Pursuing Federal Government “Set-Aside” Contracts

If you’re looking for new ways to “grow” your small business, you may want to learn more about qualifying to bid on federal government “set-aside” contracts. The Small Business Administration (SBA) says there are two basic types of these set-aside contracts. Both can result in highly lucrative contracts that might otherwise have been awarded to far larger companies

The difference between “sole-source” and general competitive bidding set-aside contracts

This “sole-source” type of set-aside contract is often awarded through a non-competitive bidding process when the government believes that only one single business can meet the contract’s requirements. Companies seeking to bid on these types of contracts must first register with SAM (the System for Award Management). Occasionally, these types of sole-source contracts may be managed so that competitive bids will be accepted.

However, most small businesses try to submit bids after qualifying for one of four main federal government set-aside contract programs that always consider competitive bids. Here’s a closer look at each of them.

The four main types of federal government set-aside contracting programs

  1. Women-owned companies. Each year, the federal government tries to award at least five percent of all federal contracting dollars to Women-Owned Small Businesses (WOSBs).

The goal is to try and help women gain access to more business contracts now since male-run companies were often favored during past decades.

  1. Companies owned chiefly by a disabled military veteran. At present, the SBA states that the federal government seeks to award about three percent of all federal government set-aside contracts to disabled-veteran owned businesses;
  2. 8 (a) business development program entities. These businesses are usually run by socially or economically disadvantaged owners. In some cases, they’re helped by forming joint ventures with more established companies. An SBA specialist may be assigned to help the owners gain a better understanding of how the federal government contracting process is designed to work. Each year, at least five percent of all federal contracting dollars are awarded to owners of these types of businesses;
  3. HubZone certified small businesses. For your company to qualify to bid on this type of set-aside federal government contract, it must be at least 51% owned and controlled by a U.S. citizen, an agricultural cooperative, a Community Development Program, an Indian tribe or a Native Hawaiian organization. The principal place of business for a HubZone company must be located in a qualified HubZone area. In general, these businesses are viewed as “distressed” and are often found in underrepresented rural or urban populations.

If you’d like to find out if your company can be certified to bid on federal government contracts under one of these four competitive set-aside programs, plan on meeting with your Houston business law attorney. You can then discuss the various challenges you may encounter while trying to become a small business contractor with the federal government. You can also ask how you might submit bids to any state government contracting programs.

After speaking with your lawyer, you may also want to pursue a special SBA training program. Even if your business cannot currently qualify for certification under one of the set-aside programs described above, you can still try to obtain specialized training that can help you better manage your employees while expanding your customer base without doing business with any government programs.

Please feel free to contact one of our Murray Lobb attorneys about your current interest in bidding on specific types of government or private enterprise business contracts. In addition to providing you with our best legal advice, we can also help you create the formal paperwork that you may need.

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