[Code of Federal Regulations]

[Title 13, Volume 1]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 13CFR124.107]



[Page 372-373]

 

                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.

    (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



[[Page 373]]



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.