Federal Contracting Glossary
Set-Aside
A procurement reserved for a defined category of small business — limiting competition to firms that meet the relevant socioeconomic and size eligibility.
Definition
A set-aside reserves a contract (or order) for competition only among firms in a designated category — small business generally, or a socioeconomic program such as 8(a), WOSB/EDWOSB, SDVOSB, or HUBZone. Under FAR Part 19 and the "rule of two," contracting officers must set aside an acquisition for small business when there is a reasonable expectation of receiving offers from at least two responsible small businesses at fair-market prices.
Because only eligible firms may compete, set-asides concentrate the competitive field and are the primary on-ramp for small businesses into federal work. Eligibility is verified through SAM.gov registration and SBA program certifications, and an offeror's size is judged against the NAICS code size standard assigned to the solicitation.
How this affects your proposal
Confirm your eligibility before you invest — size and socioeconomic status are verified, and a misrepresentation can disqualify you or worse. Treat your SAM.gov profile and SBA certifications as living credentials, kept current and accurate for every set-aside you pursue.
Common questions about set-aside
What is the "rule of two"?
If the contracting officer reasonably expects offers from at least two responsible small businesses at fair-market prices, the acquisition is set aside for small business. The same logic supports set-asides within specific socioeconomic programs.
How is small-business size determined?
By the NAICS code size standard the agency assigns to the solicitation — either an employee count or an average annual receipts figure published by the SBA. Your status is self-certified in SAM.gov, subject to challenge.
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