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The 8(a) MAS Pool – A New Initiative to Boost SDB Federal Contracting Opportunities

29 June, 2023
The 8(a) MAS Pool – A New Initiative to Boost SDB Federal Contracting Opportunities

Key Details: In May 2023, the Small Business Administration (SBA) and the General Services Administration (GSA) announced a joint initiative called the 8(a) MAS Pool Initiative. The goal of this joint effort is to provide more small disadvantaged businesses (SDBs) who participate in the 8(a) Business Development Program with greater access to federal contracts in the GSA’s Multiple Award Schedule (MAS). This initiative aligns with President Biden’s goal and Executive Order (EO) 13985 “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government” to increase federal spend and contracts to SDBs. As such, this effort will establish a pool of eligible 8(a) firms to make it easier for procurement officials to locate, connect, and contract with SDBs.

Additionally, agencies will be able to place 8(a) directed awards once the MAS solicitation is refreshed and contracts are placed into the Pool. This is anticipated to begin later this year. Once participants are accepted into the Pool, they will receive a designation that provides buying agencies with the information that these businesses are eligible for 8(a) sole source and competitive set-aside awards. Pool participants will remain eligible for competitive set-aside awards for up to 5 years from the award date.

Potential Benefits of the 8(a) MAS Pool

SDBs can look forward to the following potential benefits of this initiative:

  1. Greater access to federal contracts, sparking job creation for SDBs and aiding the economic environment of underserved communities.
  2. Eligibility to compete for sole-source and competitive set-aside contracts.
  3. Increased potential for growth through gaining more contracting experience and the potential for high past performance ratings.
  4. More opportunities to work with other similar contractors to share knowledge on business growth strategies.
  5. Access to business development training through the 8(a) Program with the SBA’s district teams through workshops, guidance programs, and counseling.

How to Participate

The SBA certifies small socially and economically disadvantaged businesses through the 9-year 8(a) Business Development Program. Participants of this Program are able to submit an application to be included in the 8(a) MAS Pool. After submission, the SBA and GSA will review applications and select eligible SDBs and accept contracts into the pool. Additionally, the GSA has already identified active 8(a) MAS contractors and provided the SBA with confirmation that these contracts can be accepted into the Pool. Current 8(a) Participants seeking a MAS contract award will therefore be offered to the SBA for the Pool with their offer and upon acceptance, their contract will be added to the Pool upon award of the MAS contract.

As such, interested parties are encouraged to first ensure certification under the SBA’s 8(a) Business Development Program. Currently, businesses aiming to qualify for the 8(a) Program are subject to the following thresholds relating to net worth, adjusted gross income (AGI), and total assets:

  1. Net Worth - $850,000
  2. AGI - $400,000
  3. Total Assets - $6,500,000

Net Worth and AGI Program Thresholds Explained

Net Worth Requirements:

  1. The net worth of an individual claiming disadvantage must be less than $850,000.
  2. The value of an owner’s personal assets such as a home, retirement accounts, and value of the business are not included in this net worth calculation except when portions of assets and equity are gained through excessive withdrawals from the 8(a) business.
  3. The income and assets of a spouse are also not included in the calculation. But an important item to note is that the SBA will be checking for transfers between an owner and their spouse.

AGI Requirements:

  1. The SBA will presume that an individual is not economically disadvantaged if their average AGI over the three preceding years exceeds $400,000. This can be calculated by taking an average of your AGI over the last 3 years. AGI is reported on the first page of your federal tax returns. Non-operational sources of income can affect this calculation.
  2. Distributions from your business (in excess of reasonable compensation) are also included in your AGI calculation. Thus, withdrawals for personal expenses other than for satisfying tax obligations arising in the normal course of operating the 8(a) firm, will be included. For example, an owner takes wages of $200,000 and distributions of $350,000. If their individual tax liability arising from the 8(a) business turns out to be $100,000, they now have excess distributions of $250,000 which would be included in the AGI calculation. This results in an AGI of $450,000 which outpaces the three-year average limit.
  3. If your three-year rolling average AGI is below $400,000, you have met the requirement. If your average is above $400,000 or your distributions exceed tax on profits reported by your business, you must do further analysis. If you are filing taxes jointly with your spouse, you must separate any portion of income reported between you and your spouse. Further analysis can be performed for owners of an S Corporation, LLC, or Partnership by deducting any income reinvested (less distributions taken).

In addition to these thresholds, businesses seeking to apply for the 8(a) Program must also be a small business, have not previously participated in the Program, be at least 51% owned or controlled by socially and economically disadvantaged U.S. citizens, demonstrate good character, and demonstrate the potential for success as having been in business for two years.

Conclusion

The 8(a) MAS Pool Initiative provides SDBs who are currently participating in the 8(a) Business Development Program with a fresh opportunity to compete for federal contracts. Small businesses are encouraged to review the program eligibility for the 8(a) Program and to look out for updates from the SBA and GSA regarding this initiative. For further information and expertise, contact Ryan & Wetmore.

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About Peter Ryan
Partner, Co-founder, & CPA

Peter T. Ryan co-founded Ryan & Wetmore in 1988 with business partner Michael J. Wetmore. Peter provides clients with the best strategies for success. His expertise extends across various industries. Peter obtained a Master of Business Administration in Finance from the University of Baltimore and a Bachelor of Arts in Accounting from the Catholic University of America.

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About Rosie Cheng
Finance Consultant

Rosie Cheng is a Finance Consultant at Ryan & Wetmore. She focuses on government contracting services and produces many of the firm’s government contracting newsletters. Rosie graduated from Georgetown University with a Master of Science in Management and from William and Mary with a Bachelor of Business Administration.

 
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