The federal government has a statutory goal of awarding at least 23 percent of prime contract dollars to small businesses, with sub-goals for specific categories. To meet those goals, agencies set aside certain competitions so that only eligible small businesses can compete. Four programs come up constantly. Here is what each one means.
Small business, the baseline
Before any of the others, a company must qualify as small under the size standard for the NAICS code of the particular procurement. Size standards are set by the SBA and vary widely by industry, measured in either annual receipts or employee count. A company can be small for one kind of work and not for another.
8(a) Business Development
A nine-year SBA program for small businesses owned and controlled by socially and economically disadvantaged individuals. Certified firms can receive sole-source awards up to certain thresholds and compete in 8(a)-only competitions. The application is detailed and the eligibility criteria are specific; it is the most involved certification of the four.
HUBZone
For small businesses located in Historically Underutilized Business Zones with at least 35 percent of employees living in a HUBZone. The program is about geography, and the ongoing compliance is about keeping that employee percentage. Certification is through the SBA.
Service-Disabled Veteran-Owned Small Business
For firms at least 51 percent owned and controlled by one or more service-disabled veterans. Since 2023, certification is handled by the SBA rather than the VA. The VA itself has a statutory preference for these firms that makes the certification especially valuable in VA procurements.
Women-Owned Small Business
For firms at least 51 percent owned and controlled by women, with an economically disadvantaged subset, EDWOSB. Set-asides under this program are limited to industries where the SBA has determined women-owned businesses are underrepresented.
How set-asides work in practice
A contracting officer who expects to receive offers from two or more capable small businesses of a given category can restrict the competition to that category, known as the rule of two. Eligible firms must have the relevant certification in place, and in SAM, before the offer is due. Certifications take months. Start early.
Beacon Federal Partners works with clients to determine which programs they qualify for and to prepare the applications that get them certified.