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HHS Small Business Program Policy Manual

Chapter 9: Small Disadvantaged Business (SDB) Participation Program

Topics in this Chapter:

  1. Background
  2. Small Business Goals
  3. SDB Certification Program
  4. SDB Participation Program

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


A Small Disadvantaged Business (hereafter referred to as SDB) is a small business that is at least 51 percent owned by one or more individuals who are both socially and economically disadvantaged. SDB status makes a company eligible for bidding and contracting benefit programs involved with federal procurement.

The SBA published a notice in the Federal Register on September 23, 2008 to alert the small business community of the suspension of applications for the Small Disadvantaged Business Program. The suspension will have no effect on SBA’s 8(a) Business Development program. Small Businesses that participate in the 8(a) program are also small disadvantaged businesses. An Interim Final Rule was published (Fed. Register/Vol. 73 No. 193) that revised 13 CRF 124 to reflect the authority to allow small businesses to self-certify their SDB status, if they meet the criteria established by the SBA. As of October 3, 2008, companies seeking to obtain federal prime or subcontracts can self-certify their status as small disadvantaged businesses.

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The Department’s small business goals for SDBs are as follows:

Prime Contracting Goal: 5 percent
Subcontracting Goal: 5 percent


The SDB Program is one of two SBA programs targeted towards providing business assistance to small disadvantaged businesses. SDB certification pertains specifically to federal procurement. SDB firms are eligible for special bidding benefits. Also, SDBs increase their subcontracting opportunities with prime contractors who accumulate evaluation credits by subcontracting to qualified SDBs. FAR Subpart 19.304 requires a SDB at the time of its offer (prime or subcontracting) to have certification from SBA or to have completed and submitted a SDB application.

The CO may accept an offeror’s representation that it is a SDB concern for general statistical purposes. The provision at FAR Clause 52.219-1, Small Business Program Representations, or 52.212-3(c)(4), Offeror Representations and Certifications - Commercial Items, is used to collect SDB data for general statistical purposes.

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The two mechanisms addressed in FAR Subpart 19.12, SDB Participation Program are: (a) an evaluation factor or sub-factor for the participation of SDB concerns in performance of the contract; and (b) an incentive subcontracting program for SDB concerns.

  1. Evaluation factor or sub-factor.

The extent of participation of SDB concerns in performance of the contract, in the NAICS as determined by the U.S. Department of Commerce (DOC) shall be evaluated ( Participation in performance of the contract includes joint ventures, teaming arrangements and subcontracts.

The extent of participation of SDB concerns in performance of the contract in the authorized NAICS shall be evaluated in competitive, negotiated acquisitions expected to exceed $550,000 ($1,000,000 for construction). The extent of participation of SDB concerns in performance of the contract in the authorized NAICS shall not be evaluated in 

(1) Small business, HUBZone, and SDVOSB set-asides; 

(2) 8(a) acquisitions, 

(3) Negotiated acquisitions where the lowest price technically acceptable source selection process is used; or 

(4) Contract actions that will be performed entirely outside the United States or its outlaying areas.

In developing a SDB participation evaluation factor or sub-factor, agencies may consider - 

  1. The extent to which SDB concerns are specifically identified; 
  2. The extent of commitment to use SDB concerns (for example, enforceable commitments are to be weighted more heavily than non-enforceable ones); 
  3. The complexity and variety of the work SDB concerns are to perform; 
  4. The realism of the proposal; 
  5. Past performance of offerors in complying with subcontracting plan goals for SDB concerns and monetary targets for SDB participation; and 
  6. The extent of participation of SDB concerns in terms of the value of the total acquisition. The factor or sub-factor must be included in Section M and must be point scored. The amount of points given and language of the factor or sub-factor shall be individually tailored to fit the acquisition and should be developed in conjunction with the OPDIV SBS.

The solicitation shall describe the SDB participation evaluation factor or sub-factor. The solicitation shall state that any targets will be incorporated into and become part of any resulting contract. Contractors with SDB participation targets shall be required to report SDB participation.

When an evaluation includes a SDB participation evaluation factor or sub-factor that considers the extent to which SDB concerns the extent to which SDB concerns are specifically identified, the SDB concerns considered in the evaluation shall be listed in the contract, and the contractor shall be required to notify the CO of any substitutions of firms that are not SDB concerns.

  1. Incentive subcontracting with SDBs

In accordance with FAR Subpart 19.1203, the CO may encourage increased subcontracting opportunities in the NAICS as determined by the DOC for SDB concerns in negotiated acquisitions by providing monetary incentives.

Monetary incentives shall be based on actual achievement as compared to proposed monetary targets for SDB subcontracting. The incentive subcontracting program is separate and distinct from the establishment, monitoring, and enforcement of SDB subcontracting goals in a subcontracting plan.

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.

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