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How to use Small Business Set-asides to Drive Business!

By Kristin Ghanem | Harkcon’s Contract Management Specialist

Small business set-asides are an effective tool for helping small businesses compete and win government contracts. When market research determines that a small business is able to perform the work or provide the necessary items needed by the government, those opportunities are set-aside exclusively for small businesses.

There are several types of small business set-asides. Some opportunities are open to all small businesses and some require a specific small business designation.

The government determines small business set-asides using either Contract Value or Prime Contract Goals.

Contract Value

A set-aside is partially based on the value of goods or services the government is purchasing.

Simplified Acquisition Threshold

Every government purchase with an anticipated value above the micro-purchase threshold of $3,500, and up to the Simplified Acquisition Threshold of $150,000, is required to be exclusively set-aside for small businesses. The Rule of Two applies, meaning that there must be at least two small businesses that are competitive.

Above the Simplified Acquisition Threshold

Contract opportunities above $150,000 should also be set aside if the Rule of Two is met.

$700,000 or $1.5 million

Opportunities over $700,000 or $1.5 million (for construction) awarded to large businesses must have small business subcontracting plans to the extent that there are subcontracting opportunities.

Prime Contract Goals

The government has specific annual prime contracting goals for designated small business. Currently, the government-wide goal states that at least 23 percent of all government contracting dollars should be awarded to small businesses. Additionally, there are targeted goals for the following small business designations:

  • Women Owned Small Business: 5 percent

  • Small Disadvantaged Business: 5 percent

  • Service Disabled Veteran Owned Small Business: 3 percent

  • HUBZone: 3 percent

Next time we will discuss how to determine whether you qualify to a specific small business designation and, if so, how to become certified.

If you would like to contact the author of this blog, send an email to and reference the title, "How to use Small Business Set-asides to Drive Business!”

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