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  2. Small Business Set Asides

Small Business Set Asides

ACON 079


A program that includes the Mentor-Protégé Program, Women-Owned Small Business (WOSB), Indian Incentive Programs, Small Business Innovation Research and Small Business Technology Transfer (SBIR/SBTT) Programs, Service-Disabled Veteran-Owned Small Business Program, Historically Black Colleges and Universities/Minority Institutions Technical Assistance Program (HBCU/MI), Comprehensive Subcontracting Plan (CSP) Test Program, and Historically Underutilized Business Zones (HUBZone) Program.

Alternate Definition

A “small business set-aside” is the reserving of an acquisition exclusively for participation by small business concerns, as governed by FAR Part 19.

General Information

Congress created the Small Business Administration (SBA) in 1953 to provide focused assistance to small businesses. Small businesses comprise 99.7% of all companies and generate the majority of new jobs in the U.S. economy. Congress recognized the economic benefit of setting aside certain business opportunities for small businesses. Small business size standards are based on North American Industrial Classification System (NAICS) codes. The NAICS code may indicate a qualifying small business based on the number of its employees or its average annual revenue in dollars.

FAR Subpart 19.5, Small Business Total Set-Asides, Partial Set-Asides, and Reserves contains the general requirements.

Qualifying Small Business Concerns. Per SBA regulations, a business may qualify for one or more of the following categories: Small Business, Veteran-Owned Small Business, Service–Disabled Veteran-Owned Small Business, HUBZone Small Business, Small Disadvantaged Business (includes “8(a)” business development program), or Women-Owned Small Business.

Total Small Business Set-Asides (FAR 19.502-2). For a total set-aside, any acquisition valued between the micro-purchase threshold and the simplified acquisition threshold (SAT) shall be set aside for small business unless the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of fair market prices, quality, and delivery. Acquisitions estimated to be valued over the SAT shall be set aside for small business participation when there is a reasonable expectation that offers from at least two responsible small business concerns will be received at fair market prices (FAR 19.502-2(b)). Total small business set-asides may be conducted using simplified acquisition procedures (FAR Part 13), sealed bidding (FAR Part 14), or competitive proposals (FAR Part 15).

Partial Set-Asides of contracts other than Multiple-Award Contracts (FAR 19.502-3). When a Government requirement can be divided into smaller portions and small businesses have the capability to provide products or services at reasonable prices, the contracting officer may choose to implement partial set-asides (FAR 19.502-3). This provides contracting opportunities for small business participation in a Government procurement along with participation by one or more large businesses (the “non set-aside” part). Partial set- asides may be conducted using sealed bids (FAR Part 14) or competitive proposals (FAR Part 15) (ref. FAR 19.502-4).

Partial Set-Asides of Multiple-Award Contracts (FAR 19.502-4). When conducting multiple-award procurements using full and open competition, reserve one or more contract awards for any of the small business concerns identified in 19.000(a)(3). Set aside part or parts of a multiple-award contract for any of the small business concerns identified in 19.000(a)(3). Set aside orders placed under multiple-award contracts for any of the small business concerns identified in 19.000(a)(3). For orders placed under the Federal Supply Schedules Program see FAR 8.405-5. For orders placed under all other multiple-award contracts see FAR 16.505.

Class Set-Asides (FAR 19.502-6). The contracting officer may set aside a class of acquisitions of selected products or services, or a portion of the acquisitions, for exclusive participation by small business concerns if individual acquisitions in the class will meet the criteria in 19.502-1, 19.502-2, or 19.502-3(a). The determination to make a class small business set-aside shall not depend on the existence of a current acquisition if future acquisitions can be clearly foreseen. This allows the buying agency to better focus on specific categories of purchases for small business set-aside opportunities.

The contracting officer shall review each individual acquisition arising under a class small business set-aside to identify any changes in the magnitude of requirements, specifications, delivery requirements, or competitive market conditions that have occurred since the initial approval of the class set-aside. If there are any changes of such a material nature as to result in probable payment of more than a fair market price by the Government or in a change in the capability of small business concerns to satisfy the requirements, the contracting officer may withdraw or modify (see 19.502-9(a)) the unilateral or joint set-aside by giving written notice to the SBA Procurement Center Representative (PCR) (or, if a PCR is not assigned, see 19.402(a)) for review.