Small Business Set-Asides: Your Complete Guide to Reserved Contracts

Understanding Set-Aside Programs

The federal government has statutory goals for contracting with small businesses. The current overall goal is 23% of all federal prime contract dollars, with sub-goals for specific categories. These goals create set-aside contracts — opportunities reserved exclusively for qualifying small businesses, dramatically reducing competition.

Set-asides exist because Congress recognizes that small businesses are the engine of the American economy but face barriers competing against large corporations for government contracts. Set-aside programs level the playing field and ensure small businesses have access to government contracting opportunities.

Types of Set-Aside Programs

Small Business (SB) set-asides are the most common, open to any business meeting the size standard for the relevant NAICS code. The 8(a) Business Development program serves socially and economically disadvantaged businesses and offers both competitive and sole-source opportunities for nine years.

HUBZone certification is for businesses operating in Historically Underutilized Business Zones. Service-Disabled Veteran-Owned Small Business (SDVOSB) set-asides reserve contracts for businesses owned by service-disabled veterans. Women-Owned Small Business (WOSB) set-asides target industries where women are underrepresented.

Each program has specific eligibility requirements, certification processes, and benefits. Some programs allow sole-source awards up to certain dollar thresholds — meaning no competition at all. Understanding which programs you qualify for and how they work is essential to your government contracting strategy.

Qualifying and Getting Certified

All small business determinations are based on your NAICS code size standards, which vary by industry. Size standards are measured by either average annual revenue (typically $8-41.5 million) or number of employees (typically 100-1,500), depending on the industry.

General small business status is self-certified in SAM.gov — you declare your size, and the government can challenge it if competitors protest. Specific programs require formal certification: 8(a) through the SBA, HUBZone through the SBA, SDVOSB through the VA's Center for Verification and Evaluation, and WOSB through approved third-party certifiers or the SBA.

Certification processes vary in complexity from weeks to months. The 8(a) program has the most rigorous application process but also offers the most benefits, including mentorship and sole-source contract authority.

Winning Set-Aside Contracts

Don't assume set-asides are easy wins — competition among small businesses is fierce. Your proposals still need strong technical approaches, relevant past performance, and competitive pricing. What changes is the competitive landscape — you're competing against peers rather than large corporations with massive proposal teams.

Leverage your small business advantages: agility, specialized expertise, lower overhead rates, and the ability to provide senior leadership attention to smaller contracts. Many agencies prefer working with small businesses because of the direct access to decision-makers and faster responsiveness.

Build relationships with agency small business offices and attend small business matchmaking events. These connections help you learn about upcoming opportunities early and understand agency priorities. Consider teaming with other small businesses to strengthen your combined capabilities while maintaining set-aside eligibility.