Statement of the Hon. Kweisi Mfume on The 8(a) Program: Overview and Next Steps to Promote Small Business Success
Washington, March 2, 2022
Thank you to all our witnesses for joining us today.
Throughout our history, small businesses, especially those owned by socially and economically disadvantaged individuals, have faced real challenges when it comes to participating on equal footing in the American economy, and specifically in the federal procurement space. Disadvantaged businesses often navigate obstacles like discriminatory lending practices, and fewer mentorship and business opportunities, as they seek to grow their businesses and serve their customers.
Recognizing the struggles that disadvantaged businesses face, Congress created the Small Business and Capital Ownership Development Program, known as the 8(a) program, in 1978. I take particular pride in this landmark program because my predecessor, Parren J. Mitchell of Maryland’s 7th Congressional District was the architect of this Program. I succeeded him in Congress in 1987 and carry this important mantle today.
The 8(a) program is a 9-year program that offers small businesses owned by “socially and economically disadvantaged individuals” training, technical assistance, and contracting opportunities. 8(a) participants are eligible for 7(j) training, which offers valuable counseling and training opportunities in financing, management, accounting, bookkeeping, marketing, and identifying new business opportunities.
The federal government has also established a statutory goal of awarding 5% of all eligible contracting and subcontracting dollars to small and disadvantaged business concerns. Disadvantaged businesses, including those who are not currently participants in the 8(a) program, need more support. That is why I applaud President Biden’s goal of increasing the share of contract awards to small and disadvantaged firms to 15% by 2025.
For over 40 years, socially and economically disadvantaged small businesses have relied on the 8(a) program to help them compete and innovate in the Federal marketplace. When small businesses win federal contracts, they grow, create jobs, and support their communities.While the 8(a) program helps thousands of disadvantaged small businesses annually, participants have reported ongoing challenges.
For example, many business owners have reported concerns with the duration of the 8(a) program. When a small firm is admitted, it typically takes a business multiple years to receive its first award. This hinders the development of program participants and raises the question of whether enterprises are ready for graduation when they exit the program.
8(a) businesses have also expressed concern with the program’s technical assistance and training through the 7(j) program. Today, we will ask the question of whether the training provided to 8(a) participants is adequately preparing small contractors for graduation, and how to improve the 8(a) program to better support disadvantaged businesses.
Lastly, we will examine how trends within the contracting space impact small 8(a) firms. For years, the size and scope of contracts have been on the rise. This has excluded many 8(a) firms that may not have the capacity to take on larger contracts. At the same time, sole-source contract thresholds have remained unchanged over time, resulting in fewer 8(a) sole-source contracts.
Consolidation in procurement has limited the ability of 8(a) firms to compete for contracts. Ensuring a level playing field for small contractors is of the utmost importance to our economy. Despite all the obstacles, socially and economically disadvantaged businesses employ millions of Americans and contribute over $1 trillion in revenue to the nation’s economy. The 8(a) program is a crucial tool to ensuring that these firms have ample access to the federal marketplace.
I hope that today’s hearing allows us to explore actions our Committee can take to improve and modernize the 8(a) program.