Benefits of SDB Program

April 13, 2006

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If you can qualify as a small disadvantaged business (SDB), then you are entitled to participate in special preference programs aimed at encouraging participation by SDBs in government business.

SDB certified companies may benefit in two main ways. First, SDBs are eligible for special bidding benefits. An SDB can qualify for a price evaluation adjustment of up to 10 percent when bidding on federal contracts in certain industries or services where the U.S. Department of Commerce has determined that SDBs are underrepresented because of the effects of ongoing discrimination.

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As of October 1, 1998, SDBs are eligible to receive the price credit when competing in the following industry categories:

Industries	Services
Agriculture	Electric
Fishing	Gas
Forestry	Sanitary services
Construction	Wholesale trade
Mining	Retail trade
Manufacturing	Finance
Transportation	Insurance

Second, the program also provides evaluation credits to prime contractors who achieve SDB subcontracting targets, which in turn boosts subcontracting opportunities for SDBs. All prime contractors are encouraged to use certified SDBs as subcontractors through mandated evaluation factors and optional monetary incentives. The program is intended to help federal agencies achieve the government-wide goal of 5 percent SDB participation in prime contracting.

To receive this credit, a contractor must confirm that a joint venture partner, team member, or subcontractor representing itself as a small disadvantaged business concern is, in fact, identified as a certified small disadvantaged business. Confirmation may be made by checking the PRO-Net database maintained by the Small Business Administration or by contacting the SBA's Office of Small Disadvantaged Business Certification and Eligibility.

The extent of participation of SDB concerns is evaluated in competitive, negotiated acquisitions expected to exceed $500,000 ($1,000,000 for construction). The SDB preference program does not apply in small business set-asides, 8(a) acquisitions, negotiated acquisitions where the lowest price technically acceptable source selection process is used, or contract actions that will be performed entirely outside of the United States.

Note that this price credit does not apply to government procurements that are below the simplified acquisition threshold of $100,000, procurements that are set aside for small business (i.e., small business set asides, HUBZone set asides and procurements under the SBA 8(a) program).

We also want to mention a new benefit. Under recent federal procurement regulations, the SBA certifies SDBs for participation in federal procurements aimed at overcoming the effects of discrimination.