Small Business Set-Aside

The total small business set-aside is the default competitive structure for most mid-size federal requirements. Contracting officers must set aside acquisitions above the simplified acquisition threshold when there is a reasonable expectation of competition among small firms at a fair price.

Who can bid: Any firm small under the solicitation's NAICS size standard
Authority: FAR 19.5
Typical thresholds: Generally required when two or more small firms can compete at fair market price
Where to search: SAM.gov set-aside filter

Key takeaways

Set-asides shrink the field — your real competition is often three to eight firms, not fifty.
Limitations on subcontracting apply: you must perform the required share of the work yourself.
Eligibility is determined as of your initial offer including price, so certifications must be current at submission.
Ineligible bids are protestable, and size or status protests are common in tight competitions.

How the set-aside works

Only firms that qualify as small under the assigned NAICS code may compete. The limitations on subcontracting cap how much of the contract value can flow to other-than-small firms: generally 50% for services and supplies, 85% for general construction, and 75% for specialty trade construction.

Finding these opportunities

Filter SAM.gov by set-aside type and your NAICS codes, then work backwards through the agency's forecast and sources-sought notices. Most set-aside decisions are made during market research, so responding to sources-sought notices is how you influence whether a set-aside happens at all.

Competing and winning

Because the field is narrow, differentiate on delivery credibility rather than price alone. Name your actual staff, show same-size past performance, and demonstrate that your workshare complies with the subcontracting limits — noncompliant teaming structures are the most common protest ground.

FAQ

What is the rule of two?

The contracting officer must set aside an acquisition when two or more responsible small businesses are expected to submit offers at a fair market price.

Can I subcontract most of the work?

No. Limitations on subcontracting require you to perform a defined majority share, depending on contract type.

When is size determined?

As of the date of your initial offer that includes price.