Set Asides

By law, the federal government must give special attention to small businesses when awarding specific government contracts. Every federal government purchase expected to be valued from $2,500 to $100,000 is automatically set aside for small businesses as long as there are at least two companies that can provide the product or service.

Within this general small business group goal, federal goals have been recognized for women-owned small businesses, service-disabled small business owners, small-disadvantaged businesses, and historically underutilized business zone, or HUB Zone businesses.

In the Small Business Act of 1953, Congress declared that small businesses should receive a fair proportion of the Government's purchases and contracts for services, property, and construction. Section 15 of the Act established the legal authority for procurement set-asides and FAR Subpart 19.5 provides the procedures for setting aside requirements for small business concerns.

An acquisition shall be conducted as a small business set aside whenever the CO determines a rational expectation of receiving at least two offers from small business concerns and awards will be issued at fair market prices; this is commonly known as the "Rule of Two".

Past acquisition history is not the only factor to consider in determining whether a reasonable expectation exists. In accordance with FAR Subpart 19.502 the OPDIV SBS and SBA PCR are responsible for market research analysis inaccuracy to ensure that the capabilities demonstrated by small businesses concerns are justly reflected.

Once a product or service has been attained successfully on the basis of a set-aside, the CO shall make every effort to ensure that future purchases for that product or service are acquired using set-aside procedures.

Whenever an acquisition has been determined not to be appropriate for the set-aside program, the CO shall consider whether a partial set-aside is beneficial before issuing the requirement as a full and open. Partial set-asides procedures shall not be used in construction acquisitions. Refer to FAR Subpart 19.502-3 to review a list of partial set-aside procedures that are permissible.

The Small Business Set-Aside Program (SBSA) is one of the oldest, if not the original, program set up to help small businesses win government contracts. This program helps assure that small businesses are awarded a fair proportion of government contracts by reserving certain government purchases exclusively for participation by small business concerns.

The determination to make a small business set-aside is usually made individually by the Contracting Officer. However, this determination may also be mutual. In this case it’s suggested by the Small Business Administration procurement center representative (PCR) and agreed to by the Contracting Officer. The regulations specify that unilateral determinations initiated by a Contracting Officer, rather than joint determinations, should be used as the basis for small business set-asides.

Set-asides may have many regulations. Call Malyszek & Malyszek today for help with the set-aside program.