Enjoy the post from I'Ashea Myles-Dihigo:
Money for Women and Minority Owned Contracting Businesses… An Introduction to Winning Government Contracts - Part 1: Certifying as a Small Business
I can’t help but think of the song
by The O’Jays, “For the Love of Money” when writing this piece, so let that
soundtrack play in your mind’s ear as you read this.
I
get together with a group of my friends about every 6-8 weeks for “Wine and
Woodworking,” the brain-child of my talented friend, Natalie. As a construction lawyer, I felt the need to
be able to at least attempt to build something with my hands. I get to interact with a cross-section of
women. We laugh, drink wine, use table saws and various other tools and build
amazing furniture pieces. At one of
these events, a friend of mine approached me about starting her own construction
company. I was all about helping her out.
The information I found in walking her through the process is useful for
any general contractor or sub-contractor that is looking to start or grow her
or his business.
The current administration spoke
very boisterously on the campaign trail about its plans to “revitalize” the
country’s infrastructure. There is also
a large push in many areas of the country for housing and new construction as
affordable housing shrinks across the nation.
This series will be used to introduce minority and women owned
contractors, and those aspiring contractors to the United States Small Business
Administration (SBA). It will provide a
broad overview of the programs it offers to small businesses and specifically
the certifications and set-asides for women and minority owned businesses which
are in place to position those companies to win some of those government
contracts.
In 2016, the U.S. Bureau of Labor
Statistics reported that women in construction related fields represented about
9% of the workforce. Latinos and/or
Hispanic Americans 28.9%, African Americans made up 5.8% and Asian Americans
1.9%. These statistics are shocking, especially when new construction is booming
in almost every quadrant of the country.
As the statistics show, construction is an often missed and lucrative
field for minority and women owned businesses.
According to the SBA, the U.S. government awards about $500 billion in
contracts annually, and at least 23% of those contracts are awarded to small businesses. There are additional federal mandates that
some of those dollars and contracts must
flow to businesses that are owned by women and minorities.
Size Matters:
Certifying as a Small Business
The SBA has identified various
programs to encourage women and minorities to enter into federal government
contracting. For the record, the
business registration process for minorities, women and service-disabled and/or
veterans does not differ at all from the standard process that all businesses
must follow. You will need to register
your business with the state, choose a name for your business, obtain a federal
tax identification number, and secure any pertinent certifications and/or
permits for your business to legally operate under the rules and laws of your
state.
You must also ensure that your
business is a small business as defined by the SBA. For most industries, small business is
defined by either the average number of employees over the past 12 months or
average annual receipts over the past three years. U.S.
Small Business Administration (October 2, 2017), available at http://www.sba.gov. This is the definition used for the
construction industry. This information will be used in the System for Award
Management (SAM) when you register as a government contractor in addition to
your self-certification as a small business. Id. Additionally, the SBA
defines a small business as one that:
- Is organized for profit;
- Has a place of business in the U.S.;
- Operates primarily within the U.S. or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor;
- Is independently owned and operated;
- Is not dominant in its field on a national basis. Id.
All
federal agencies must use the SBA defined size standards for contracts
identified as small businesses. Once you have gone through the process to
determine if you’re in fact a small business, you may register and certify your
business as such. The small business
standards are the ceiling on how large your business can be and still remain
classified as a small business under the SBA guidelines.
NAICS for General Contractors
Once you’ve determined your business
size, you have to determine the classification under which your service would
fall. The North American Industry
Classification System (NAICS) is a system used to classify businesses to collect,
analyze and publish statistical data related to the U.S. economy. United
States Census Bureau (October 2, 2017), available at https://www.census.gov. The NAICS industry codes define
establishments based on the activities in which they are primarily engaged in
and services and/or goods a business produces.
The 2017 NAICS code for new
single-family construction is 236115. Id.
This code is used for general contractor establishments that are responsible
for the entire construction of new single-family housing that is separated from
neighboring houses by a ground-to-roof wall and has no housing units
constructed above or below the unit.
This code would cover firms working in single-family design for firms
handling the construction management for single family homes.
The 2017
NAICS code for commercial and industrial construction is 236220. Id.
This code is for contractors focused on the construction of commercial and
institutional buildings and related structures, such as parking garages,
airports, office buildings and schools.
This code would also cover design firms and commercial and institutional
construction management firms. There are
also specialty codes within the construction subsection for contractors that
specialize in trades like flooring (238330), electrical (238210), structural
and foundation (238190) and roofing (238170).
Id. The NAICS defines the size of the business by monies earned
in annually in millions of dollars. Id. For instance, if you are a
framing contractor (23810), your size standards are calculated in either the number
of employees or average annual receipts; therefore, if your business, inclusive
of subsidiaries and affiliates, makes less than $15 million in receipts
annually, then you are considered a small business. Many small start-up to
mid-sized construction companies would qualify under this definition of small
business. So, some of the governmental
contracts for construction work on roads, infrastructure, natural disaster
relief and many other areas could go to businesses of this size.
Next time, I will talk about the
government set-asides that are specifically designed to be awarded to
businesses that self-certify to be women and minority owned and how to qualify
for those contracts.
For
more information on the SBA visit www.sba.gov.
I'Ashea Myles-Dihigo
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