what are set-asides?
Small business set-asides are a powerful tool for helping small businesses compete for and win federal contracts. Every year, the federal government purchases approximately $400 billion in goods and services from the private sector. When market research concludes that small businesses are available and able to perform the work or provide the products being procured by the government, those opportunities are "set-aside" exclusively for small business concerns. Because of these set-asides, the government market has increasingly been a prominent target market for small businesses looking to find stable revenue streams.
There are many different types of set-asides. Some are open to all small businesses; others are open only to small businesses with certain designations.
In terms of simple small business set-asides (without further designation), the federal government pushes for a 23% small business set-aside on all prime contracts. Keep in mind that while the recent track record of government spending has met that mark, the government does not always achieve this goal. It should also be noted that this goal is government-wide; although the SBA pushes for all agencies to match this mark, some agencies are far more successful in achieving the goal than others.
One of the primary ways the federal government achieves these small business set-aside goals is through establishing parameters on contract value. Every federal government purchase with an anticipated value above the micro-purchase threshold of $3,500, and up to the Simplified Acquisition Threshold (SAT) of $150,000, is required to be automatically and exclusively set-aside for small businesses. There must be at least two or more (Rule of Two) responsible small business concerns that are competitive in terms of market prices, quality, and delivery for an automatic set-aside to occur. Additionally, contract opportunities above the SAT of $150,000 shall also be set aside if the Rule of Two is met.
Along with the 23% mark, there are additional set-aside percentages for various designations (described in further detail to the right), and subcontracting standards for Other Than Small Businesses (OTSBs) to achieve in order to obtain certain contracts. These subcontracting standards can force larger business entities to subcontract up to 50% of their projects to a small business.
should my business try to get a set-aside?
Every small business registered in the System for Award Management already has access to at least the small business set-asides -- including the Simplified Acquisition Threshold. In terms of other designations -- some described in further detail to the right, they can be highly potent in business development. Obviously, when the competition is automatically cut down, it is going to be a boon to opportunity.
Keep in mind, however, that if your business does not have the ability to go after some of the more specific set-asides, this does NOT mean there is no availability for your firm. Despite set-asides giving advantages to certain kinds of companies, the fact remains that a majority of awards and monies go to regular small businesses (and, for that matter, OTSBs) that does not have any special set-aside. In considering this, it is important to understand that trying to falsify information to gain a specific set-aside is not worth it. Agencies are cracking down on fraudulent attempts at passing a company off as service-disabled, veteran-own or woman-owned, and the reputation penalties to your company for such attempts can be detrimental to future endeavors.
Thus, if you do have legitimate access to certain set-asides, it can be extraordinarily powerful, but such set-asides are not get-rich-quick magic spells; at the same time, not having them is not a curse.
If you are having trouble or need further assistance, feel free to reach out to us for additional support. Some assistance -- such a personalized attention or consulting referrals -- may require your company to becoming a member of the Chamber. Feel free to click on the below button to go to our contact page and reach out to us.