[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR124.107]

[Page 294-295]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
                CHAPTER I--SMALL BUSINESS ADMINISTRATION
 
PART 124--8(A) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS STATUS DETERMINATIONS--Table of Contents
 
                  Subpart A--8(a) Business Development
 
Sec. 124.107  What is potential for success?

    The applicant concern must possess reasonable prospects for success 
in competing in the private sector if admitted to the 8(a) BD program. 
To do so, it must be in business in its primary industry classification 
for at least two full years immediately prior to the date of its 8(a) BD 
application, unless a waiver for this requirement is granted pursuant to 
paragraph (b) of this section.

[[Page 295]]

    (a) Income tax returns for each of the two previous tax years must 
show operating revenues in the primary industry in which the applicant 
is seeking 8(a) BD certification.
    (b)(1) SBA may waive the two years in business requirement if each 
of the following five conditions are met:
    (i) The individual or individuals upon whom eligibility is based 
have substantial business management experience;
    (ii) The applicant has demonstrated technical experience to carry 
out its business plan with a substantial likelihood for success if 
admitted to the 8(a) BD program;
    (iii) The applicant has adequate capital to sustain its operations 
and carry out its business plan as a Participant;
    (iv) The applicant has a record of successful performance on 
contracts from governmental or nongovernmental sources in its primary 
industry category; and
    (v) The applicant has, or can demonstrate its ability to timely 
obtain, the personnel, facilities, equipment, and any other requirements 
needed to perform contracts as a Participant.
    (2) The concern seeking a waiver under paragraph (b) must provide 
information on governmental and nongovernmental contracts in progress 
and completed (including letters of reference) in order to establish 
successful contract performance, and must demonstrate how it otherwise 
meets the five conditions for waiver. SBA considers an applicant's 
performance on both government and private sector contracts in 
determining whether the firm has an overall successful performance 
record. If, however, the applicant has performed only government 
contracts or only private sector contracts, SBA will review its 
performance on those contracts alone to determine whether the applicant 
possesses a record of successful performance.
    (c) In assessing potential for success, SBA considers the concern's 
access to credit and capital, including, but not limited to, access to 
long-term financing, access to working capital financing, equipment 
trade credit, access to raw materials and supplier trade credit, and 
bonding capability.
    (d) In assessing potential for success, SBA will also consider the 
technical and managerial experience of the applicant concern's managers, 
the operating history of the concern, the concern's record of 
performance on previous Federal and private sector contracts in the 
primary industry in which the concern is seeking 8(a) BD certification, 
and its financial capacity. The applicant concern as a whole must 
demonstrate both technical knowledge in its primary industry category 
and management experience sufficient to run its day-to-day operations.
    (e) The Participant or individuals employed by the Participant must 
hold all requisite licenses if the concern is engaged in an industry 
requiring professional licensing (e.g., public accountancy, law, 
professional engineering).
    (f) An applicant will not be denied admission into the 8(a) BD 
program due solely to a determination that potential 8(a) contract 
opportunities are unavailable to assist in the development of the 
concern unless:
    (1) The Government has not previously procured and is unlikely to 
procure the types of products or services offered by the concern; or
    (2) The purchase of such products or services by the Federal 
Government will not be in quantities sufficient to support the 
developmental needs of the applicant and other Participants providing 
the same or similar items or services.