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Set-aside contracts – what are they and how can they benefit my business? This may be the question you’re asking yourself if you’re interested in applying for federal contract bids.
The federal government issues government solicitations through the General Services Administration (GSA). The GSA buys billions of dollars’ worth of commodities each year. For this reason, a lot of smaller businesses think they don’t have a chance to secure a contract win. To tackle this, the GSA works with the Small Business Administration (SBA) to ensure smaller vendors have a chance.
Small business set-aside contracts are used to help level the procurement playing field for small businesses. The GSA and SBA work together to set aside 23% of all government solicitations for smaller businesses. This makes the process fairer, allowing them to get a slice of the pie.
Each federal agency sets its own specific set-aside goals with the SBA annually. For example, the Department of Education will have a different percentage from the Department of Defense. This means there are plenty of Request For Proposals (RFPs) available to respond to across all sectors.
There are two kinds of set-aside contracts: competitive set-aside contracts and sole-source set-aside contracts.
Competitive set-aside contracts are when at least two small businesses could perform the work or provide the products. The government sets aside the contract, especially for small businesses. With the occasional exception, this happens automatically for all government contracts under $150,000.
Some of these competitive set-asides are open to any small business. However, some are only open to small businesses in Small Business Association (SBA) contracting assistance programs.
Most government set-aside contracts are competitive, but there can be exceptions to this rule. These are known as sole-source set-aside contracts. They are a type of contract that can be issued without a competitive bidding process. This often happens only in situations where a single business can fulfill the requirements of the contract.
In order to be considered for this, you must have your business registered with the System for Award Management (SAM). You must also participate in any contracting program you may qualify for.
In some cases, the sole-source set-aside contracts must be published publicly. It will then be marked with intent to sole source. From here, hopeful vendors can view and bid on them. Once the bidding process starts, the intent to sole-source might be withdrawn.
As touched on above, almost every federal government purchase between $10,000 and $250,000 is set aside for small businesses. Depending on if there are over two companies that can provide the service/product at a fair and reasonable price.
The GSA advertises federal government solicitations both locally and nationally. The GSA reserves a percentage of all federal contracting dollars, and is an advocate for businesses that are:
Being a participant in one of these SBA programs means you’ll have fewer businesses to compete with for government contracts. An official award/certification must be granted to a company registered with SAM before they can qualify for set-aside contracts. You must meet eligibility requirements and certify your business’ socio-economic status before you can bid on one.
The certification process may vary depending on the SBA contract program you’re going for. Some allow you to self-certify by updating your business profile on SAM.
Others may require you to apply for a certification. Here, you’ll have to answer questions about your business ownership and upload supporting documents.
Check the contracting program’s page on the SBA website for specific details about the certification process and eligibility requirements.
To be eligible to apply for set-aside contracts, you must meet certain size requirements. These are set out by the SBA. These standards define the maximum size that a business can qualify as a small business for a government contract. For example:
It’s important to remember that there are exceptions by industry. You should look at the Table of Small Business Size Standards to find the relevant code for your business. You can check the SBA’s Size Standards Tool to see if your business classifies as ‘small’ for the set-aside contract.
Bidding for government set-aside contracts can have many advantages and benefits for your business. Some of the benefits are as follows:
When bidding on small business set-asides, you may get peace of mind by knowing that there will be Prompt Payment. This is because the government must act in accordance with the Prompt Payment Act.
When a vendor submits a proper and valid invoice to the federal agency, they must make the payment on time. ‘On time’ for federal payments means payment is due on whichever of these four conditions applies:
If not, the payment is late. This will result in the agency paying an interest rate.
Bidding for government solicitations can help you to secure a pipeline of work for your business. It is a business growth stem that isn’t often considered by many businesses. What’s more, is that the government is hoping to secure supply chains that are closer to home. They are actively looking to award contracts to smaller businesses. Therefore, it’s worth giving it a go.
In order to progress and secure larger contracts, you must build up your experience. Buyers expect 2 – 3 contract examples, often within the last 3 – 5 years. Securing set-aside contracts is a great way to build up your experience.
The more contracts you go for, the more experience you have. The more experience you have the bigger the contracts you can go for. The bigger contracts you go for, the bigger you can grow your business.
Hopefully, now you understand what small business set-aside contracts are and how they can benefit your business. If you haven’t considered bidding for contracts as a viable way to grow your business – think again. As a small business, it can help you gain experience and guarantee payment.
Not got the time to write winning set-aside contract responses in-house? Don’t worry, we can help. We provide three bid and RFP writing support services. Here at Hudson Bid Writers, we’re experts in writing winning bids. We proudly hold an 87% success rate and have over 60 years of collective bid writing experience.
Our RFP Writing service is the perfect solution to ensure that you submit a high-quality bid, even when you’re busy. Our writers will break down the solicitation documents, allowing you to see what the bid and the contract involves. This will help to ensure that you have all the specified evidence and meet the requirements of the contracting authority.
Our RFP Writers will then craft persuasive, high-quality responses, attach supporting evidence and even submit the bid on your behalf. Upload the solicitation documents for a free quote.
Have you already written a bid but need a second pair of eyes to review your work? Our RFP Mentor service will do just that. Simply send over your bid responses and the solicitation documents.
Our writers will then assess your work, ensuring that your responses are in line with the specification. They will also check for any spelling or grammar errors. You can then submit your bid with confidence. Upload your work for a free quote.
Do you need help with preparing a bid proposal? Proposal Ready can help businesses that are new to bidding for contracts or those in need of rejuvenating their content. Our Bid Consultants will create:
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