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HHS Small Business Program Policy Manual

Chapter 8: Small Business Administration 8(a) Business Development Program

Topics in this Chapter:

  1. Background
  2. Authority and Implementation
  3. Identifying Procurements for the 8(a) Program
  4. Offering Procurements To The SBA
  5. Withdrawal or Modification of 8(a) Set-Asides
  6. Post-Award Actions
  7. Parity Rule

This part sets forth policy and procedure about HHS’ actions issued under the Small Business Administration (SBA) 8(a) Business Development Program.  It expands on key aspects of the Federal Acquisition Regulations (FAR) and the U.S. Health and Human Services Acquisition Regulations (HHSAR).


This philosophy expresses the basis for Federal programs supporting minority business enterprise, begun in 1969. At that time, Federal contracts were viewed as an effective means to stimulate the growth of the minority business community. Section 8(a) of the Small Business Investment Act of 1958 was determined to be an appropriate mechanism for awarding those contracts.

Section 8(a) authorized the SBA to enter into prime contracts with Federal agencies and to subcontract the performance of the contract to small business concerns or others. Executive Order No. 11458, authorized the use of this provision to assist minority businesses and established the 8(a) Program, as it is commonly called. That authority was later superseded by Executive Order No. 11625 of October 13, 1971.  Public Law (P.L.) 95-507, enacted in 1978, gave the 8(a) Program statutory authority, more exacting eligibility criteria and a more clearly defined mission.

The Business Opportunity Development Reform Act of 1988, P.L. 100-656, has refocused the 8(a) Program on its original business development objectives. The process for determining eligibility has been decentralized and simplified.  The program participation term has been expanded to nine years and divided into a developmental stage and a transitional stage.  More emphasis has been placed on business planning, participating concerns can no longer be dependent on sole-source contracts, and competition has been introduced for larger procurements. The changes enacted in P.L. 100-656 are a sweeping effort to ensure that 8(a) Program participants develop the ability to compete in the open marketplace.

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The 8(a) Program is authorized under Sections 7(j) and 8(a) of the Small Business Investment Act, as amended. Also refer to the 13 Code of Federal Regulations Part 124 and the FAR Part 19.8.

The SBA and HHS have a Partnership Agreement (hereafter referred to as PA) to streamline the 8(a) acquisition process. The SBA has delegated its authority to execute the final contractual document 8(a) acquisitions. Please log onto the OSDBU homepage for details (


  1. Types of Suitable Procurements

    All procurement opportunities, including those under the Simplified Acquisition Threshold (SAT), should be considered as a possible candidate for the 8(a) Program. 8(a) contractor are capable of performing virtually every type of manufacturing, service and construction contract.

    There are no limitations on the type or size of 8(a) procurements. The Federal Acquisition Regulation (FAR) Part 19.805 states that a competitive award shall be issued if there is a reasonable expectation of receiving offers from at least two eligible 8(a) concerns and making award at a fair market price.  There are thresholds governing sole source and competitive 8(a) procurements.  Competition is for 8(a) concerns when the estimated value of the procurement, including all options, exceeds $4 million. For procurements with manufacturing NAICS codes, the threshold for competition is $6.5 million (FAR Subpart 19.805-1).  For Indefinite-Delivery type contracts, the determination of whether the competition threshold is exceeded will be based on the estimated maximum value of the procurement.

    A proposed sole source 8(a) requirement should not be a) publicly synopsized as a small business set-aside , b) performed by a small business, nor c) require excessive subcontracting to be performed by other than the prospective 8(a) contractor (see FAR 52.219-14, Limitations in Subcontracting). Competitive 8(a) requirements are synopsized in FedBizOpps.

  2. Repetitive Set-Aside Policy

    Once a product or service has been acquired successfully by a contracting office on the basis of an 8(a) set-aside, all future requirements for that specific product or service must be acquired using 8(a) set-aside procedures. (See Section G of this Chapter for exceptions.)

    The CO must submit a new offering letter to SBA if he or she intends to award a follow on or repetitive contract as an 8(a) award.   SBA will determine whether the requirement should remain under the 8(a) Program.

