Federal programs such as the Small Business Administration 8(a) program are designed to help businesses owned by people from disadvantaged backgrounds become competitive, but some recipients of this designation say the process for obtaining 8(a) status can be exploited.

Larger firms can sometimes take advantage of federal aid programs, such as one California construction company that won more than $7 million in no-bid and other federal contracts based off a disputed Native American ancestry, according to a 2018 Los Angeles Times article.

“It’s businesses like that which make it hard for us businesses that are on the up-and-up to get through the SBA application process,” said Marcella Medor, president and founder of MarCom. "Other legit businesses have to pay the price for their sins. And we pay it 10 times over."

MarCom is a SBA-certified, Native American-owned and woman-owned business with offices in Idaho Falls and Butte, Montana. The business provides management, administrative, engineering, nuclear operations and health and safety services to Department of Energy sites across the country.

The 8(a) program is a small business development program that allows government agencies to set aside work for small businesses, awarding at least 5 percent of all federal contracting dollars to these businesses. After nine years, companies graduate from the program with the intent of them being able to stand on their own.

In fiscal year 2021, which ends Sept. 30, Battelle Energy Alliance — which runs Idaho National Laboratory on a 10-year contract — targeted 51 percent of its laboratory procurement spending, or $240 million, with small businesses. It also has targeted 5 percent of its procurement spending, or $23.5 million, with 8(a) businesses and 5 percent (also $23.5 million) with Women-Owned Small Business.

"Battelle Energy Alliance is committed to supporting the small business objectives of the U.S. government and the Department of Energy and recognizes that diversity in subcontracting provides a vital link to the local community, strengthens the economy, and represents best business practices," INL said in its Fiscal Year 2021 Small Business Subcontracting Plan.

Medor said the process for her to obtain 8(a) designation was tedious.

It took two years for MarCom to receive 8(a) aid after she started the application process, Medor said. The application process was lengthy and she had to get proof from the city that MarCom didn’t own the building it was renting or the parking lot next to its building. At one point, she had to provide a receipt for a $1 transaction, she said.

“Any hoop you can or can’t imagine, we have to jump through,” Medor said. “Finally, I think what happened is I just wore them down. They couldn’t think of anything else to ask me.”

Sylvia Medina — founder of North Wind and Green Kids Club, both based in Idaho Falls — said the program is a great way for small businesses to compete with large companies.

“If the government didn’t require competitions with these different certifications, then many companies would never qualify to do (contracting) work because the competition is so stiff,” Medina said.

Medina didn’t get 8(a) status for North Wind until about four years after she founded the company, she said. She sold North Wind in 2010. The company provides services in environmental consulting, technical services and construction.

While Medina said she hasn’t seen anyone blatantly lie about their heritage to receive 8(a) status, she has seen businesses owned by couples that will give 51 percent ownership to the woman in the relationship even though the businesses essentially belong to the man.

Another problem Medina said she has with the program is the amount of work that’s contracted to larger firms that have obtained 8(a) status rather than to local small businesses.

“You just continue seeing companies coming in from outside the area,” Medina said. “It’d be nice to see if they give work to some of the local businesses.”

Medor said she thinks some of the issues that arise with 8(a) distribution may be from SBA regional offices being understaffed. She said there are two people that represent the program in Boise and MarCom’s office in Montana, which works with the forest service in the state, has only been in contact with one person from the program.

“The intent of the program is for the good of small business and to help minorities,” Medor said. “Once you get through the vetting process, it can really be helpful. But you have to have your patience hat on to get through that process.”