Guide
US small business set-asides for IT firms
How US federal small business set-asides work for IT contracts, including the rule of two, small business, 8(a), HUBZone, women-owned and service-disabled veteran-owned programs, and how to qualify.
The US federal government has a goal to award a large share of its contracting dollars to small businesses, and set-asides are one of the main tools. For a small IT firm, they can mean competing only against other small firms.
How set-asides work
- The rule of two. In general, if a contracting officer expects at least two capable small businesses to bid at a fair price, the contract should be set aside for small businesses. That's why answering sources sought notices matters. See responding to an RFI.
- Small purchases. Many purchases between the micro-purchase threshold and the simplified acquisition threshold are generally reserved for small businesses.
- Sole-source awards. Some programs allow contracts to be awarded directly to an eligible firm up to set limits.
Are you small?
The SBA sets size standards by NAICS code, usually by average annual revenue for services. Many IT services codes, such as 541511 (custom computer programming) and 541512 (computer systems design), have revenue-based standards in the tens of millions of dollars. Check the current SBA table for your codes.
The programs
| Program | Who it's for |
|---|---|
| Small business set-aside | Any firm under the size standard |
| 8(a) Business Development | Small firms owned and controlled by socially and economically disadvantaged individuals |
| HUBZone | Small firms in, and employing people from, historically underutilized business zones |
| Women-owned small business (WOSB and EDWOSB) | Small firms at least 51% owned and controlled by women |
| Service-disabled veteran-owned small business (SDVOSB) | Small firms owned and controlled by service-disabled veterans, certified by the SBA |
Program rules and certification processes change, and some, such as 8(a), have been under review. Check sba.gov for current eligibility.
How to get started
- Register in SAM.gov and get a UEI.
- Choose your NAICS codes carefully.
- Apply for any certifications you qualify for through the SBA.
- Write a capability statement.
- Watch SAM.gov for set-asides in your codes, and respond to sources sought notices.
- Consider a GSA Schedule, where set-asides can also apply to orders.
Foreign firms
Set-aside programs are generally for US small businesses. A Canadian or other foreign firm usually can't bid on set-asides directly, but can partner or subcontract with eligible US firms, or set up a US subsidiary that meets the rules. See selling IT to government in the US.
Common questions
What is the rule of two in federal contracting?
It's the general rule that a contract should be set aside for small businesses if the contracting officer reasonably expects offers from at least two capable small businesses at fair prices.
How do I know if my IT company counts as small?
Check the SBA's size standard for the NAICS code of the contract. For most IT services codes, it's based on average annual revenue.
Can I be in more than one set-aside program?
Yes, if you meet each program's rules. A firm can, for example, be both women-owned and in a HUBZone.