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Small Business Set Asides

Small business set asides are a powerful tool for helping small businesses compete for and win federal contracts. Every year, the federal government purchases approximately $400 billion in goods and services from the private sector.  When market research concludes that small businesses are available and able to perform the work or provide the products being procured by the government, those opportunities are “set-aside” exclusively for small business concerns.

There are many different types of set-asides. Some are open to all small businesses; others are open only to small businesses with certain designations.

Contract Value

A set-aside is based, in part, on the value of the goods or services that the government is looking to purchase.

$3,500 – $150,000 Every federal government purchase with an anticipated value above the micro-purchase threshold of $3,500, and up to the Simplified Acquisition Threshold (SAT) of $150,000, is required to be automatically and exclusively set-aside for small businesses.  There must be at least two or more (Rule of Two) responsible small business concerns that are competitive in terms of market prices, quality, and delivery for an automatic set-aside to occur.

$150,000+ Contract opportunities above the SAT of $150,000 shall also be set aside if the Rule of Two is met.

$700,000 or $1.5M for Construction Contracts opportunities over $700,000 or $1.5M (for construction), awarded to Other-than-Small-Businesses (OTSBs), must have small business subcontracting plans to the extent there are subcontracting opportunities.  A small business subcontracting plan establishes subcontracting goals for small businesses, small disadvantaged businesses, HUBZone, veteran-owned, service-disabled veteran-owned and women-owned small businesses.

Prime Contract Goals

The Federal government has specified annual prime contracting goals for designated small businesses. The current, government-wide procurement goal stipulates that at least 23% of all federal government contracting dollars should be awarded to small businesses. In addition, targeted sub-goals are established for the following small business categories:

  1. Women Owned Small Business – 5%

  2. Small Disadvantaged Business – 5%

  3. Service Disabled Veteran Owned Small Business – 3%

  4. HUBZone – 3%

Set Aside and Sole Source Programs

Government contracts can be set-aside for small businesses in the following certification programs and socio-economic categories:

In addition, there are sole source development opportunities under the 8(a) program and sole source conditional opportunities under the  HUBZone, SDVOSB, WOSB programs.

Want to learn more about small business set asides?  Attend our Lunch and learn on Oct 5th or visit the SBA’s Website 

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