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Small Business Set Aside FAQs

Small Business Set-Aside Frequently Asked Questions (FAQs) and answers:

  1. Does the interim rule authorize set-asides for orders and Blanket Purchase Agreements (BPAs) under Schedule contracts?

  2. Under the interim rule, can an agency set aside Schedule orders and/or BPAs for any of the socioeconomic programs (e.g. service-disabled veteran-owned, women-owned, and Historically Underutilized Business Zone (HUBZone) small business concerns)?

  3. Are there any circumstances in which the interim rule requires the consideration or use of set-asides?

  4. Must agencies prepare any special determinations in order to conduct set-asides under Schedule contracts?

  5. What steps must an agency take under the interim rule to set aside an order under the Schedules Program?

  6. If an agency uses eBuy, must it ever prepare a justification, such as if the agency received fewer than three bids?

  7. If an agency decides to limit consideration to fewer than all small businesses (i.e., it does not use eBuy) and thinks it will receive at least three offers but receives only two or one, what must it do?

  8. If an agency can only find two small businesses, can it still do a set-aside?

  9. Can you set aside orders against small business set-aside Special Item Numbers (SINs) and/or against the Temporary Administrative and Professional Staffing Services (TAPS) Schedule (which is totally set aside for small business concerns)?

  10. Can socioeconomic status still be used as an evaluation factor as opposed to set-asides?

  11. What is meant by "specific small business program eligibility requirements" in Federal Acquisition Regulation (FAR) 8.405-5(a)(2)(ii)?

  12. What system changes will be made to facilitate the set-aside of orders?

  13. How do set-asides apply to Multiple Award Schedule (MAS) Contractor Team Arrangements (CTAs)? For example, if an order is set-aside for small business, do all members of the CTA have to be small to be eligible for that order or can only the team lead be small?

  14. Can you sole source to small business concerns under this authority?

  15. Can agencies get 8(a) credit for orders placed with 8(a) Schedule-holders?

  16. Does the Non-Manufacturer Rule apply to orders set-aside for small business?

  17. Can a Schedule contractor use a participating dealer’s size status for an order?

  18. How does the “Limitations on Subcontracting” (FAR 52.219-14) rule work under a Multiple Award Schedules (MAS) Contractor Team Arrangement (CTA)? For example, does the Team Leader have to perform at least 50% of the work or is the 50% requirement aggregated across all team members?

1. Does the interim rule authorize set-asides for orders and BPAs under Schedule contracts?

Yes. The interim rule amends FAR Subpart 8.4 to make clear that set-asides may be used in connection with the placement of orders and the establishment of BPAs under Schedule contracts.
 

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2. Under the interim rule, can an agency set aside Schedule orders and/or BPAs for any of the socioeconomic programs (e.g., service-disabled veteran-owned, women-owned, and HUBZone small business concerns)?

Yes. FAR 8.405-5(a)(1) expressly states that agencies may set aside orders and BPAs for any of the small business concerns identified in 19.000(a)(3).
 

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3. Are there any circumstances in which the interim rule requires the consideration or use of set-asides?

No. It is entirely up to the ordering contracting officer to decide whether or not it is in the best interest of the Government to set aside an order for small business. See FAR 8.405-5.
 

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4. Must agencies prepare any special determinations in order to conduct set-asides under Schedule contracts?

Generally, no. As explained in bullet d. of answer 5 below, no special documentation is required if the agency is conducting a competitive set-aside. However, if the agency is limiting the number of small business sources considered to fewer than that anticipated in FAR 8.404 and 8.405 (which lay out the basic competition requirements when using the Schedules) the agency must prepare documentation to justify the limitation. Given that there are more than 15,000 small businesses participating in the Schedules Program, there should be few instances where an agency is unable to give consideration to a sufficient number of small businesses to comply with the competition requirements set forth in FAR 8.404 and 8.405.
 

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5. What steps must an agency take under the interim rule to set aside an order under the Schedules Program?

Agencies must take the following four steps:

a. Perform market research. Determine if there are small businesses capable of performing the desired work. Given that there are more than 15,000 small business Schedule contract holders, and Schedule contracts focus exclusively on commercial products and services, agencies should easily be able to identify small businesses that are capable and competitive.

b. Incorporate clauses into Request for Quotations (RFQs) (until all Schedule contracts are modified). Federal Acquisition Service (FAS) is in the process of modifying its existing vehicles to include all appropriate set-aside clauses. Contracting officers can visit Contracts Online (accessed through gsaelibrary.gsa.gov) to view a listing of current clauses and see which Schedule contracts have been modified. Until Schedule contracts have been modified to incorporate set-aside clauses, contracting officers must incorporate the following FAR clauses, as applicable, in all RFQs:

