceable agreements of the shareholders permitting one of them to vote all stock as a block without a shareholders meeting. If a super majority* requirement exists, the disadvantaged individuals must own at least the percentage of voting stock necessary to overcome any super majority* requirements. * A super majority is a percentage of votes required by shareholders to make decisions on behalf of the concern. For example, if a 2/3 vote is required to approve a bylaw change, disadvantaged individuals must have at least 2/3 of the votes necessary to control the concern. Ref: 13 CFR §124.106(a)(5)(d(1)(i); 13 CFR §124.106(a)(5)(d(1)(ii); and 13 CFR §124.106(a)(5)(d(1)(iii)

What constitutes Control?

A Disadvantaged Individual must: Hold the position of President or Chief Executive Officer, Managing Partner or LLC Managing Member Be the highest compensated individual Have the ability to Hire and Fire Set Policies Have the ability to commit firm to contracts Have the ability to control the Budget and Financial Disbursement 13 CFR §124.106(a)(1-3)

Size

Size is determined either by: average 3 years revenues Firms must be small based on their primary NAICS Code, including affiliates. Size is determined either by: average 3 years revenues # of employees (manufacturers, dealers, wholesalers) See 13 CFR 121 Size Regulations or visit our website: www.sba.gov/size. 13 CFR §124.102 & 13 CFR Part 121

Potential for Success

Factors considered: Minimum proof of two years operation in the firm’s primary industry as verified by revenues reported in business tax returns. Less than two years requires waiver request. To request waiver, must have at least 1 year with revenues generated. Financial capability: sufficient capitalization, financial performance, bonding capacity, manageable debts. SBA may pull the applicant’s personal credit report. Negative credit history will be evaluated by SBA. Managerial and Technical capability: performance on previous contracts, firm has the necessary personnel, licenses, certifications, facilities, prior experience. Management capability: Education, experience and training of CEO and other managers, magnitude and complexity of past/current jobs, management systems. Qualifications for ability to perform on Federal contracts: relevant contracting experience, ability to meet Federal procurement policies. 13 CFR §124.107(a) & §124.107(c) &(d) & (e) & (f)

Waiver of the Two Year Rule

SBA may waive the two-year rule if the following areas are addressed in detail: The individual or individuals upon whom eligibility is to be based have substantial and demonstrated business management experience; The applicant has demonstrated technical expertise to carry out its business plan with a substantial likelihood for success if admitted to the 8(a) BD Program; The applicant has adequate capital to carry out its business plan as a Participant; The applicant has a record of successful performance on contracts from governmental and nongovernmental sources in the primary industry category; The applicant has, or can demonstrate its ability to timely obtain the personnel, facilities, equipment, and any other requirements needed to perform such contracts as a Participant. 13 CFR §124.107(b1) & §124.107(b1)(i) &(ii) & (iii) (iv) (v)

Ineligible Businesses & Individual Disqualification

Ineligible businesses: brokers Ineligible businesses: brokers* ; debarred or suspended persons or concerns; nonprofit organizations. Franchises may be allowed contingent upon SBA review of the franchise agreement. A business may participate only once. Even if ownership and control has completely changed, firm may not re-apply. Any person who has used his/her disadvantaged status to qualify another firm shall be regarded as non disadvantaged. * A broker is a concern that adds no material value to an item being supplied to procuring activity or which does not take ownership or possession of or handle the item being procured with its own equipment or facilities. 13 CFR §124.108

Good Character

What shows lack of good character? Adverse information regarding possible criminal conduct by the applicant or its principals. Violations of any SBA regulations. Debarred or suspended individuals or firms. Applicant firms and principals that lack business integrity as shown by an indictment, guilty plea or civil judgment. Any principal who is incarcerated or on parole or probation. Evidence that the firm knowingly submitted false information during the application process. Any firm or any of its principals that fail to pay financial obligations to the Federal Government.

Assistance Available to 8(a) BD Program Participants

Available Assistance includes: Training by SBA resource partners in all areas of business. Information on SBA loans and other programs. 8(a)BD Showcase and other marketing assistance. SBA’s Mentor Protégé and Joint Venture Programs Assistance in identifying Government Procurement agencies and their Procurement Forecasts. Introduction and search letters as well as follow-up on specific requirements identified by firm.

Available Assistance cont’d: Subcontracts with federal government - (SBA serves as the prime contractor). 7(j) Management and Technical Assistance Information on various contracting opportunities with county, airports, large government primes.

SBA Joint Ventures

SBA’s Joint Venture Program Joint Venture with an 8a firm or non-8(a) firms both small & large. Benefits: Can joint venture for the purpose of bidding on 8(a) set-aside contracts that are too large for your firm to perform on your own or if the agency wants to utilize a another company but they don’t have 8(a) certification. Under a single joint venture, you can have 3 awards in a 2 year period. Contracts you bid on but don’t win are not counted against the 3 awards. Can also joint venture with Service Disabled Veteran Owned(SDVOSB), Hubzone and/or WOSB/EDWOSB companies.

SBA Mentor Protégé Program

SBA’s 8(a) Mentor Protégé Program Create a mentor protégé relationship with another 8a firm or non-8(a) firms both small & large. Purpose of the program: Enhance the capabilities of the protégé Assist the protégé with meeting the goals outlined in its approved SBA 8(a) business plan Improve the protégé’s ability to successfully compete for contracts Benefits of the Mentor Protégé program: Technical and management assistance: The mentor’s expertise, resources, and capabilities are made available to the protégé. Contracting: Mentors can provide assistance relevant to performance of non-8(a) contracts so that protégé firms more fully develop their competitive capabilities. Mentors can enter into joint-venture arrangements with protégés to compete for, and perform on, certain federal government contracts. Financial assistance in the form of equity and/or loans: Mentors can own up to 40% in of the protégé to help it raise capital. SBA also established an “ALL SMALL BUSINESS MENTOR PROTÉGÉ PROGRAM: https://www.sba.gov/contracting/government-contracting-programs/all-small-mentor-protege-program

What is expected of 8(a)BD Program Participants?

“Mandatory” SELF MARKETING to federal procurement agencies for contracts. Submission and annual update of continued eligibility along with annual update of approved business plan. Grant access to company records by SBA. Informing SBA of any changes affecting 8(a)BD eligibility, i.e. changes in business structure, ownership, etc. Submission of year end financial statements and annual tax returns. Participation in business development training opportunities and networking offered by SBA. Staying current in financial obligations to the Federal Government. Maintain a balance between their commercial and government business. Limit on the total dollar value of sole-source contracts that an individual participant can receive while in the program: $100 million or five times the value of its primary NAICS Code.

8(a) Program Benefits Participants can receive sole-source contracts, up to a ceiling of $4 million for goods and services and $7 million for manufacturing. Federal contracts for 8a Certified firms that have a total contract value of more than $4 million for services and more than $6.5 million for manufacturing must be competed but only against other 8a Certified firms. 8(a) firms are also able to form joint ventures and teams to bid on contracts. This enhances the ability of 8(a) firms to perform larger prime contracts and overcome the effects of contract bundling.

The Randall Group, LLC. Ms. Monica M. Randall, MBA Founder & CEO 1300 I Street NW, Suite 400 E Washington, DC 20005 Office: (202) 749-8386 Email: monica.randall@therandallgrp.com Website: www.therandallgrp.com