Set-asides in plain words

A set-aside limits who can bid as the prime contractor. The prime is the company that signs the contract with the government. Set-asides help small businesses and certain groups compete with larger firms.

The set-asides you will see on SAM.gov

Most programs also have a "sole source" version, where the work goes to one named firm in that program. No set-aside, often called full and open, means any responsible business can bid, including large companies.

Small is measured per notice

For a small business set-aside, you must be small under the size standard for that notice's NAICS code when you submit. See NAICS codes and size standards.

A status must be real on the day you bid

You can bid as the prime on a program set-aside only if your business holds that status when you submit. Never claim a status you do not hold, and never claim one because you think you would qualify. A false claim can bring serious penalties.

When a bid is set aside for a status you do not hold

You still have ways in:

1. Team with an eligible prime. Offer to do part of the work as a subcontractor.
2. Look at a joint venture or a mentor-protege agreement. SBA has rules for these, and some joint ventures can bid on set-asides. Check with SBA or an attorney before you sign anything.
3. Watch for the award. When the award posts, contact the winner and offer to help if they need a subcontractor.

Victavio shows these notices in the "Team up or watch" lane instead of hiding them, so you can see every way in.

The prime must do real work

On set-aside contracts, the prime has limits on how much it can pass to others. For services, the prime may pay no more than half of what the government pays it to subcontractors that are not similarly situated. A similarly situated subcontractor holds the same status as the prime. This is why primes choose partners carefully. See Teaming and subcontracting.

The rule of two

For many federal buys, the contracting officer must set the work aside for small businesses when it expects offers from at least two capable small businesses at fair prices. Answering Sources Sought notices helps a buyer see that small businesses can do the work.

Texas works differently

Texas state agencies do not use federal set-asides. Texas has its own VetHUB program for businesses owned by service-disabled veterans. See Texas HUB is now VetHUB.