Did you know that SBA has a Government Surplus Property Program? It is one of the lesser known benefits of being an 8(a) participant. The Surplus Property Program allows 8(a) businesses to obtain excess equipment from the government. As long as the 8(a) business is eligible and in good standing with SBA they are eligible to receive the Federal Government Property from State Agencies for Surplus Property (SASPs). Every state has its own State Surplus Property Agency. The property that you can receive has been donated by Federal agencies that no longer need the item.
In order to receive the donated equipment an 8(a) business must meet the following conditions:
- You are an eligible 8(a) firm in good standing.
- Your business cannot be on the debarred, suspended, or declared ineligible listing
- Cannot be pending any 8(a) program suspension, termination or early graduation proceedings; and
- The equipment must be something that would normally be used in your business.
If you meet the above eligibility criteria then you can take advantage of this program. Furthermore, you can benefit by putting this equipment into use and enhance your capabilities of your business
How Can I use the acquired surplus property?
As a 8(a) Participant you may acquire surplus Federal property from any SASP located in any state, provided the concern represents and agrees in writing:
- What is the surplus property. And that this use is consistent with the objectives of the concern’s 8(a) business plan;
- That you will use the property in the normal conduct of your business activities. Failure to comply with the proper use of the equipment could cost your business money. As you will owe the fair rental value of the property from the date you received it;
- You will not sell or transfer the property to any party other than the Federal Government, The property term is up to one year past your program term;
- That, at your own expense, you will return the property to a SASP or transfer it to another Participant. SBA has the discretion.
Failure to Comply
- That, should you breach the agreement not to sell or transfer the property, you will owe the Government for the established fair market value or the sale price, whichever is greater, of the property sold or transferred; and
- You will give SBA access to inspect the property and all records pertaining to it
- A firm receiving surplus property assumes all liability associated with or stemming from the use of the property.
- The property is put into use within one year. If not, SBA may direct the concern to deliver the property to another participant or to the SASP.
- Failure to comply with any of the commitments constitutes a basis for termination for the 8(a) BD program.
In summary, you are basically renting the equipment for your program term plus one year. As long as you meet the eligibility requirements of the program you are free to visit your State Surplus Property Agency and obtain the equipment.
How to acquire federal surplus property?
The following are the steps need to be able to acquire government surplus property.
- Participants may participate in the surplus property distribution program administer by the SASPs to the same extent but with no special priority over, other authorized transferees.
- Each participant seeking to acquire Federal Surplus Property must
- Certify in writing to the SASP that it is eligible to receive the property;
- Make. Written representations and agreement; and
- Identify to the SASP its servicing SBA field Office.
- Upon receipt of the required certification, representations, agreement, and information the SasP must contact the appropriate SBA Field office. The SBA district office will verify that your business is okay to receive the property. Also, the property must be in your business plan and consistent with the work performed by your business. SASPs may not release property to a participant without this verification.
- The SASP & Participant must agree on and record the fair market value of the surplus property at the time of transfer to the Participant. State Agency must provide to SBA a written record, including the agreed upon fair market value, of each transaction to a participant when any property has been transferred.
- Participants acquiring surplus property from a SASP must pay a service fee to the SASP which is equal to the SASP’s direct costs of locating, inspecting, and transporting the surplus property. If a Participant elects to incur the responsibility and the expense for transporting the acquired property, then the SSASP will not charge you. The SASP may charge a reasonable fee to cover its costs of administering the program. In no instance will any SASP charge a Participant more for any service than their established fees charged to other transferees.
In Summary, you will not receive the equipment for free. The SASP will charge a reasonable fee to cover the states cost of locating, inspecting and transporting the surplus property. You must also agree not to sell the property and return the property to the state agency, or another 8(a) business.
The title will transfer after all the paperwork has been completed by the State agency and a copy has been sent to SBA. You will also receive a copy of the paperwork. Your title will transfer after you receive the property.
SBA will periodically review whether you are property using and maintaining the surplus property as agreed. This review may include site visits to visually inspect the property. Remember as part of your contract you agreed to provide SBA with access to all relevant records and visitation rights to the equipment. If SBA receives information that you may have sold or otherwise disposed of the surplus property then they will have to investigate the matter. Also, you agreed to use the equipment as intended.
Furthermore, if you fail to property maintain the equipment SBA can direct you to transfer the equipment back to the state agency or to another 8(a) business. Also if you dispose of the equipment without SBA’s consent then you could face a termination action.
In Summary, this program allows an 8(a) business to obtain equipment that it may not be able to afford presently. This equipment can increase production or enhance your business in some manner. Check out your local State Agency and have a discussion today about the government surplus property program.
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