What is Set-Aside?
A federal procurement restriction that limits competition for a contract to a specific category of small business.
A set-aside is a contracting mechanism where the federal government restricts competition for a contract to businesses that meet certain socioeconomic criteria. Set-asides are the primary tool the government uses to meet its statutory goal of awarding at least 23% of prime contract dollars to small businesses.
Common set-aside types include Total Small Business Set-Aside (open to all qualifying small businesses), 8(a) Business Development Program (for socially and economically disadvantaged businesses), HUBZone (for businesses in Historically Underutilized Business Zones), Service-Disabled Veteran-Owned Small Business (SDVOSB), and Women-Owned Small Business (WOSB).
Contracting officers decide whether to set aside a contract based on market research. If they determine that at least two qualified small businesses can compete, the Rule of Two generally requires the contract be set aside.
Related Terms
An SBA program for socially and economically disadvantaged small businesses that provides access to sole-source and set-aside contracts.
HUBZoneAn SBA program that provides contracting preferences to small businesses located in Historically Underutilized Business Zones.
SDVOSB (Service-Disabled Veteran-Owned Small Business)A contracting program that provides set-aside opportunities and sole-source awards to small businesses owned by service-disabled veterans.
WOSB (Women-Owned Small Business)A federal contracting program that provides set-aside opportunities for small businesses owned and controlled by women.
EDWOSB (Economically Disadvantaged WOSB)A subset of the WOSB program for women-owned businesses where the woman owner is also economically disadvantaged.
Small Business Size StandardThe maximum revenue or employee count a firm can have and still qualify as a small business for a given NAICS code.