Small Business Federal Contracts
The federal government is the world's largest customer, and small businesses are its preferred partners. By law, at least 23% of all federal contracting dollars must go to small businesses. Total Small Business set-asides restrict competition to firms that qualify as "small" under SBA size standards for the relevant NAICS code, giving smaller firms a fair shot at winning work that might otherwise go to large corporations.
What Are Small Business Set-Asides?
When a federal contracting officer determines that at least two qualified small businesses can perform the work at a fair price, they are required to "set aside" the procurement exclusively for small businesses. This is known as the Rule of Two, and it's the foundation of the federal small business contracting program.
Small business size is determined by the SBA's size standards, which vary by NAICS code. These standards are defined by either average annual revenue or number of employees. For example, a general management consulting firm is "small" with less than $19 million in average annual revenue, while a custom software development firm can have up to $34 million.
Why Small Businesses Win in Federal Contracting
Small businesses often offer advantages that large firms cannot: faster response times, more innovative approaches, lower overhead costs, and direct engagement from senior leadership. Federal agencies recognize these advantages, which is why the government consistently exceeds its small business contracting goals.
Competition in small business set-asides is significantly lower than in full and open procurements. While a full and open solicitation might attract 30-50 proposals, a small business set-aside in the same space might see only 5-15. This dramatically improves your probability of winning.
Recent Small Business Opportunities
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Frequently Asked Questions
How do I know if my business qualifies as "small" for federal contracts?
The SBA assigns a size standard to each NAICS code, defined by either average annual revenue or number of employees. Check the SBA's size standards table for the NAICS codes that apply to your business. Your size is evaluated based on the specific NAICS code assigned to each solicitation.
Do I need any certifications to bid on small business set-asides?
No special certification is required for Total Small Business set-asides. You simply need to be registered in SAM.gov and meet the SBA size standard for the relevant NAICS code. However, additional certifications (8(a), HUBZone, SDVOSB, WOSB) qualify you for even more targeted set-asides with less competition.
What percentage of federal contracts go to small businesses?
The federal government has a statutory goal of awarding at least 23% of all prime contracting dollars to small businesses. In recent fiscal years, the government has consistently exceeded this target, with small businesses receiving over $160 billion annually in federal contract awards.
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