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In an effort to ensure that small businesses get their fair share, Federal purchasing offices are required by the Small Business Act to "set-aside" contracts or portions of contracts for exclusive bidding by small and/or minority owned businesses. Often large prime contractors are also required to subcontract a portion of their work to small businesses. The Southwest Central Ohio Procurement Technical Assistance Center (SWCO PTAC) can assist you in identifying which, if any, set-asides you qualify for.
All contracts for supplies, equipment and services totaling over $500,000, and all construction contracts over $1,000,000 must have a subcontracting plan. The statutory goals are as follows:
- 23 percent of prime contracts for small businesses;
- 5 percent of prime and subcontracts for small disadvantaged businesses;
- 5 percent of prime and subcontracts for women-owned small businesses;
- Not less than 3 percent for FY2003 and each year thereafter for HUBZone small businesses;
- 3 percent of prime and subcontracts for service-disabled veteran-owned small businesses
To learn about cascading set-asides, Click Here.
Below are descriptions of the set-aside programs and links to online resources for more information:
A small business concern, as defined by the SBA, is one that is independently owned and operated, organized for profit, and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period. Companies may self certify themselves as a small business.
To be considered a small business, a firm must be:
- Independently owned or operated
- Not dominant in the field under which it is pursuing government contracts
- Qualified under the NAICS criteria in 13 CFR part 121 .
Examples of SBA general size standards include the following:
- Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured;
- Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided;
- Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided;
- Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided;
- General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction;
- Special Trade Construction: Annual receipts may not exceed $7 million; and
- Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product.
- Disadvantaged Business Enterprise (DBE)
The Disadvantaged Business Enterprise (DBE) is federally mandated by the Department of Transportation to ensure nondiscrimination in the award and administration of Federal contracts. The DBE program is designed to create a level playing field for small businesses that are black, hispanic, native american, asian, pacific islander, subcontinent asian, or woman owned.
DBE Program Information
DBE Application
- Small Disadvantaged Business Enterprise (SDB)
The Small Disadvantaged Business Enterprise (SDB) program is administered by the Small Business Administration (SBA) and is designed to help small disadvantaged businesses compete in the American economy by providing advantages and benefits in the Federal procurement process. This is done mainly in two ways. First, SDB's are eligible for special bidding considerations. Second, the program provides evaluation credits to primes, who do business with SDB's.
SDB Program Information
SDB Application
- Women Owned Small Business (WOSB)
In 1994, the Federal Acquisition Streamlining Act (FASA) was established, setting a goal for Federal agencies to award at least 5% of all prime and subcontract dollars to WOSB's. Despite continued growth in the number and economic impact of women-owned firms, the 5% goal has never been achieved on a government-wide basis. However, FY2002 saw the higher percent ever recorded - 2.9% of Federal contract dollars were spent with women-owned businesses. Companies may self certify themselves as a WOSB's.
To be classified as a WOSB a small business must be:
- At least 51% owned by one or more women or in the case of any publicly owned business
- At least 51% of the stock of which is owned by one or more women
- Owned by a U.S. citizen
- Owned, operated and managed on a daily basis by the woman owner(s)
- In business at least one year.
The Hubzone program is designed to provide contracting assistance to companies located in historically underutilized businesses zones as prescribed by the SBA. The primary purpose of the program is to encourage economic development and increase employment in these distressed urban and rural areas. Certified businesses qualify for Competitive Hubzone contracts, sole source Hubzone contracts, and Full and Open Competitive Contracts (price evaluation preference).
HUBZone Information
HUBZone Locations
HUBZone Application
- Service Disabled Veteran Owned
SBA's Office of Veterans Business Development (OVBD) is designed to serve the veteran entrepreneur by formulating, executing and promoting policies and programs of the agency that provides assistance to veterans seeking to start and develop small businesses. There is no certification process for veterans. A veteran or a service-disabled veteran self certifies his/her veteran status when he/she registers on PRO-Net and when responding to a government solicitation. Proof of being a service-disabled veteran can be evidenced by a DD Form 214 and a Veteran's Administration certified letter as to disability
To be considered a SDVOSB, a firm must be:
- Not less than 51 percent of which is owned by one or more service-disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more service-disabled veterans; and
- The management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a service-disabled veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran.
"Service-disabled veteran" means a veteran, as defined in 38 U.S.C. 101(2), with a disability that is service-connected, as defined in 38 U.S.C. 101(16). Any service-disabled veteran-owned small business concern (nonmanufacturer) must meet the requirements in 19.102(f) of the Federal Acquisition Regulation to receive a benefit under this program.
A service-disabled veteran-owned small business concern agrees that in the performance of the contract, in the case of a contract for:
- Services (except construction), at least 50 percent of the cost of personnel for contract performance will be spent for employees of the concern or employees of other service-disabled veteran-owned small business concerns;
- Supplies (other than acquisition from a nonmanufacturer of the supplies), at least 50 percent of the cost of manufacturing, excluding the cost of materials, will be performed by the concern or other service-disabled veteran-owned small business concerns;
- General construction, at least 15 percent of the cost of the contract performance incurred for personnel will be spent on the concern's employees or the employees of other service-disabled veteran-owned small business concerns; or
- Construction by special trade contractors, at least 25 percent of the cost of the contract performance incurred for personnel will be spent on the concern's employees or the employees of other service-disabled veteran-owned small business concerns.
A joint venture may be considered a service-disabled veteran owned small business concern if:
- At least one member of the joint venture is a service-disabled veteran-owned small business concern, and makes the following representations: That it is a service-disabled veteran-owned small business concern, and that it is a small business concern under the North American Industry Classification Systems (NAICS) code assigned to the procurement;
- Each other concern is small under the size standard corresponding to the NAICS code assigned to the procurement; and
- The joint venture meets the requirements of paragraph 7 of the explanation of Affiliates in 19.101 of the Federal Acquisition Regulation.
- The joint venture meets the requirements of 13 CFR 125.15(b)
SDVO Information
Dept. of Veterans Affairs - SADBU Office
- 8a Business Development Program
The 8a program similar to the SDB program described above and is administered by the SBA. The program is designed to help disadvantaged businesses compete in the American Economy. It differs in that 8a companies enter into a 9 year partnership with the SBA to develop and grow their business. Also any business accepted into the program automatically qualifies for SDB certification.
To be considered a small business, a firm must be:
- Independently owned or operated
- Not dominant in the field under which it is pursuing government contracts
- Qualified under the NAICS criteria in 13 CFR part 121 .
8a Program Information
8a Application
The Mentor-Protégé Program encourages approved Mentors to provide various forms of assistance to eligible Protégé Participants, while enhancing the capabilities of the Protégés, and to improve their ability to compete for federal contracts.
Mentors may benefit by receiving additional consideration when submitting bids for government contracts, developing a relationship with a trusted business partner, and being allowed to invest equity in the Protégé firm of up to 40% in certain instances.
Protégés may benefit by receiving governmental contracting experience that will aid in future bidding opportunities, guidance and establishment of processes from the Mentor, financial developmental assistance, and developing a relationship with a larger partner that may lead to future business (both government and non-government related).
Mentor/Protégé programs differ from department to department. If you are interested in being either a Mentor or Protégé, contact a PTAC consultant for information specific to the agency in which you are interested.
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