Federal Procurement – Goals and Set Asides
In order to ensure that small, minority, woman and service disabled veteran-owned businesses get their fair share of federal procurement dollars, the Small Business Administration (SBA) negotiates annual procurement goals with each federal agency and review each agency’s results. Procurement goals are established in terms of percentage of annual expenditures:
- 23% of all prime contracts is to be set aside for small businesses
- 5% of all prime and subcontracts is to be set aside for small disadvantaged businesses
- 5% of all prime and subcontracts is to be set aside for woman-owned businesses
- 3% of all prime contracts is to be set aside for HUBZone small businesses
- 3% of all prime and subcontracts is to be set aside for to Service Disabled Veteran-Owned Small businesses
Federal Set Aside Programs
Under the Small Business Act, federal government agencies may set aside procurements exclusively for small businesses. Announcements placed on beta.SAM.gov, the federal government’s online procurement portal for purchases over $25,000, will indicate those solicitations that have been set aside for small businesses. Set-asides are only made when enough qualified small businesses are expected to bid or offer services, in order to ensure adequate competition.
The SBA establishes small business size standards, based on employment and/or annual receipts, on an industry-by-industry basis. The standards apply for SBA program participation as well as all other federal government programs and actions where eligibility as a small business is a factor or a consideration.
For more detailed information, visit www.sba.gov/sizestandards .
Small Disadvantaged Business (SDB)
A federal designation, an SDB is a small business that is at least 51 percent owned, controlled and operated by one or more socially and/or economically disadvantaged individuals or stockholders. Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identification as members of certain groups. Within the socially disadvantaged classification, economically disadvantaged individuals are those whose ability to compete in the economy has been impaired due to diminished capital and credit opportunities. Officially designated socially and economically disadvantaged groups include African-Americans, Native Americans, Hispanic Americans, Asian Pacific-Americans and Asian Indian-Americans. Members of other groups must provide evidence that they are economically and socially disadvantaged. SBA determines eligibility on a case-by-case basis.
For more details on SDB definitions, visit www.sba.gov/sdb .
The following programs can be especially helpful to socially and/or economically disadvantaged business owners:
- 8(a) Business Development Program
This program provides SDBs with technical and management assistance as well as access to the federal procurement market through sole-source, limited competition contracts and special procurement set-asides. All 8(a) firms must be unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and U.S. citizens. sba.gov/8a website provides more detailed information on 8(a) program eligibility criteria, the application process, other resources and contact information.
- SDB Status
If you have at least one NAICS code where you qualify as a small business, and you indicate that you are a minority-owned small business concern in Core Data (General Information), you may enter your self certification as a Small Disadvantaged Business (SDB) while completing the FAR questionnaire in the Representations and Certifications portion of SAM. The answer you provide during the questionnaire portion will fill in FAR provisions 52.212-3 and 52.219-1.
Woman-owned Small Business Program/Economically Disadvantaged Woman-owned Small Business Program
The Small Business Act authorizes contracting officers to specifically limit, or set aside, certain requirements for competition solely amongst women‐owned small businesses (WOSBs) or economically disadvantaged women‐owned small businesses (EDWOSBs). This is referred to as the WOSB Program. These procurement mechanisms are meant to increase Federal contracting opportunities for WOSBs and to assist agencies in achieving their women‐owned small business goals.
To be eligible, a firm must be at least 51% owned and controlled by one or more women, and primarily managed by one or more women. The women must be U.S. citizens. The firm must be small in its primary industry in accordance with SBAs size standards for that industry. In order for a WOSB to be deemed economically disadvantaged, its owners must demonstrate economic disadvantage in accordance with the requirements set forth in the final rule. For more information and eligibility requirements, visit www.sba.gov/wosb .
Effective October 15, 2020 formal certification is required to bid on WOSB/EDWASB set asides. To apply, go to beta.certify.sba.gov .
SBA’s Historically Underutilized Business Zone (HUBZone) Empowerment Contracting Program gives federal contracting preferences to certified small businesses in targeted urban and rural locations. Certification is awarded to small businesses that are owned and controlled by one or more U.S. citizens and have a principal office located in a HUBZone. Additionally, at least 35 % of a certified firm’s employees must reside in a HUBZone.
For more information go to www.sba.gov/hubzone .
Service-Disabled Veteran-Owned Business
A business can claim service-disabled veteran-owned small business status if it is 51 percent owned by one or more service-disabled veterans, and the management and daily business operations are controlled by one or more service-disabled veterans or, in the case of a veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran. A service-disabled veteran means a veteran with a disability that is service-connected. This can be 0%-100%. There is no formal certification program for service-disabled veterans for the majority of federal agencies; however to do business with the Department of Veterans Affairs as a veteran or service-disabled veteran you must certify your company with the Department of Veterans Affairs. A veteran or a service-disabled veteran self-certifies his/her status in their SAM registration. A Defense Department Form 214 and a Veteran’s Administration certified letter as to disability can serve as proof of being a service-disabled veteran.
For more information, on the SBA SDVOSB program, go to www.sba.gov/sdvosb .
For information on the formal certification for the Department of Veterans Affairs, go to www.va.gov/osdbu/verification .
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