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How Government Contracting Can Help Small Disadvantaged Businesses Succeed

By Edited Nov 13, 2013 0 0

For women and other minorities, starting and growing a business can be very difficult. These individuals often have fewer resources and are unable to get the financing they need to get their business established. For those that meet the requirements of their state to become a disadvantaged business enterprise (DBE), government contracting can open doors that would otherwise remain closed.

Most of us have heard jokes about how much the government spends on all types of things that seem far overpriced in comparison to what we buy. In the public works and procurement sector, the Good Faith Act makes up a set of procedures that requires companies which bid on government contracts to help satisfy the contracts’ socially and economically small disadvantaged business participation goals. The result is that DBE certified businesses have more opportunities to get government contracts so that the playing field is leveled.

The government has a goal to purchase 23% of what it buys from small business with 5% of those being a certified women owned business and an additional 5% being with a disadvantaged business enterprise. In addition, money is set aside to help with training, mentoring and to provide set-aside contracts and bidding on contracts that are not made available to other non-qualifying businesses.

In addition to making minority owned businesses more competitive, government contracting also offers other advantages for qualifying businesses. They include contracts with higher set-aside amounts and the potential of a higher bid from a small business to win in spite of being higher than a bid from a larger bidder. Small businesses also have the advantage of prompt payment arrangements that don’t always exist when pursuing private contracts.

The first step towards getting these benefits is for the business to learn the local, state and federal requirements for becoming DBE certified.  Meeting the associated regulations is essential for being permitted to participate in advanced training programs, job fairs, and other opportunities. This is not done by the federal government but by the Certification Unit of each state. Each state CU unit is responsible for certifying DBE firms.

Becoming certified as a disadvantaged business enterprise typically takes approximately 90 days from the time a completed application is received. This includes any required documentation, notarizations and signatures.

In order to meet the requirements of a DBE, the business must be a minimum of 51 percent owned by a single or multiple individuals who are disadvantaged both socially and economically. It must also be managed and operated daily by one or more of these owners. The entire list of requirements is found in 49 CFR, Part 26.

In spite of meeting requirements and becoming certified, many businesses have difficulty in getting started navigating the regulations associated with government contracting programs.   Outreach companies are available which make it easier for businesses to procure government contracts and also to keep up with changes in the different states. They can be a valuable resource for information needed to bid and obtain contracts for their company.



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