  • 52.219-13 Notice of Set-Aside of Orders (November 2011)
  • 52.219-3 Notice of Total HUBZone Set-Aside or Sole Source Award (November 2011)
  • 52.219-6 Notice of Total Small Business Set-Aside (November 2011)
  • 52.219-14 Limitations on Subcontracting (November 2011)
  • 52.219-27 Notice of Total Service-Disabled Veteran-Owned Small Business Set-Aside (November 2011)
  • 52.219-29 Notice of Total Set-Aside for Economically Disadvantaged Women-Owned Small Business (EDWOSB) Concerns (November 2011)
  • 52.219-30 Notice of Total Set-Aside for Women-Owned Small Business Concerns Eligible Under the Women-Owned Small Business Program (November 2011)

c. Include a statement in the RFQ for an order or BPA that will be set aside. The contracting officer should include the following language in the RFQ: “This is a notice that this order is a total set-aside for [insert either “small business concerns” or specify a subset of small business concern]. Only quotes submitted by [insert either “small business concerns” or specify a subset of small business concerns] will be accepted by the Government. Any quote that is submitted by a contractor that is not [insert either “a small business concern” or specify a subset of small business concern] will not be considered for award.”  If using eBuy, this statement will be added automatically to the set-aside RFQ posting. See the response to question #12 for more details.

d. Use the same competition rules as provided in FAR 8.405, except limit consideration only to small businesses.
 

Size of BPA/Order Competition Strategy Any special documentation required?
BPA/order exceeds the Micro-Purchase Threshold but not the Simplified Acquisition Threshold (SAT) Agency posts a quote on eBuy No
Agency considers reasonably available information about at least three small businesses No
BPA/order exceeds the SAT Agency posts a quote on eBuy No
Agency sends quote out to enough small businesses to receive quotes from at least three small businesses No


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6. If an agency uses eBuy, must it ever prepare a justification, such as if the agency receives fewer than three bids?

No. Posting an RFQ on eBuy so that all those awarded the relevant Special Item Numbers (SINs) can view the requirement satisfies all Schedule competition requirements, both above and below the SAT. See FAR 8.402(d)(1).
 

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7. If an agency decides to limit consideration to fewer than all small businesses (i.e., it does not use eBuy), thinking it will receive at least three offers but receives only one or two, what must it do?

When fewer than three quotes are received from Schedule contractors that can fulfill the requirement, the ordering contracting officer mustl prepare a written determination explaining that no additional contractors capable of fulfilling the requirement could be identified despite reasonable efforts to do so. The determination must clearly explain efforts made to obtain quotes from at least three small business Schedule contractors. See FAR 8.405-1(d)(3)(ii), 8.405-2(c)(3)(iii)(B), 8.405-3(b)(1)(ii)(B), and 8.405-3(b)(2)(v)(B). [This requirement applies only to orders exceeding the SAT.]
 

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8. If an agency can only find two small businesses, can it still do a set-aside?

Yes, both for orders above and below the SAT. However, the agency must document the circumstances for restricting consideration to fewer than three Schedule contractors based on one of the reasons at FAR 8.405-6, which sets out requirements when limiting sources. For actions above the SAT, the requirement to distribute the RFQ to a sufficient number of Schedule-holders to ensure at least three quotes are received, is mandated by Section 863 of the FY 2009 National Defense Authorization Act, and Section 1331 of the Jobs Act does not provide relief from this competition requirement. Since there are more than 15,000 small business contractors available via the Federal Supply Schedule Program, this situation should be rare.
 

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9. Can you set aside orders against small business set-aside SINs and/or against the Temporary Administrative and Professional Staffing Services (TAPS) Schedule (which is totally set aside for small business concerns)?

Yes, you can do a set-aside for a specific small business socioeconomic category against a set-aside SIN and/or the TAPS Schedule. For example, you can choose to set aside an order against TAPS for HUBZone small business concerns. As always, however, market research must indicate that there are sufficient eligible small business concerns capable of performing the work before you can set aside the order for that small business socioeconomic category.
 

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10. Can socioeconomic status still be used as an evaluation factor as opposed to set-asides?

Yes. If an order is not being set aside exclusively for small business concerns, contracting officers can use socioeconomic status as an evaluation factor in RFQs.
 

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11. What is meant by “specific small business program eligibility requirements” in FAR 8.405-5(a)(2)(ii)?

