Small Business Set-Asides: How They Work

If you run a small manufacturing company in the U.S., you’ve probably heard of set-asides—these are special programs designed to give small businesses an edge when bidding for government contracts. But how exactly do they work? Let’s break down what you need to know so you can better understand how to take advantage of these opportunities.

What Are Small Business Set-Asides?

Small business set-asides are initiatives where the government reserves a specific portion of federal contracting opportunities exclusively for small businesses. This is a way to ensure that smaller companies—often with fewer resources—can compete fairly against larger firms for government work.

For example, a government agency might set aside a contract worth $500,000 to be awarded only to small businesses. If your company qualifies, you get a better chance to win the contract without having to compete directly with big corporations that have more resources.

Types of Small Business Set-Asides

1. Total Set-Asides

These are contracts that are entirely reserved for small businesses. If a contract is designated as a total small business set-aside, only small firms can submit bids.

2. Partial Set-Asides

In some cases, only part of a larger contract is set aside for small businesses. Larger contracts might have a portion reserved for small companies, encouraging joint ventures or partnerships.

3. 8(a) Business Development Program

This is a specific set-aside program for small businesses that are certified as 8(a) firms, offering them a competitive edge and support. Participation helps small companies access set-asides, training, and mentoring.

How Does a Contract Get Set Aside?

Before the government puts a contract out for bidding, agencies identify which opportunities are suitable for small businesses. They analyze factors like contract size, complexity, and past procurement trends. If the opportunity aligns with small-business interests, it is classified as a small-business set-aside in the solicitation documents.

For instance, if an agency needs custom metal fabrication, and the estimated contract value is under the small business threshold (which varies but is often around $250,000 for manufacturing), it may be designated as a small business set-aside. This means only small businesses can compete for that work.

How to Find Small Business Set-Aside Opportunities

• SAM.gov — The official U.S. government procurement website. All federal contracting opportunities are posted here, including those designated as small business set-asides.

• Register your business in the System for Award Management (SAM). This is required to bid on federal contracts.

• Use filters to find small business set-asides specifically—look for tags or notices indicating set-aside status.

What Are the Benefits and Challenges?

Benefits

• Less Competition: Fewer companies can bid, increasing your chances of winning.

• Support Programs: Small Business Administration (SBA) offers resources, counseling, and certifications that open doors to set-asides.

• Recognition: Being awarded a set-aside contract can boost your reputation and lead to more opportunities.

Challenges

• Qualification: You must meet small business size standards and other criteria.

• Complex Procedures: Navigating federal procurement rules can be complicated without experience.

• Limited Opportunity Size: Contracts might be smaller than what larger firms compete for, but they are a vital step for growth.

Conclusion

Understanding how small business set-asides work is key to seizing opportunities that can help your manufacturing company grow and thrive in government contracting. Take the time to register in SAM, explore contract opportunities, and consider certifications like the 8(a) program to improve your chances of winning prime or subcontract work. With persistence and proper preparation, set-asides can be a significant part of your business development strategy.

For more on government procurement and small business resources, visit the Small Business Administration.