Understanding Set-Aside Contracts: Opportunities for Small Businesses

The federal government is required to award at least 23% of prime contract dollars to small businesses. To meet this goal, agencies use "set-aside" contracts - opportunities reserved exclusively for qualifying small businesses. Understanding these programs can give your business a significant competitive advantage.

Types of Set-Aside Contracts

Small Business Set-Asides

The most common type. Any business that meets the SBA size standard for the contract's NAICS code can compete. Size standards vary - they might be based on revenue (e.g., under $16.5 million) or employee count (e.g., under 500 employees).

8(a) Business Development Program

For small businesses owned by socially and economically disadvantaged individuals. Benefits include:

• Sole-source contracts up to $4 million (goods) or $7 million (services)
• Competitive set-asides among 8(a) firms
• Business development assistance

HUBZone Program

For businesses located in Historically Underutilized Business Zones. Requirements:

• Principal office in a HUBZone
• At least 35% of employees live in HUBZones
• Owned and controlled by U.S. citizens

Women-Owned Small Business (WOSB)

For businesses that are at least 51% owned and controlled by women. The program targets industries where women-owned businesses are underrepresented.

Service-Disabled Veteran-Owned Small Business (SDVOSB)

For businesses owned by veterans with service-connected disabilities. Strong emphasis in VA contracting, but available across all agencies.

How to Qualify

1. Determine eligibility - Review SBA requirements for each program
2. Gather documentation - Proof of ownership, disability ratings, location, etc.
3. Apply for certification - Through SBA or approved certifying agencies
4. Update SAM.gov - Reflect your certifications in your registration
5. Market your status - Include certifications in capability statements

Finding Set-Aside Opportunities

Set-aside contracts are posted on SAM.gov with specific designations. When searching, filter by:

• Set-Aside Type (Total Small Business, 8(a), HUBZone, etc.)
• NAICS Code (matching your certifications)
• Place of Performance

With ProcurePing, you can filter your alerts to show only set-aside opportunities matching your certifications. Create your free alert feed and never miss a set-aside opportunity.

Competition in Set-Asides

Set-asides reduce competition by excluding large businesses, but you'll still compete against other qualified small businesses. To win:

• Build relevant past performance on smaller contracts
• Develop relationships with contracting officers
• Submit compliant, competitive proposals
• Consider teaming arrangements with experienced contractors