Set-Aside

Full Definition

A set-aside is a contracting action where all or a portion of a contract is reserved exclusively for participation by small businesses or firms within specific socioeconomic categories including 8(a), HUBZone, Service-Disabled Veteran-Owned (SDVOSB), and Women-Owned Small Business (WOSB). Under the Rule of Two established in FAR 19.502-2, contracting officers must set aside acquisitions exceeding the micro-purchase threshold when there is a reasonable expectation that at least two responsible small businesses will submit offers at fair market prices. Only businesses that meet the applicable eligibility requirements and size standards under the assigned NAICS code may submit offers on set-aside contracts. Partial set-asides reserve a portion of a larger contract for small businesses while allowing full and open competition on the remainder.

Why It Matters

Set-aside contracts are the most accessible pathway into federal contracting for small businesses because they eliminate competition from large corporations. The government awarded over $160 billion to small businesses in recent fiscal years, with set-asides accounting for the majority of those awards. Small businesses should filter opportunity searches by set-aside type to focus on competitions where they are eligible. Understanding the hierarchy of set-asides is important: total small business set-asides are most common, followed by 8(a), SDVOSB, HUBZone, and WOSB set-asides. Contracting officers generally consider socioeconomic set-asides before total small business set-asides. Maintaining accurate size representations in SAM.gov and keeping certifications current ensures you appear in searches when agencies look for eligible firms.

Example

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