August 4, 2015

If you are a small business, you have heard of contractors receiving a sole source contract because they are 8(a) certified. What does this mean and is it something your firm can participate in?

First, you must go through the 8(a) certification process, which is getting increasingly difficult because the SBA has been cracking down on requirements. Once certified as an 8(a) firm, you’re now eligible to receive a sole source contract.

8(a) Certification and Sole Sourcing - What Does it Mean and Do You Qualify?

8(a) Certification and Sole Sourcing – What Does it Mean and Do You Qualify?

A sole source contract means purchasing agencies do not have to put that service and/or product out for bid. However that only includes contracts that are up to $4 million for goods and services and $6.5 million for manufacturing. Right now sole source contracts can only be done for firms that hold the 8(a) status but soon will include woman owned small businesses as well. The justification for sole source contracts, according to the SBA, is that this allows 8(a) firms to learn how to be competitive in the government market.

To qualify to submit an application for the certification you need to meet the following:

  • Business must be majority-owned by an individual(s) (aka no holding companies)
  • That individual(s) must be an American citizen
  • Business must be majority-owned and controlled/managed by socially and economically disadvantaged individual(s)

In order to qualify as socially disadvantaged you need to belong to one of the following:

  • Black American
  • Hispanic American
  • Native American
  • Asian Pacific American
  • Subcontinent Asian American

In order to qualify as economically disadvantaged, your net worth must be below $250,000

  • That does not include the value of the primary home, business or any retirement funds
  • Business must be considered a small business
  • Business must demonstrate potential for success
  • Principals must show good character

These are just the initial requirements. If you want to find out more information and if your firm qualifies, take a look at the SBA’s 8(a) Certification Q&A:

This article was originally posted on August 4, 2015 and the information may no longer be current. For questions, please contact GRF CPAs & Advisors at