Bold Concepts Blog

Being successful in the federal 8(a) construction program

The Federal 8(a) construction program can be exciting, confusing at times, and profitable; but, in order to make it a success, you really have to create goals and have a solution-oriented mindset. Make sure your goals are clear and smart--SpecificMeasurableAttainableRelevant.  It’s always good to research how similar companies have achieved success in the 8(a) program possibly to use as a baseline.  A company that has years of experience in a particular trade or specialty can incorporate the data that has been acquired over the years into their goals as well.  As it relates to Federal contracting, it’s always important to remember that most of the time you’re doing work on behalf of the government so make “creating a business that maintains its clients’ satisfaction” as one of your main objectives.  

 Since the Federal 8(a) program is a 9-year program, it’s important to strategize on profit objectives early.  Time can fly pretty quickly. You never want to be in a position of feeling you didn’t completely maximize the nine years.   Because the Federal 8(a) program is a competitive market, you want to receive higher margins in the first years of the program while also effectively managing business growth.  Within the program you will be tasked with sustaining 8(a) sales and non-8(a) sales at a 75/25 ratio, so you want to maximize on profitable returns sooner than later; this will assist in the later years of having to procure more competitive business.  You will be able to create the opportunity to become a profitable business if you stay on the path of increasing quality revenue while managing risk and carefully monitoring expenses.

 Bonding Bonding Bonding. I can’t say it enough. It’s a crucial aspect to one’s longevity and success within the Federal construction 8(a) program.  Many times, small businesses aren’t able to win large bids that require a higher level of bonding.  They just don’t have the equity or capital. It’s important to learn the techniques that develop those best practices that are necessary to establish a strong foundation in the surety industry and to build the three C’s that the surety industry so desperately counts on—Capital, Capacity, and Character.  Partnering with a company that understands the needs of the surety industry will be crucial to increasing your bonding limits at a faster pace in hopes of securing more profitable projects. 

 As your business starts to grow, you will need to access more personnel resources, ensure your accounting is up to par with Federal guidelines, and learn the ins and outs of the Federal Sales Cycle.  With respect to personnel resources, it will be important to minimize these costs especially as project demands increase. Project Managers, Quality Control Managers, as well as other construction personnel can be costly to hire and maintain.  Partnering with a company that provides expertise in Federal construction can prove to be more cost effective and lessens potential liability issues.  Back-office operations such as accounting and payroll can seem monumental, but with the right tools and understanding, government submissions can become more routine tasks.  Find a partner who understands accounting but, more importantly, find a partner who understands accounting per Federal guidelines.  The acquisition of your 8(a) license does not guarantee that business will come knocking at your door.  It will be equally important for you to understand the government sales cycle and to find the right contracting officers and program managers who require your services.  You must market yourself and communicate to the government the value that you can bring.    

 The Federal 8(a) program can be exciting, confusing, and profitable.  Remove the confusion by planning ahead.  Partner with the right industry leaders to make it profitable and undoubtedly the 9-year ride will be exciting. 

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