Some of the small business programs identified in FAR Part 19 have special circumstances under which you can set aside an acquisition. For example, for an order to be set aside under the Women-Owned Small Business (WOSB) Program, the requirement needs to be: 

  • Under $6.5 million if it is for manufacturing, and under $4 million for all other requirements; and 
  • Fall within the scope of those specific North American Industrial Classification Systems (NAICS) code industries in which the Small Business Administration (SBA) has determined that women-owned small business concerns are underrepresented or substantially underrepresented in Federal procurement (see FAR Subpart 19.15, WOSB Program for additional requirements).

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12. What system changes will be made to facilitate the set-aside of orders?

In order to facilitate the set-aside of orders in eBuy, the system has been changed to remove an RFQ from the view of those Schedule contractors that are not eligible to respond to a particular set-aside order. For example, if an RFQ is set aside for service-disabled veteran-owned small business concerns, only those Schedule-holders that are awarded the relevant Schedule and SIN(s), and are service-disabled veteran-owned small businesses will be able to view it. Other Schedule-holders will not be able to view the set-aside RFQ.  

Note that contracting officers still have to comply with the ordering procedures in FAR 8.405-1, 8.405-2, or 8.405-3 before proceeding with a set-aside (i.e. make sure there are sufficient contractors eligible to participate in the set-aside or follow the requirements for limiting sources in FAR 8.405-6).

The set-aside RFQ posting on eBuy will include a label identifying what kind of a set-aside it is, and language stating that quotes from Schedule contractors who are not eligible for the set-aside will not be considered for award. For more information on this functionality, visit our Interact Blog Post eBuy is "Set-Aside" Ready!
 

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13. How do set-asides apply to Multiple Award Schedule (MAS) Contractor Team Arrangements (CTAs)? For example, if an order is set-aside for small business, do all members of the CTA have to be small to be eligible for that order or can only the team lead be small?

All members of the CTA must be small (or whatever sub-set the order is set-aside for) for the CTA to be eligible for that order. It is important to note, that for an MAS CTA, all team members must hold a Schedule contract, they each are responsible for their portion of the work, and each member maintains privity of contract. These rules apply in both an order and BPA environment against Federal Supply Schedules.

Important Interim Guidance for Ordering Activities on FPDS Reporting for Contractor Team Arrangements (CTAs):

1. Interim Guidance: Ordering activities are responsible for accurately achieving and reporting on their small business goals, including accurate reporting to the Federal Procurement Data System (FPDS). Under CTAs, each contractor has privity of contract with the ordering activity. When an MAS order is awarded with a CTA, small business achievement in contractual terms is based upon the dollar amount of the work the small business contractors perform under the order. FPDS currently will only accept information relating to one contractor per order. The ordering activity must determine which CTA member is realizing the preponderance of the revenue on an order and report that contractor's information to FPDS.

2. Future Guidance: GSA is working with the Office of Federal Procurement Policy (OFPP) and the Small Business Administration (SBA) to provide further clarity around the use of CTAs, and anticipates issuing final guidance in the future.

 

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14. Can you sole source to small business concerns under this authority?

Section 1331 of the Small Business Jobs Act and FAR 8.405-5(a)(1) only authorizes set-asides of orders under multiple award contracts, not sole source.
 

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15. Can agencies get 8(a) credit for orders placed with 8(a) Schedule-holders?

Currently, agencies have no goals for 8(a) small business concerns but they do have goals for small disadvantaged businesses. Since 8(a) firms are by definition small disadvantaged businesses, an order placed against an 8(a) Schedule-holder will be credited towards the ordering agency's small disadvantaged business goal.
 

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16. Does the Non-Manufacturer Rule apply to orders set-aside for small business?

Yes, the Non-Manufacturer Rule (NMR) does apply to Schedule orders set-aside for small business. The NMR requires that a small business performing under a set-aside contract/order must provide the product of a small business manufacturer.
 

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17. Can a Schedule contractor use a participating dealer's size status for an order?

No. Size is assigned to a particular Schedule contract based on the Schedule contractor. A large business Schedule contractor cannot use a small business dealer’s size status in order to compete for a set-aside order.
 

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18. How does the “Limitations on Subcontracting” (FAR 52.219-14) rule work under a Multiple Award Schedules (MAS) Contractor Team Arrangement (CTA)? For example, does the Team Leader have to perform at least 50% of the work or is the 50% requirement aggregated across all team members?

Under an MAS CTA the Team must perform 50% of the value of the work in the aggregate. For example, on a team consisting of three contractors, the Team Leader could perform 30% of the work and each Team Member could perform 10% of the work to meet the 50% requirement. The remaining 50% of the work may be performed by subcontractors working under any of the team members Schedule contracts. Socioeconomic restrictions do not apply to subcontractors, i.e. they may be large business.
 

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