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Many small business owners are curious about small business set-asides—how do they work and how you can get in on the action? Here’s a closer look.
Every year, the federal government buys some $500 billion worth of goods and services from the private sector. Does a small business stand a chance of winning any of those contracts? Yes, thanks to the SBA. Since it was founded in 1953, the U.S. Small Business Administration has worked with federal agencies to help ensure that at least 23% of all prime government contracts are awarded to (“set aside” for) small businesses.
Here’s how small business set-asides work and how to get them.
In addition to the government-wide 23% set-aside goal, there are different goals for certain subsets of small businesses:
Learn more about these programs.
Not all set-asides are for prime contracts (those directly with a government agency). There are also small business set-asides for subcontracts resulting from a prime contract. For example, if an automotive manufacturer gets a prime contract to build Army jeeps, they could subcontract with a small manufacturer to supply some of the parts. Learn more about the Small Business Subcontracting Program.
Adding to the complexity, each federal agency sets its own specific set-aside goals with the SBA every year. For example, for the fiscal year of 2017, the Department of Defense has a goal of awarding 22% of prime contracts and 34% of subcontracts to small businesses. The Department of Energy’s goal is to award 10.2% of prime contracts and 40% of subcontracts to small businesses.