If you’ve ever assembled a piece of furniture from IKEA then you know that while doing-it-yourself seems like a better, faster way of getting something done, it’s usually more complicated. Fortunately, IKEA furniture comes with instructions. Once you understand how to assemble it, you’ve got a desk in no-time.
The same logic applies to becoming a SAM Self-Certified Business. Years ago, you used to have to apply through the SBA in order to be certified as a Small Disadvantaged Business (SDB). Since 2008, you can self-certify through the System for Award Management, or SAM. It can be confusing, naturally, so you may need some direction. Below you’ll find things you should know about what’s involved in SAM self-certification.
Two important things to note:
- SAM is one certification for veteran suppliers. Another certification option is through the Center for Veteran Enterprise (CVE) and is required for Department of Veteran’s Affairs (VA) procurements.
- Once certified, you’ll be legally responsible for keeping your business within the guidelines of the certification.
Why Get Certified?
SDB certification can make it easier for you to get federal contracts and become a federal supplier, because federal (and state) governments have set-aside contracts and opportunities for certain kinds of businesses (such as women, minority and Veteran-owned businesses). It can also help you convey to customers that you’re a reliable and trustworthy business. John Chaverra, a U.S. Veteran and part owner of American Protection Group security company, says he makes it a priority for customers to know his business is Veteran-owned.
“We want to make sure that they know we have military backgrounds, that they know that they’re dealing with people that are not irresponsible and that we know what we’re doing. When people think about military personnel, the first thing that comes to their mind is people that give their lives for freedom, good people that just go beyond their line of duty to make sure that everybody’s safe.”
“So, when we bring it to our clients and even our employees that, hey, we’re in the military, it’s just pride, because they look at us differently, because we have the time that we served and we did something for this country, not only for the country but for the people.”
The SDB Certification Process
The first step still involves the SBA as you should understand SBA eligibility criteria for SDBs, including:
- The firm must be 51% or more owned and control by one or more disadvantaged persons.
- The disadvantaged person or persons must be socially disadvantaged and economically disadvantaged.
- The firm must be small, according to SBA’s size standards.
The SBA’s size standards can be found here.
Socially & Economically Disadvantaged Defined
Federal law sets the criteria for socially and economically disadvantaged persons and is as follows:
“those who have been subjected to racial or ethnic prejudice or cultural bias within American society, because of their identification as members of groups without regard to their individual qualities.”
For application purposes, the following groups are presumed socially disadvantaged by the SBA:
- Black Americans
- Hispanic Americans
- Native Americans
- Asian Pacific Americans
- Subcontinent Asian American
- Service-Disabled Veterans
Eligibility for persons not included in this presumed list will be determined on a case-by-case basis.
In order to be economically disadvantaged, the SBA must have first established the person as socially disadvantaged. According to SBA’s regulations, “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.”
After the SBA has determined an individual to be socially disadvantaged, he or she must submit the following in order to be determined economically disadvantaged:
- Narrative statement of economic disadvantage
- Personal financial information (including tax returns and certain SBA forms)
- When married, the socially disadvantaged individual must submit separate financial information to SBA for his or her spouse (including tax returns and certain SBA forms).
Factors that can be taken into account by the SBA when determining an individual to be economically disadvantaged are:
- All income for the past three years, including any unusual income levels
- Fair market value of all assets
- Personal net worth (assets and liabilities)
- Transfer of assets to an immediate family member, directly or via trust
- Availability of individual retirement account (IRA) funds or other official retirement accounts
- Income received from the firm when filing taxes as an S corporation or partnership
- Reinvestments into the applicant firm
- Tax payments for the firm
As you can see, there is a lot to understand before self-certifying in SAM. Taking actual action can be as simple as filling in three areas of data in SAM, for both global and local:
1. All the NAICS codes you are presently capable of performing in and designate the primary one which represents the bulk of your business activity.
2. The total number of employees (head count, not full-time equivalent) and if there are seasonal variations, use the annual average number.
3. The total revenues from all sources.
Once you’ve done this, the system will run your data against the small business size standards and determine the size of your business. After your business size has appeared in SAM, you can update your profile and click the “disadvantaged” box. This is where understanding the SBA criteria becomes important, because you absolutely should not mark the disadvantaged box unless you meet the criteria. (If you cannot check the disadvantaged box, you may have not have waited long enough for the data to process, you may have entered incorrect size data, or you may have accidentally marked your business as a not-for-profit.)
There is currently no formal government registration process for women, minority, or veteran-owned businesses that differs from the standard process all businesses follow. However, ownership status is relevant when applying for federal and state government contracts. Being certified as women, minority or veteran-owned can make your business eligible for set-aside federal and state contracts.
Photo Credit: Government Contract Registration