Study Finds 8(a) Program Benefits Businesses By Obtaining Prime Federal Contracts
Date: August 25, 2021
The federal government established the 8(a) program to improve the capacity of small businesses owned by the socially and economically disadvantaged members of society by creating a level playing field for providing goods and services to the federal government and increasing the supply base of qualified businesses owned by such members of society.
The Small Business Administration partnered with Optimal Solutions Group LLC to conduct a rigorous program evaluation to assess the performance of the 8(a) program by examining the market for goods and services supplied by 8(a) businesses and those demanded by federal agencies. The study found that there is overlap between the industries that federal agencies buy goods and services from and those in which 8(a) businesses operate. However, the results show that a change in spending in those industry sectors by federal agencies would largely not differentially affect contracting dollars to 8(a) businesses. The study identified the strongest relationships of any agency procurement practices with 8(a) spending with the use of 8(a) set-aside and sole source vehicles. Spending through these vehicles have a very strong positive relationship with increasing 8(a) prime contracting dollars.
The results also show that of the 8(a) businesses that were successful in obtaining a first prime federal contract, those that had more experience in federal contracting, had a higher concentration of federal earnings in their overall revenue, and had more set-aside and sole source contracts were likely to receive higher prime federal contracting dollars. Comparing the performance of businesses that joined the 8(a) program to a group of non-8(a) businesses statistically matched based on their characteristics, the study found that 8(a) businesses were more likely to obtain a prime federal contract in the first 4 years after joining the program compared to the non-8(a) businesses. Moreover, the results show that businesses in the 8(a) program obtain prime federal contracts at a faster rate than non-8(a) businesses.
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Optimal Solutions Group, LLC
Founded in 2000, Optimal Solutions Group, LLC, is a nonpartisan public policy research and technical assistance firm that stands out for its quantitative expertise and innovative approaches to provide rigorous, data-driven research and technical assistance to government agencies, corporations, nonprofit organizations, and philanthropic foundations. Located at the University of Maryland’s Discovery District in College Park, Optimal is a leader in driving real-time public policy research. Optimal has 60+ employees, including multidisciplinary researchers with backgrounds in economics, education, health, housing, sociology, statistics, information management and entrepreneurship. Optimal has four research centers—Health, Education, Housing and Workforce Development, and Social Policy—as well as an International Practice, Analytics Group, and Entrepreneurship and Innovation Center.