Small business set-aside

Also called: Set-aside, Total small business set-aside, Rule of two

Updated

What is Small business set-aside?

A set-aside reserves a government contract, or part of one, for competition among small businesses or a specific group of them, such as 8(a), HUBZone, service-disabled veteran-owned or women-owned small businesses. Only offerors that qualify under the solicitation's NAICS size standard and program rules can compete.

How set-asides work

FAR Part 19 governs small business programs. Under the long-standing "rule of two", a contracting officer sets a purchase aside for small businesses when there is a reasonable expectation of offers from at least two responsible small businesses at fair market prices. Market research, including sources sought notices, is how the contracting officer finds out.

Socioeconomic set-asides go further and restrict competition to 8(a), HUBZone, SDVOSB or WOSB firms. Part 19 is among the parts rewritten in the FAR overhaul, so check the current text for the exact order of preference and thresholds.

Qualifying and staying compliant

Eligibility turns on the solicitation's NAICS code and its size standard, plus any certification required. Winning a set-aside also brings limitations on subcontracting, which cap how much of the work can go to firms that are not similarly situated.

Common mistakes: assuming you are small for every code, teaming with a large firm that does the main work (the ostensible subcontractor rule), and missing that certifications must be current at the time of offer. States run their own small and disadvantaged business programs with separate certifications.

Set-asides also shape strategy beyond eligibility. Watching which of your target agencies set aside work in your codes, and for which programs, tells you where a certification will actually produce opportunities. Responding to sources sought notices matters here too: a capable small business response is part of the market research a contracting officer uses to decide whether a set-aside is possible, so a short, specific reply can influence whether the final RFP is open to you at all.

Small business set-aside in ProposalWorkspace

ProposalWorkspace filters federal opportunities by set-aside type, weighs set-aside fit at 15 of 100 points in the business-profile match score, and keeps your certifications in the company profile so eligible notices rank higher.

Small business set-aside: questions and answers

Can a large business bid on a small business set-aside?

Not as the prime. A large business can take part as a subcontractor, within the limitations on subcontracting and the ostensible subcontractor rule.

What is the rule of two?

The test under FAR Part 19 for setting a purchase aside: a reasonable expectation of offers from at least two responsible small businesses at fair market prices.

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