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Socioeconomic Programs

ACON 080


Alternate Definition

Socioeconomic Programs originate from the 1953 Small Business Act, as amended. In Section 8(d) of the Small Business Act, Congress explicitly declares “it is the policy of the United States that small business concerns shall have the maximum practicable opportunity to participate in the performance of contracts let by any federal agency, including contracts and subcontracts for subsystems, assemblies, components, and related services for major systems.”

General Information

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), includes 8(a) Program (certified through 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. Women-Owned Small Business Program (WOSB) (certified through 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.
  4. Service-Disabled Veteran-Owned Small Business Program (SDVOSB) (Certification update: On January 1, 2023, responsibility for certification of VOSBs and SDVOSBs was transferred to the SBA, and certification is required for firms seeking sole-source and set-aside contracts on the basis of this status government-wide. Self-certification continues to be permitted for agency goaling purposes and at the subcontract level. If a SDVOSB or VOSB was self-certified, it has a one-year grace period, ending December 31, 2023, to file an application for certification and may continue to rely on its self-certification to compete for non-VA sole source and set-aside awards during that time. SDVOSB and VOSBs certified by the VA CVE prior to January 1, 2023, do not need to re-certify with the SBA in 2023. The SBA will deem such firms certified for the remainder of their three-year eligibility term. At the conclusion of that three-year term, the firms will need to meet all conditions of eligibility and apply to be recertified by SBA.): A SDVOSB is at least 51% owned by one or more service-disabled  veterans or, in the case of any publically 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.
  5. Historically Underutilized Business Zone (HUBZone) Program (certified through 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.

FAR Set-Aside requirements (FAR 19.502-2): Each acquisition of supplies or services that has an anticipated dollar value exceeding the micro-purchase threshold, but not over the simplified acquisition threshold, is automatically reserved exclusively for small business concerns and 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. This requirement does not apply if 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 market prices, quality, and delivery. The contracting officer shall set aside any acquisition over the simplified acquisition threshold for small business participation when there is a reasonable expectation that (1) offers will be obtained from at least two responsible small business concerns; and (2) award will be made at fair market prices.