Is the 8 process worth all the trouble? - a - minority set-aside program of the Small Business Administration

Black Enterprise, August, 1992 by Kevin D. Thompson

Len Ray, president of RAY Communications Inc., a Norristown, Pa., systems integrator for local area networks and telephone systems, says that the program gave him the opportunity to demonstrate that his company had some capability. "We became certified in 1986, and we didn't get the first contract until two years later," says Ray. "The first one was with the Census Bureau to install cable - the contractor had a ceiling of $75,000 per year. The first year we did about $30,000 worth of work. They liked what we did and after that first year, we signed a three-year contract, and we will do about $200,000 worth of work for the Census Bureau."

William H Smith was another one of those entrepreneurs who heard that 8(a) might give him a good shot at landing a few government contracts. The president of ComTel Productions Inc., a Londonderry, N.H., film, video, interactive production company, says that he applied to the program at the suggestion of a friend. "Initially, I wasn't interested," recalls Smith, whose company has done a series of Medicare videos for the Health Care Financing Administration featuring "20/20" correspondent Hugh Downs. "I didn't want to get bogged down in something that would involve a lot of paperwork. But a friend told me how it helped him establish a real base for his business. I saw this as an opportunity to help my business become more stable through an added source of contracting."

Smith says that since ComTel joined the program, 8(a) has, among other things, enabled his firm to expand into touch screen technology - or as it's more commonly called, interactive video. "We would not have had the opportunity to get into this end of the business as rapidly had it not been for 8(a)," he says.

However, for every William Smith whose expectations were met, there are hundreds of other 8(a) business owners who walk away disappointed.

Take Jim Taylor. The president of Alaska Quality Control & Technical Services contends that 8(a) has been a total disaster for him. Taylor, whose 10-year-old firm grossed $900,000 in sales last year, says he joined 8(a) in 1986 because it was touted as a minority business development program.

However, Taylor laments that the program hasn't done much to help his company grow. Since joining, he says that he has landed only two contracts totaling $232,000. The first was a $32,000 job to analyze asbestos samples at Elmendorf Air Force Base in Anchorage and the second was a $200,00 contact to install telephone systems for the U.S. Fish & Wildlife agency. Fortunately for Taylor, 98% of his business in non-8(a).

The 8(a) contract that sticks in his mind, however, is the $1.5% million job to manage a computer research effort at Elmendorf. While pursuing that contract earlier this year, Taylor says he got little support from the SBA. It was an adversarial situation, he recalls, and a lot of unnecessary volleying. "One of the people at Elmendorf told me about the project and asked what SIC [standard industrial classification] codes I had. [SIC codes refer to the type of business an 8(a) firm is in.] I told him and he said he'd list the project under this particular code," recalls Taylor. "When I got to the SBA, the first thing they said was, |What is the size of the contract?' I told them it's for $1.5 million. They thought it was for more than $3 million, which means I would have had to compete for it against other 8(a) companies. I finally got that settled with them, but they were not trying to sit down with me to work out the contract."