If you’re in the federal contracting world, you probably have some familiarity with small business set-asides and the various socioeconomic types of small businesses that the government is concerned with. Small business set-asides influence every type of federal acquisition strategy, including purchases made off of GSA’s Multiple Award Schedule (MAS), and other government-wide acquisition contracts.
But did you know that, by participating in government market research, small businesses can influence what orders get set-aside designations? Small business contractors on MAS are especially well positioned to influence this process, allowing them greater competition in the federal marketplace.
To understand the relationship between federal government ordering activities and small businesses, let’s break down small business set-asides, socioeconomic classes of small businesses, and the market research process.
What Are Small Business Set-Asides?
Small business set-asides are the process by which federal buyers restrict competition on a given bid, Blanket Purchase Agreement (BPA) order, or Request for Proposal (RFP) to allow only small businesses to compete. These set-asides assist federal agencies meet financial goals to allocate a certain dollar-value percentage of their money spent to small businesses.
The Small Business Administration (SBA), established by the Small Business Act of 1953, negotiates with federal agencies to establish goals on how they will include small business participation in their acquisition activities. These goals are anywhere from 10% of all acquisition spending should go to small business concerns, all the way up to nearly 60%. Find the breakdown by agency here.
What Are the Socioeconomic Types of Small Business?
There are 6 types of small businesses that the government recognizes for the purpose of acquisition set-asides:
- Small Businesses
- Veteran-Owned Small Businesses
- Service-Disabled Veteran-Owned Small Businesses
- HUBZone Small Businesses
- Small Disadvantaged Businesses
- Women-Owned Small Businesses
Agencies have their pre-set goals for how much acquisition spending should go to small businesses, and then, of that chunk of spending, a percentage will be set-aside for these types of small businesses. This means that RFPs and RFQs can be set-aside for all small businesses generally, but they can also restrict competition to only one of these socioeconomic types, giving eligible businesses a bigger edge on competing for these bids.
How Does the Government Determine Small Business Eligibility?
The government uses North American Industry Classification System (NAICS) Codes to classify small business eligibility. This means that the criteria for classifying as a small business or larger business will vary by industry, because NAICS Codes define the industries that businesses falls under. Further, the criteria itself can differ. Some NAICS Codes will base their size standards on number of employees, and some will base it on the last five years of annual receipts, averaged. The SBA’s website has the full list of size standards.
Under GSA’s Multiple Award Schedule (MAS) program, businesses will certify their status as small or “other than small” at the time of contract submission using the NAICS Codes associated with the Special Item Numbers (SINs) they’re applying under.
How Long Does Small Business Certification Last?
For long-term contracts, including GSA Schedules, businesses will need to recertify their size status every five years, or at the start of every option period. For short-term contracts, such as an open market Request for Proposal (RFP), businesses will certify their status as part of their engagement with that proposal.
The government can request that a business recertify its size standard if a contracting officer has concerns that it is incorrect or no longer applies. Additionally, events such as novations or mergers can necessitate a business recertifying their size standard.
What If My Contract Has Multiple NAICS Associated?
In the case of contracting vehicles like MAS, where the government negotiates long-term, multi-user contracts, it’s very possible that you’ll have more than one NAICS Code associated with your contract. So, what happens when you have multiple NAICS Codes, and some classify you as a small business, but others classify you as a large business?
In this case, you will determine what NAICS Code is associated with your “preponderance of work”. Your preponderance of work will be asserted by you, the contract holder, and should be the NAICS Code that the majority of your business activities is associated with on GSA MAS.
How Do Ordering Activities Determine What Will Be a Set-Aside?
Because federal agencies need to meet their small business goals, the government is always scouting for opportunities to make progress towards those goals. Market research is the key way that they determine whether it’s feasible to make a bid a small business set-aside or not.
Before submitting a formal Request for Proposal (RFP) or Request for Quote (RFQ), ordering activities may submit a Request for Information (RFI). These RFIs are an opportunity for businesses interested in pursuing that opportunity to submit information on their business, including their products, services, or capabilities that would let them meet the order requirements. There are other ways the government does market research, though, and many methods utilize contracting vehicles such as MAS.
The Multiple Award Schedule and Market Research
We know that ordering through GSA MAS is far more streamlined than ordering through open market acquisition strategies, but GSA MAS brings value even before an order goes to the bid phase.
Contracting officers utilize both GSA Advantage! and eBuy, platforms restricted to GSA MAS contract holders, to conduct market research and determine if they can set aside their orders for small businesses, whether it’s through keyword search in the library of contractor pricelists on GSA Advantage!, or through direct participation in an RFI posted to eBuy.
Making Your Impact on the Federal Market as a Small Business
If you’re a small business, being a contractor on MAS can give you the opportunity to influence government acquisitions directly. By responding to RFIs, keeping your pricelist up to date on GSA Advantage!, and maintaining a strong business development cycle, you can turn an RFI or other market research tool into an eventual small business set-aside.
If you’re interested in learning more about the advantages of being a MAS contract holder, or if you have questions about the acquisition process, get in contact with one of our GSA MAS experts today.
