What is a set-aside?
A set-aside reserves a contract for a certain group of businesses. When a contracting officer expects at least two qualified small businesses to bid at fair prices, the job is generally set aside for small businesses. Every Bid Watch listing shows the set-aside, if there is one.
Am I a small business?
The SBA decides by industry, using your average yearly revenue. For most construction trades the limit is in the millions of dollars of annual revenue, so most local contractors qualify. Check the current number for your NAICS code in the SBA's size standards table.
The main types of set-asides
- Total small business: any small business can bid. This is the most common.
- 8(a): for SBA 8(a) program participants (small businesses owned by socially and economically disadvantaged people).
- HUBZone: for certified small businesses based in, and hiring from, historically underutilized areas.
- Service-disabled veteran-owned (SDVOSB): for certified businesses owned by service-disabled veterans.
- Women-owned (WOSB/EDWOSB): for certified women-owned small businesses in eligible industries.
The 8(a), HUBZone, veteran and women-owned programs each require an SBA certification. If you might qualify, it's worth applying, because these jobs have fewer competitors.
You must do a share of the work yourself
On set-aside jobs, rules limit how much you can pass to subcontractors who aren't also small businesses of the same type. The limits are tighter for specialty trades than for general construction. Read the subcontracting clause in each solicitation.
Answer "sources sought" notices
Agencies sometimes post a "sources sought" or market research notice before the real bid, asking who could do the work. Answering it is free, and it can be the reason the job gets set aside for small businesses at all.