eGuide: Issuing 8(a) Direct Awards

This visual eGuide provides the how and why behind the unique contracting method of issuing 8(a) direct awards. It offers a brief look into the 8(a) program, Alaska Native Corporations, the overall process for issuing contracts, and lessons learned for government agencies.

8(a) Program Overview

The 8(a) Business Development program was designed to help small businesses owned by socially and economically disadvantaged people or entities build and sustain a profitable business. Title 13 Part 124 of the Code of Federal Regulations (CFR) defines who qualifies for the program. The federal government has a goal of awarding at least 5% of all federal contracting dollars to small disadvantaged businesses each year.

In short, the program requires participants to:

1. Be a small business (size standards vary by industry and are typically
   stated in number of employees or average annual receipts)
2. Have 51% or greater ownership and control by U.S. citizens who are socially and economically disadvantaged
3. Demonstrate good character and potential to perform on contracts

8(a) companies graduate from the program after up to nine years or when they reach a certain revenue threshold.

The Process for Issuing Direct Awards

Direct awards are a method to use sole source procedures to award to a single participant of the 8(a) Business Development program (FAR 19.8 and DFARS 219.8).

Issuing a direct award can be executed in six simple steps:

1. Contracting Officer determines company is capable. This is done by reviewing the company’s website, capabilities statement, past performance, NAICS codes, etc.
2. Contracting Officer makes a request to the participant’s/ contractor’s SBA servicing District Office to determine if the company is able to receive a direct award. A simple one-page form, called an offer letter, is required, covering the type of requirement, information about the 8(a) company, period of performance, contract value, and associated NAICS code. Many agencies have templates readily available for use by government acquisition professionals.
3. SBA responds within 5 days. The turnaround time is typically only 1 to 2 days. If for some reason, there is no response after 5 days, by SBA/Agency Partnership Agreements, the request is considered approved.
4. Contracting Officer releases RFP performance requirements to direct award recipient. Unlike competitive procurements, open negotiations can take place between the agency and 8(a) company. Negotiations can be on timeline, scope, technical approach, and price. This creates a cooperative environment where the contractor can help craft the solution, ensuring best-fit solutions are achieved and fair negotiated prices are offered. IDIQs can also be established if there is a funded sponsoring engagement as the initial task order for the contract. There is no obligation to use all of the IDIQ funding.
5. Recipient responds and negotiations are completed.
6. Contracting Officer makes the award.

Alaska Native Corporations

Alaska Native Corporations (ANCs) were formed under the laws of the State of Alaska in accordance with the Alaska Native Claims Settlement Act (ANCSA) (43 U.S.C. 1601). ANCSA was intended to resolve long-standing issues surrounding aboriginal land claims in Alaska, as well as to stimulate economic development throughout the state.

Under the Act:

1. 12 regional for profit ANCs were created and over 200 village, group, and urban corporations
2. A 13th landless regional corporation headquartered in Seattle was later established for Alaska Natives who lived outside of Alaska
3. ANCs have specific procedures to follow as provided by ANCSA, but they are also incorporated under State of Alaska law and must follow state corporation law
4. Lands, businesses, and other assets are owned by the shareholders of the Native corporations, and subject to terms, protections, and restrictions placed on them by both federal Indian law (ANCSA) and by State of Alaska corporation law

Today, ANCs employ thousands of people, not only in Alaska, but also worldwide through a variety of businesses ranging from natural resource development and construction, to government contracting, real estate, and tourism. By statute, ANCs are deemed to be economically disadvantaged under 43 U.S.C. 1626(e).

Why Work with an ANC?

Working with a company that has the unique combination of ANC ownership and Small Business Administration 8(a) status offers government procurement professionals a streamlined avenue for procuring products and services.

As defined in federal law and the Federal Acquisition Regulations, the SBA may issue a direct award contract with an unlimited ceiling to an 8(a)-participant (13 CFR 124.506(a)(2)iii).

Non-ANC owned 8(a)s have a dollar limit cap per direct award contract: $4 million for goods and services and $7 million for manufacturing (13 CFR 123.506). ANC-owned 8(a)s do not have a cap. A simple Justification & Approval document is required for contracts above $100M for the DoD and $25M for federal civilian agencies.

Key Benefits of Working with an ANC

1. Speed: Competitive government procurements can often take between 12 – 18 months to execute. A direct award allows for quick, smooth transition to full contract operations typically in 30 to 60 days.
2. Effort: Direct awards are a collaborative effort, allowing the procurement workload to be reduced by the customer because it’s shared with the contractor. Plus, contracting officers can eliminate the phone calls, emails, and repeated inquiries that come along with competitive procurements. You can eliminate the RFI process, going straight from RFP to award in a matter of days.
3. Risk: A direct award is non-protestable if made to an ANC, providing legal expediency (13 C.F.R. 124.517).
4. Contracting Credits: Working with an ANC helps agencies meet their small business goals and provides Native American Credits (13 CFR 124.109(a)(4)).
5. Commitment: Customers get the flexibility and agility of working with a small business, backed by the financial security and business processes efficiency of a large enterprise. That means bills get paid on time and services rendered are always delivered.

Lessons Learned from Industry

If you’re used to issuing competitive procurements, you may be hesitant to leverage the direct award process. However, direct awards offer a unique opportunity to relieve the pressure of current contracting backlogs without sacrificing value or performance. Here are a few best practices to keep in mind:

• Communication is paramount. Establishing consistent, open lines of communication allows you to gain a deeper understanding of your agency customers’ challenges. When industry partners are added to that collaboration, suddenly you’re no longer just issuing an RFP—you’re offering a direct path to a best-fit solution for your end customer. A win-win.
• Get involved in the process early. Once you have issued a bid as competitive small business, it cannot be transitioned into a direct award opportunity. Explore the direct award avenue with your agency customer before trying other procurement paths.
• Take advantage of available resources. Your local Small Business Administration (SBA) office is a great resource to learn more about the 8(a) procurement process overall, as well as for quickly verifying qualified 8(a) partners. Additionally, some ANCs/8(a)s will self-validate their NAICS codes in a day or less, saving you significant time and effort.

Summary

Given today’s complex acquisition landscape, direct awards offer an ideal path for rapidly procuring products and services with less risk. Do you have further questions about the 8(a) Direct Award Process? Akima has a team of contracting professionals standing by ready to assist you. Reach out to us directly at [email protected].