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When a suitable procurement (over $150,000) has been identified, the CO offers it to the SBA for award under the 8(a) Program.  FAR Subpart 19.804-2, lists the exact information that must be contained in the offering letter.  The letter must state the applicable NAICS code and size standard for the procurement, and include a copy of the statement of work. For Sole source under the competitive threshold the proposed procurement can be offered for the 8(a) Program in general, on behalf of a specific 8(a) firm.  Should you not identify a specific 8(a) firm, SBA may recommend on for you.  For a competitive 8(a), the offering letter must be sent to and accepted by the SBA prior to any public announcement or solicitation release.  For competitive actions the CO must send a second or follow-up letter to the SBA.  This is a letter to name the apparent awardee and to obtain eligibility determination from SBA for that company prior to award. (See Section F of this Chapter.)

For sole source, offering letters should be sent to the SBA District Office that services the nominated 8(a) firm, except for construction procurements.  For construction requirements, offering letters should be sent to the SBA district office where the work is to be performed.

Offering letters for competitive 8(a) procurements, other than construction requirements, should be sent to the SBA district office servicing the geographical area in which the contracting office is located. All requirements for 8(a) construction competition should be forwarded to the SBA District Office servicing the geographical area in which all or the major portion of the construction will be performed.

  1. Sole Source Offers for 8(a)

    1. A Contracting Officers and Project Officers must always do their market research. (See Chapter 2 of this Manual.)
    2. If an 8(a) contractor has performed identical or similar work previously, or has marketed its capabilities in a certain area, a proposed procurement can be offered to the SBA on behalf of that contractor. Prior to offering procurements in this manner, the OPDIV CO should contact the SBA District Office where the company's business plan is administered to verify that the contractor 1) is a small business in the NAICS code to be performed; 2) has not exceeded its business plan support level; and 3) is in compliance with the competitive business mix targets. The CO should also reference any search letters submitted by the SBA in their offering letters and copy the OPDIV SBS on all correspondence to the SBA District Office.
    3. Should the CO not identify a specific company for the 8(a) sole source, the SBA will select the 8(a) contractor to perform based on the capabilities, approved level of contract support in the business plan, and compliance with the competitive business mix requirements. The contractor must meet the procuring agency's technical needs, but the final contractor selection rests with the SBA. SBA will promote the equitable geographic distribution of 8(a) sole source contracts.
    4. Informal Technical Presentations - A Small business may market its capabilities to program officials, acquisition officials and other key stakeholders through informal technical presentations for 8(a) sole source requirements.
      COs may invite 8(a) contractors (usually from three to seven) to give presentations on their capability to perform a specific procurement. The OPDIV shall not require the contractors to develop elaborate technical presentations or to otherwise incur bid and proposal costs at this stage. In order to enable the 8(a) concerns to focus their presentations, the CO may develop a list of salient characteristics and/or necessary expertise to perform the procurement. This list may be given to each of the invited contractors, with a statement that the list is not inclusive and is not the final statement of work (SOW). A draft SOW may be provided as long as it is a draft and not the final SOW. If the finalized SOW is issued, SBA will consider that the procuring agency has initiated a competitive procurement.
      The CO, and if possible, the SBS, shall attend the presentations with the program office staff. The CO or SBS shall make clear to all in attendance that the presentation is a marketing effort and not a commitment to offer a contract. No cost information may be solicited. After listening to the presentation, appropriate questions about the contractor's capabilities may be asked. Based on the informal technical presentations, OPDIV procurement, small business, and program officials, may at that time select one 8(a) contractor with which to continue the acquisition process. The CO shall submit an offering letter to SBA on behalf of that concern. The CO also shall provide the OPDIV SBS with a copy of the offering letter within five (5) business days.
      Since this process is considered market research there is no debriefing for the businesses that were not selected for the sole source. The CO should, as a courtesy notify these businesses once an award is made.
    5. The selection and offering of a particular 8(a) contractor is outlined above.  As outlined in the SBA, HHS Partnership Agreement, the SBA has five (5) business days to respond to the offering letter with an acceptance letter. If the SBA does not respond within five (5) business days, the contract specialist may assume, on the sixth day, that there is an agreement, if an extension to the 5 day timeframe has not been requested and accepted.  This is in accordance with the Partnership Agreement, paragraph IV.A.4(a)ii.
  1. Offers for Competitive Procurements

