The federal government’s goal is to set aside 23% of federal contracting dollars for small businesses, as well as a percentage of awards to woman-owned, veteran-owned, 8a businesses (minority/disadvantaged),and businesses located in areas of high unemployment (HUB-Zones).
A small business set-aside is automatic when the expected award is under $150,000 – known as the Simplified Acquisition Threshold.
Federal Acquisition Regulations require agencies to make every attempt to set aside contracts for small business, as long as
- there is ‘adequate competition’ – at least two companies in that category (small, woman-owned etc) capable of providing the product or service
- the Contracting Officer determines that the offered price is ‘fair and reasonable’.
The Contracting Officer (CO) will conduct market research to find two or more small businesses in a particular category (e.g. woman or veteran-owned) who might be capable of supplying the product or service. The CO will search the System for Award Management database; the SBA’s Dynamic Small Business Search (DSBS) website; look up past award information; and post Request for Information, Sources Sought, Market Research and Pre-Solicitation notices to FedBizOpps.
Fair and Reasonable Pricing
What is a fair and reasonable price? The Contracting Officer knows that a small business may not be able to compete with a larger company, but prices can still be considered fair and reasonable if they are within a competitive price range offered by similar small businesses. The Federal Acquisition Regulations don’t specify how the CO will determine this, so again market research on the CO’s part is crucial.