What are small business set-asides?
Every year, the federal government spends over $600 billion on contracts. By law (the Federal Acquisition Regulation or FAR), they have to try to spend at least 23% of that sum on small businesses.
Then, there are spending goals for specific types of small businesses which include:
Women-Owned Small Businesses (WOSBs)
Service-Disabled Veteran-Owned Small Businesses (SDVOSBs)
Historically Underutilized Business Zone (HUBZone) Small businesses
Small Businesses enrolled in the 8(a) Program
What are the benefits of these set-asides?
In the most basic sense, being registered as a small business and specifically one of the groups above boosts your chances of winning a federal contract.
To make sure their annual contracting budget gets distributed to small businesses and various set-asides, the government employs three methods.
Creating exclusive bidding opportunities (for example an HVAC contract that can only be bid on by SDVOSBs)
An increased incentive for agencies to hire set-aside designated businesses to reach their spending goals
Increase incentives for prime contractors to work with small business subcontractors
A SAM registration will get you in compliance for federal contracts, but registering for a federal set-aside can greatly improve your chances of winning.
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