Socioeconomic Programs

The basis of the Small Business Program is to foster free competition which is basic to the economic well-being and security of the United States. This status cannot be achieved without the potential of small businesses being encouraged and developed. Contracting with these firms strengthens the economy, generates competition, lowers overall costs, creates innovations, provides more jobs than any other sector, and enhances good business practices.

Congress has been fostering fair treatment of small business since 1941 with the establishment of the Select Committee on Small Business. The Small Business Mobilization Act of 1942 recognized that small business concerns did not have the “economies of scale” necessary to compete with large plants, and that a price differential might be required to keep such plants mobilized in support of war efforts. The Armed Services Procurement Act of 1947 established that “a fair proportion of total federal purchases and contracts be placed with small business concerns” in peacetime and wartime. The Small Business Act of 1953 created the Small Business Administration (SBA). It was later revised in 1978 to establish federal prime contract and subcontracting goals. The following five types of socioeconomic programs allow agencies to limit competition on certain contracts to qualified small businesses so that small firms do not have to compete with large ones for the same contracts. Also, DoD negotiates prime and subcontracting goals with the SBA for these programs.

1. Small Business (SB) (self-certified): Small Businesses are enterprises engaged in a for-profit business which are independently owned and operated and not dominant in its field of operation.
2. Small Disadvantaged Business Program (SDB) (self-certified), includes the 8(a) Program (certified by SBA): An SDB is at least 51% owned and controlled by socially and economically disadvantaged individuals and is a small business concern whose management and daily business operations are controlled by one or more of such individuals. Socially and economically disadvantaged individuals include Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans and other minorities, or any other individual found to be disadvantaged by the Administration pursuant to section 8(a) of the Small Business Act.
3. 8(a) Program(certified by SBA): Section 8(a) of the Small Business Act ( 15 U.S.C. 637(a)) established a program that authorizes the Small Business Administration (SBA) to enter into all types of contracts with other agencies and award subcontracts for performing those contracts to firms eligible for program participation. This program is the "8(a) Business Development Program," commonly referred to as the "8(a) program." A small business that is accepted into the 8(a) program is known as a "participant." SBA’s subcontractors are referred to as "8(a) contractors." As used in this subpart, an 8(a) contractor is an 8(a) participant that is currently performing on a Federal contract or order that was set aside for 8(a) participants. Contracts may be awarded to the SBA for performance by eligible 8(a) participants on either a sole source or competitive basis. Acting under the authority of the program, the SBA certifies to an agency that SBA is competent and responsible to perform a specific contract. The contracting officer has the discretion to award the contract to the SBA based upon mutually agreeable terms and conditions. The contracting officer shall comply with 19.203 before deciding to offer an acquisition to a small business concern under the 8(a) program. For acquisitions above the simplified acquisition threshold, the contracting officer shall consider 8(a) set-asides or sole source awards before considering small business set-asides. When SBA has delegated its 8(a) program contract execution authority to an agency, the contracting officer must refer to its agency supplement or other policy directives for appropriate guidance.
4. Women-Owned Small Business Program (WOSB) (certified by SBA): A WOSB is at least 51% owned by one or more women and whose management and daily business operations are controlled by one or more women. This program includes the Economically Disadvantaged Women-Owned Small Business Program. To use this program, the requirement must have a NAICS code that is identified as being in the WOSB/EDWOSB program. The certification process changed effective October 15, 2020 and businesses competing for WOSB Federal Contracting Program set-aside contracts now must be certified either through SBA’s new, free online certification process; or an approved Third-Party Certifier (TPC), at a cost.
5. Service-Disabled Veteran-Owned Small Business Program (SDVOSB) (Certification update: SBA Direct Final Rule, 89 FR 48266, eliminates self-certification for service-disabled veteran-owned small businesses. The rule became effective on 5 August 2024. Class Deviation 2024-O0002, Revision 1, The Service-Disabled Veteran-Owned Small Business Program. Effective 15 March 2024, this class deviation revises and supersedes Class Deviation 2024-O0002, issued on December 8, 2023.  Revision 1 provides alternate procedures for contracting officers to verify the eligibility of concerns for awards made under the Service-Disabled Veteran-Owned Small Business (SDVOSB) Program until the System for Award Management (SAM) and the Dynamic Small Business Search (DSBS) are updated to align with the revisions made to the Federal Acquisition Regulation (FAR) via the interim rule for FAR Case 2022-009, Certification of Service-Disabled Veteran-Owned Small Businesses, published on February 23, 2024, at 89 FR 13950.  These procedures will allow contracting officers to continue to make awards to eligible SDVOSB concerns under the SDVOSB program while SAM and DSBS are being updated to align with the FAR.): A SDVOSB is at least 51% owned by one or more service-disabled  veterans or, in the case of any publicly owned business, at least 51% of the stock of which is owned by one or more service-disabled veterans; and whose management and daily business operations are controlled by one or more service-disabled veterans or, in the case of a service-disabled veteran with a permanent and severe disability, the spouse or permanent caregiver of such veteran.
6. Historically Underutilized Business Zone (HUBZone) Program (certified by SBA): Qualified HUBZone small business concerns must have their principal office located in a HUBZone, be at least 51% owned and controlled by one or more US Citizens, a Community Development Corporation, and agricultural cooperative, a Native Hawaiian organization, or an Indian tribe, and have at least 35% of its employees live in a HUBZone.

There are other socioeconomic or small business programs that do not have associated agency goals. These other programs include the following: Veteran-Owned Small Business (VOSB), DoD Mentor-Protégé Program, Indian Incentive Program, Small Business Innovation Research and Small Business Technology Transfer (SBIR/STRR) Programs, Historically Black Colleges and Universities/Minority-Serving Institutions (HBCU/MI) Technical Assistance Program, and the Comprehensive Subcontracting Plan (CSP) Test Program.