A set-aside contract is a federal opportunity reserved for a specific category of small business, limiting competition so smaller firms can win. Set-asides are one of the biggest advantages a small business has in federal contracting. Here is how they work and how to qualify.
What is a set-aside contract?
A set-aside restricts competition for a contract to a defined group—for example, small businesses, or businesses in a socioeconomic program. Agencies use set-asides to meet statutory small-business goals (at least 23% of prime dollars). They are central to getting government contracts as a smaller firm.
Types of small business set-asides
- Small Business — any qualifying small business.
- 8(a) Business Development — small disadvantaged businesses.
- WOSB / EDWOSB — women-owned small businesses.
- SDVOSB — service-disabled veteran-owned firms.
- HUBZone — firms in Historically Underutilized Business Zones.
Sole-source vs. competitive set-asides
A competitive set-aside is open to all firms in the category. A sole-source award can go directly to one eligible firm (common in 8(a), HUBZone, SDVOSB, and WOSB) up to certain dollar thresholds—no full competition required.
How to qualify for set-asides
First confirm you are small under the SBA size standard for your NAICS code, then obtain the relevant certification—such as the WOSB program. Keep your SAM.gov registration active throughout.
Frequently asked questions
What does set-aside mean in government contracting?
It means a contract is reserved for a specific category of business, so only those firms may compete.
What percentage of contracts are set aside for small business?
The governmentwide goal is at least 23% of federal prime contract dollars to small businesses, with sub-goals for WOSB, SDVOSB, HUBZone, and 8(a).
Want to know which set-asides you qualify for? Book a free discovery call. — Reviewed by the GSA Focus team.