    For procurements which exceed the threshold for competition (currently set at $4 million), the offering letter must be sent to SBA prior to any pre-solicitation announcement to the geographic location where the work will be preformed (for construction), or the location of the SBA region that services that HHS Operating Division.  The Letter shall identify any geographic conditions which are important for contract performance and list the names of 8(a) contractors, if any, which have already expressed an interest in the procurement. The complete draft solicitation with evaluation criteria must accompany this initial offering letter.  Additionally, identify any search letters which have been sent for that procurement.[1]

    The PA between HHS and the SBA, also applies to competitive 8(a) acquisitions.   COs are reminded  that contracts that have not been offered to and accepted by SBA into the 8(a) Program cannot be used as credit toward HHS’ 8(a) negotiated goals. 

    1. SBA Response - In accordance with FAR 19.804-3 and the SBA and HHS Partnership Agreement, the SBA will evaluate the offer and within five (5) business days[2] from receipt of the offer, either accept or reject the proposed procurement for the 8(a) Program. Prior to accepting the offer, SBA will determine whether this would have an adverse impact on another small business. An adverse impact is generally considered to exist if the contract is currently being performed by a small business concern (not in the 8(a) Program) and accounts for 25% or more of that concern's annual receipts.
      If the requirement is below the threshold for competition, the acceptance letter will also identify the contractor selected to perform the procurement. In most cases, SBA will authorize the procuring agency to conduct negotiations directly with the 8(a) company.
      For competitive procurements, the acceptance letter will advise whether the competition is limited geographically or further limited to participants in the developmental stage or the transitional stage of program participation.
      The SBA has five (5) business days to respond to the offering letter with an acceptance letter. If the SBA does not respond with a notification of rejection within five business days of receipt of the offer, the procuring activity may assume acceptance on the sixth (6th) business day.  However, the procuring activity may seek SBA’s acceptance through the Associate Administrator, Office of Business Development (AA/BD).  If the AA/BD does not respond within five (5) business days, the procuring activity may assume acceptance on the sixth (6th) business day.  Should this occur the CO must document the file, referencing the HHS and SBA Partnership Agreement paragraph IV.A.4(b)ii, and proceed with the 8(a) acquisition.
    2. Competitive 8(a) Solicitations

      For competitive 8(a) procurements, the acquisition is synopsized in FedBizOpps. The 8(a) contractors who request a copy of the solicitation, should be directed to the FedBizOpps posting. The 8(a) contractor is responsible to retrieve the posted solicitation and all future amendments from FedBizOpps.
      Competitive 8(a) acquisitions may be conducted using either sealed bids (FAR Part 14) or competitive proposals (FAR Part 15). The same criteria for selecting the method of solicitation (sealed bid vs. competitive proposals) apply as for other competitive contracts. The solicitation package for a competitive 8(a) solicitation should not differ from that required for any other competitive procurement. The solicitation shall include a complete SOW, and detailed evaluation factors for award.  The solicitation shall also include the clause at FAR Clause 52.219-18, Notification of Competition Limited to Eligible 8(a) Concerns, with it Alternate III (Deviation).
      The date of the 8(a) offeror's written self-certification as a small business, submitted with its initial offer including price, will be the date used by SBA to determine the concern's eligibility to receive the particular contract. Therefore, it is particularly important to verify each 8(a) offeror’s Online Representations and Certifications.
    3. Evaluation of Competitive 8(a) Offers

      Offers from 8(a) concerns are evaluated in accordance with the evaluation factors listed in the solicitation. Evaluations shall proceed as they would for any competitive solicitation, whether sealed bid or competitive proposals.
      The General Accountability Office (GAO) has ruled that it has jurisdiction to hear and decide protests of solicitation content and evaluation procedures used for competitive 8(a) procurements. Therefore, the CO must use the same care to safeguard information and evaluate 8(a) offers as is required for other competitive procurements.
    4. Negotiating the Competitive 8(a) Contract

      Agency COs are responsible for conducting all negotiations necessary for determining an apparent successful offeror on solicitations requiring competitive proposals.

