Small businesses are widely recognized for their significant contribution to the economy, as they continuously create job opportunities. If you're a small business owner and worried about competing with larger corporations in the government contracting world, don't be discouraged. Small businesses have the advantage of small business set-asides, which help them to compete. In this blog post, we'll explore everything you need to know about small business set-asides, from what they are and how to qualify for them, to how to successfully secure these assistance programs.
What Are Small Business Set Asides?
A small business set aside is a procurement program established by the Small Business Administration (SBA) to ensure that a certain percentage of contracts are reserved exclusively for small businesses. These set-asides are designed to provide small businesses with a fair opportunity to compete for government contracts and increase economic growth at the local and national levels.
There are two types of set-aside contracts: competitive set-asides and sole-source contracts. Competitive set-aside contracts are exclusively for small businesses. If two or more small businesses can provide the service or products, then the government sets the contract aside for small businesses to bid on.
Sole source set-aside contracts are reserved for situations where only a single business can fulfill the contract requirements. These contracts can be awarded without a competitive bidding process, but in some cases, contracts may be posted publicly, and potential vendors can bid on them.
Some set-asides are for small businesses in certain socio-economic categories and some are for small businesses who participate in SBA contracting assistance programs. We’ll cover the types below.
Types of Small Business Set Asides
Participation in one of the following programs means fewer businesses can compete to win contracts reserved for program members. Program participants also have the option to form Joint Venture (JV) partnerships with established government contractors or team-up with other businesses through a Contractor Teaming Arrangement (CTA).
HUBZone
Historically Underutilized Business Zone (HUBZone) set-asides are reserved for businesses in economically depressed geographic areas or historically underutilized business zones. To qualify for HubZone set asides, a business must meet specific criteria related to location and employee residency.
8(a) Business Development Program
The 8(a) Business Development Program is aimed at assisting small businesses owned by socially and economically disadvantaged individuals. Participants in the program receive specialized business training, counseling, and access to government contracts set aside specifically for 8(a) certified companies.
Women-Owned Small Business (WOSB)
Women-Owned Small Business (WOSB) set-asides are contracts reserved for businesses that are at least 51% owned and controlled by women. These set asides aim to promote diversity and gender equality in government contracting by providing opportunities for women-owned businesses to compete.
Service-Disabled Veteran-Owned Small Business (SDVOSB)
Service-Disabled Veteran-Owned Small Business (SDVOSB) set-asides are contracts reserved for businesses owned and operated by service-disabled veterans. These set-asides are part of the government's efforts to support veterans and ensure that they have access to economic opportunities after their service.
Do I Qualify for Small Business Set Asides?
Small business determinations vary by industry, and to be eligible for small business certification, your business must meet size requirements outlined by the SBA. The SBA takes into consideration factors such as annual receipts and the number of employees to define the maximum size that your business — and any affiliates — can be to qualify for government contracts allocated for small business.
To determine if your business qualifies as a small business, use the SBA’s Size Standards Tool. It is important to research specific small business guidelines for your appropriate industry before self-certifying.
To qualify for the socio-economic programs listed above, the certification process may vary depending on the SBA contracting assistance program. For some programs, you can also self-certify by updating your business profile in the System for Award Management (SAM). For other programs, you must apply for certification. A few of the programs such as WOSB and SDVOSB have changed the certification process recently, so we suggest you check each contracting program’s page for more information and specific details about eligibility requirements. As part of the application, you will answer questions about your business and its ownership and upload supporting documents.
What Are the Benefits of Having Small Business Set-Asides?
Small business set-asides offer several benefits for both small businesses and government agencies. For small businesses, set-asides provide them access to a wide range of assistance programs, which can be a significant source of income and expansion. Additionally, set-asides often have less competition compared to unrestricted contracts, increasing the chances of winning a contract bid.
Keeping up with Small Business Set-Asides
The federal government’s goal is to award a certain percentage of all federal prime contracting dollars to those businesses that meet certain socio-economic conditions:
- Women-owned small business - 5%
- Small disadvantaged business (8a) - 12%
- Service-disabled veteran-owned small business - 3%
- Small business in a HUBZone - 3%
Being certified as a small business opens multiple doors of opportunity to win government contracts. But what are the challenges? One major challenge is navigating the complex regulations and requirements associated with GSA or government contracting in general. It’s critical for small businesses to invest in education and resources, so they can successfully manage their government contracts while understanding the opportunities available to them.
To take advantage of these opportunities, small businesses need to understand the different types of set-asides, qualifying criteria, and best practices for participation. For additional questions about small business set-asides or if you would like to learn more about how you can position your company for government opportunities, reach out to a member of the Winvale team today!
