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) is reserved exclusively for small business concerns, and therefore “set aside.” Acquisitions estimated to be valued over the SAT are 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 19.505-2(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 (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 8.405-5. For all other multiple-award contracts see 16.505.

Class Set-Asides (FAR 19.503). The contracting officer may set aside a class of selected products or services that normally would not be automatically reserved for small business concerns under FAR 19.502-2(a)). This allows the buying agency to better focus on specific categories of purchases for small business set-aside opportunities.

The contracting officer shall review acquisitions to determine if they can be set aside for small business, giving consideration to the recommendations of agency personnel having cognizance of the agency's small business programs. The contracting officer shall perform market research and document why a small business set-aside is inappropriate when an acquisition is not set aside for small business, unless an award is anticipated to a small business under the 8(a), HUBZone, SDVOSB, or WOSB programs.