    5. Eligibility Determinations for Competitive Procurements

      For competitive 8(a) acquisitions, the CO shall submit a second letter (letter for eligibility determination) to SBA.  The letter shall contain the name, address and telephone number of the apparent successful offeror (or low bidder) and a copy of the initial offering letter to the appropriate SBA Business Opportunity Specialist (BOS) at the district office(s) servicing the identified 8(a) firm(s) (unless it is a construction requirement—which should go to the SBA office where the work will be performed). The SBA shall determine the eligibility of the firm(s) and advise the CO within five (5) business days of the receipt of the request. If the firm is determined to be ineligible, the CO shall submit information on the next apparent successful offeror (or low bidder) to the cognizant SBA District Office.
    6. Preparing the Competitive 8(a) Contract Documents

      The competitive 8(a) contract documents are prepared in the same way as Sole Source 8(a) contract documents.

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An individual 8(a) set-aside may be withdrawn or modified before award if the CO determines that award would not be in the public interest (because of unreasonable price, for example.) A copy of the CO's written determination to withdraw or modify a set-aside must be forwarded through the OPDIV SBS and the SBA PCR to the OSDBU or designee for approval prior to proceeding with the procurement. After the OSDBU or designee's approval, the CO must notify the SBA of its intention to withdraw the requirement from the 8(a) Program. SBA has the right to appeal the withdrawal, particularly if it is based on price or price-related issues.

If the SBS disagrees with the CO, the matter may be referred to the Director, OSDBU and the OPDIV’s HCA. The decision of the Director, OSDBU is final. If award cannot be made, the set-aside is automatically dissolved.

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  1. Coordination with the SBA and the HHS OSDBU

    Careful evaluation of the contractor's capabilities prior to award ensures that 8(a) contracts are performed successfully. However, any significant performance problems under an 8(a) contract shall be reported immediately by the CO to the OPDIV SBS and the Director, OSDBU. The SBA BOS should also be notified, as it may be possible for the SBA to provide assistance which will enable the 8(a) contractor to satisfactorily complete the contract. The CO must not initiate termination proceedings, either for default or for the convenience of the Government, without first informing the OPDIV SBS, Director, OSDBU and the SBA BOS.

  2. Approval of Lower Tier Subcontracting

    The OPDIV SBS and SBA PCR must concur before performance under an 8(a) contract is subcontracted to another concern. This requirement is in addition to the overall limitations on subcontracting required for all set-aside contracts (see FAR Clause 52.219-14). The SBS and SBA PCR may not concur if a proposed subcontracting arrangement has the following issues:

    • The proposed subcontractor is suspended, debarred, or determined ineligible by any Federal agency;
    • SBA determines that the subcontractor would control performance of the procurement;
    • SBA determines that the proposed subcontract is not an arms length agreement; or
    • SBA determines that the proposed subcontract is an attempt to circumvent the size regulations.

The SBA PCR must be informed of all subcontracting arrangements and reserves the right to disapprove such agreements.  You may refer to the SBPM Chapter 7 to review subcontracting policy and procedure.

  1. Contract Modifications

    Contract modifications are negotiated between the contracting agency and the 8(a) firm. In general, unilateral modifications, such as a change in the Contracting Officer Technical Representative (COTR), may be issued without the signature of the 8(a) firm. A copy of the modification should be sent to SBA within 15 business days.

    A modification within the scope of the initial contract may be issued whether the contractor has exited the 8(a) Program or whether the concern is no longer small under the size standard for the contract.

    A modification outside the scope of the initial 8(a) contract is considered a new contract action. If the 8(a) contractor is still a Program participant and still a small business, the new requirement may be issued as a sole source procurement.  The estimated price must fall below the applicable threshold for competition and SBA must issue an acceptance letter in response to the contracting agency’s offering letter for all work outside of the scope of the current contract. If the estimated price exceeds the threshold for competition, the requirement must be competed among eligible 8(a) concerns.

