Procurement Preference Programs (“Set-Asides”)

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Small Business Administration’s 8(a) Program
The Small Business Administration (SBA) 8(a) Program offers mentoring, procurement and financial assistance and training. It does NOT guarantee that you will receive federal contracts. The program is divided into a Developmental stage (up to 4-years) and a Transitional stage (up to 5 years). As a general rule, to be considered for this program your business must meet the following criteria:

  • Social Disadvantage: Subjected to racial or ethnic prejudice, or cultural bias.
  • Economic Disadvantage: Ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities.
  • Majority ownership of the business (51%)
  • Full-time management operation of the business
  • Meet specific small business size standards
  • In operation for more than two years
  • Sound management experience
  • Products or services are suited to federal contracts

An application checklist can help you to determine if your business meets the 8(a) criteria.

Woman-Owned Small Business
When you register at the System for Award Management (SAM) you may self-certify that you are a Woman-Owned Small Business (WOSB). Federal Agencies have a goal to award 5% of contracting dollars to women-owned small businesses.

In addition to this self-certification, the SBA has determined that women-owned small businesses in specific industries are under-represented in the federal contracting marketplace.

A list of applicable NAICS codes indicates which industries are eligible for this program.

In order to be eligible, the woman owner must show:

  • Majority ownership of the business (51%)
  • Unconditional ownership and control
  • US citizenship. Permanent Residents or foreign nationals are not eligible
  • Control of management & daily business operations.
  • Highest officer position in the company
  • Sufficient managerial experience. (Specific technical expertise is not necessary, as long as the woman owner has ultimate managerial & supervisory control)
  • Full-time management of the business
  • Serve as general partner in a partnership, with control over all partnership decisions
  • Serve as a management member in an LLC, with control over all decisions
  • Control the board of directors in a Company, own at least 51% of voting stock, and be on the board of directors

Economically Disadvantaged Women-Owned Small Businesses (EDWOSB) should also have:

  • personal net worth less than $750,000
  • adjusted gross yearly income (averaged over 3 years) under $350,000
  • assets (including home & business) with a fair market value under $6 million

Documentation should be submitted to the SBA’s Woman-Owned Small Business repository

Historically Under-Utilized Business Zones – HUB-Zones
This program encourages economic development in Historically Underutilized Business Zones, or HUB-Zones. In order to qualify, a small business must show:

  • The business is located in a HUB-Zone (defined by zip code).
  • Ownership and control by a US Citizen
  • At least 35% of employees must live in a HUB-Zone area.
  • The company’s principal office must be located in the HUB-Zone.
  • Existing businesses may move to a HUB-Zone area, as long as the other criteria are met.

Contracts can be 100% set-aside for HUB-Zone businesses. Alternatively a solicitation may be issued as ‘full and open’ (open to all business types), and the HUB-Zone firm can be awarded the contract, even if their bid is up to 10% higher than an equally qualified large firm. This is known as the ‘Price Evaluation Preference’ clause.

Veteran-Owned and Service-Disabled Veteran-Owned Small Business
The Department of Veterans Affairs (VA) has authority for Veteran-Owned and Service-Disabled Veteran-Owned Small Business Program. The VA’s Verification Assistant Program will help you to understand the process. A Veteran served in the active military, naval or air service and was discharged other than dishonorably. A Service-Disabled Veteran’s disability was incurred or aggravated in the line of duty in that service.

A Veteran or Service-Disabled Veteran must show:

  • Majority ownership of the business (51%)
  • Direct, unconditional ownership and control
  • Control of management & daily business operations
  • Highest officer position in the company
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