A set-aside is a contract (or part of one) that a contracting officer reserves for a particular kind of small business. Set-asides limit who can compete. For a small firm, competing only against other small firms — or only against firms in the same program — can be the difference between a long shot and a real chance.
The rules live mainly in FAR Part 19 and the Small Business Administration's regulations in Title 13 of the Code of Federal Regulations. Certification for most programs runs through MySBA Certifications.
First: are you "small"?
Every set-aside starts with size. SBA sets a size standard for each NAICS code, expressed either as average annual receipts or average number of employees. Each solicitation names one NAICS code and its size standard, and you must be small under that standard to compete for a small business set-aside. Check the current SBA table of size standards; SBA revises them periodically.
Total small business set-asides
The most common set-aside is open to any small business under the solicitation's size standard. Under the "rule of two," a contracting officer generally sets an acquisition aside for small business when there is a reasonable expectation that offers will come from at least two responsible small businesses and award can be made at a fair market price. Acquisitions above the micro-purchase threshold and up to the simplified acquisition threshold are generally reserved for small business when the rule of two is met. Read more on our total small business set-aside page.
8(a) Business Development
The 8(a) program is a business development program for small businesses that are at least 51% unconditionally owned and controlled by one or more socially and economically disadvantaged individuals, along with certain entity-owned firms (such as those owned by Alaska Native Corporations, Indian tribes and Native Hawaiian Organizations). Participation lasts up to nine years. Participants can compete for 8(a) set-asides and can receive sole-source awards below certain dollar thresholds. The program has been the subject of litigation and policy review in recent years, so check SBA's 8(a) page for current eligibility rules. More on 8(a).
HUBZone
The Historically Underutilized Business Zone program helps small businesses in designated areas. Key requirements include having your principal office in a HUBZone and having at least 35% of your employees live in a HUBZone. Certified firms can compete for HUBZone set-asides and sole-source awards and receive a price evaluation preference in full and open competitions. More on HUBZone.
Service-disabled veteran-owned small business (SDVOSB)
SDVOSBs are small businesses at least 51% owned and controlled by one or more service-disabled veterans. Since 2023, SBA certifies veteran-owned and service-disabled veteran-owned businesses through its VetCert program. The Department of Veterans Affairs also gives priority to veteran-owned firms in its own buying under its "Veterans First" authority. More on SDVOSB.
Women-owned small business (WOSB) and EDWOSB
The WOSB Federal Contract Program lets contracting officers set aside contracts in certain industries for women-owned small businesses. A WOSB must be at least 51% owned and controlled by one or more women who are U.S. citizens. An economically disadvantaged WOSB (EDWOSB) also meets SBA's economic disadvantage tests. WOSB set-asides are available in NAICS codes where SBA has found women-owned businesses underrepresented; EDWOSB set-asides are available in codes where they are substantially underrepresented. Certification is required — self-certification is no longer accepted. More on WOSB · More on EDWOSB.
Rules that apply to every set-aside
Limitations on subcontracting
If you win a set-aside, you cannot simply pass most of the work to a large company. Under the limitations on subcontracting (FAR 52.219-14 and 13 CFR 125.6), you may not pay more than a set percentage of the amount paid to you to subcontractors that are not "similarly situated" (that is, not in the same program). The percentages differ for services, supplies, general construction and specialty trade construction. Read the clause in your solicitation.
Size and status at the right time
Size and program status are generally determined as of the date you submit your initial offer including price. Competitors and the contracting officer can protest your size or status, and SBA decides those protests.
Joint ventures and mentor-protégé
SBA's mentor-protégé program allows a small business to form a joint venture with a larger mentor and compete for set-asides as long as the protégé qualifies. Joint ventures have specific requirements about the agreement and the work performed.
Which program is right for you?
You do not choose a program; you qualify for it. Many firms qualify for more than one. Start with size under your primary NAICS codes, then check ownership, location and veteran status. Then look at where your target agencies actually spend set-aside money — PinPeek's NAICS pages show small-business share by industry from USAspending data.
Frequently asked questions
Do I need a certification to bid on a total small business set-aside?
No separate certification is required. You represent your size in SAM.gov and in your offer, and you must be small under the solicitation's NAICS size standard.
Can I be in more than one program?
Yes. A firm can, for example, be both a HUBZone and a woman-owned small business if it meets each program's requirements.
What is a sole-source award?
A contract awarded without competition. Some programs, including 8(a), HUBZone, SDVOSB and WOSB/EDWOSB, allow sole-source awards under specific conditions and dollar limits set in the regulations.
What does "similarly situated" mean?
A subcontractor that has the same small business program status as the prime for that contract — for example, another certified HUBZone firm on a HUBZone set-aside. Work done by similarly situated subcontractors can count toward the prime's share under the limitations on subcontracting.
This guide is general information, not legal advice. Rules change — always check the solicitation and the official sources linked here.