    When an 8(a) firm graduates from the 8(a) Program during a contract period of performance, it is still considered an 8(a) firm (e.g. exercising options).  However, as the timeframe for recertification approaches and the CO and or 8(a) vendor foresees graduation from the 8(a) Program the CO must consider another 8(a) firm.

    An 8(a) firm must notify SBA if it’s acquired by a large business, if the current contract must be re-competed or if a Novation Agreement is issued (refer to FAR Subpart 42.12).

  2. Delivery Orders

    It is the responsibility of the CO to monitor delivery orders against Indefinite Delivery type contracts to ensure that the 8(a) firm does not subcontract tasks beyond the established limitations. A copy of each delivery or task order shall be forwarded to the appropriate SBA office within fifteen business days of execution.

  3. Exercising Options

    Priced options under 8(a) contracts are exercised in the same manner as any contract option, except that a copy of the modification should be forwarded to the SBA office which administers the contract.

    Priced options may be exercised even if the 8(a) contractor has exited the 8(a) Program or is no longer a small business under the size standard which applies to the contract. As with any other contract, un-priced options are not allowed.

  4. Performance of Contracts By Original 8(a) Concern

    A 8(a) contract (including options) awarded must be performed by the 8(a) concern that initially received the contract. If the owner(s) upon whom eligibility was based relinquish ownership, the contract or option shall be terminated for the convenience of the Government. The SBA Administrator, on a non-delegable basis, may waive this requirement if certain conditions exist (such as the death or incapacity of the owner).

    If the CO determines that termination of the contract would severely impair attainment of the agency's program objectives or mission, and the SBA Administrator does not grant a waiver to the contractor, the CO may request a waiver by immediately notifying the Contractor’s SBA in writing.3 The CO should also include in their request a copy of the acceptance letter since it may have been obtained from a different SBA office. The request for waiver must be coordinated with the OPDIV SBS and must be filed within 15 business days after the notice

  5. Preparing the Competitive 8(a) Contract Documents

    The competitive 8(a) contract documents are prepared in the same way as Single Source 8(a) contract documents.

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The Contracting Officer must submit a written request to the SBA of their request to release a requirement from the 8(a) BD Program. The written notification should be sent to the cognizant SBA district office servicing the geographical area in which the procuring agency is located. A copy of the request must be submitted to the OSDBU.

The Contracting Officer shall include the reason(s) for the request, the procurement history of the requirement, the incumbent name, the assigned NAICS code and the Statement of Work. SBA has the final decision.

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The President recently signed the Small Business Jobs Bill (S.B. BILL Sec. 1347- Small Business Jobs Act).  The Bill modifies the HUBZone regulations to clarify parity between the 8(a), HUBZone, and the SDVOSB Programs.  Market research must be conducted to determine and document the ODPIV’s selection.  Once market research is performed:

  • The decision to select between 8(a), HUBZone or SDVOSB is discretionary for procurements between $3,000 and $150,000.
  • For procurements over $150,000: after conducting market research, the CO has substantial discretion to select between the 8(a), HUBZone or SDVOSB programs before selecting to use a small business set-aside. The final decision must be documented.

The CO should make every effort to consult with the SBS when a full or partial small business set aside is considered.  The CO should also take into consideration its OPDIV’s current small business goal achievement for the fiscal year.   Refer to the SBPM Chapter 1, Subpart C to review information regarding HHS’ goals and Chapter 4 to review small business set aside policy and procedure.

Procurements that are already in the 8(a) Program remain in the 8(a) Program unless released by SBA.


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1. An offering letter for competitive action must be sent to the SBA Prior to Pre-Solicitation.  See page 6 for more information.
2 Refer to the HHS Partnership agreement with the SBA for more information
3 Written requests should be submitted to the SBA office where work will be performed for construction related requirements.

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Content created by Assist. Sec./Financial Resources - Small/Disadvantaged Business
Content last reviewed on July 25, 2014