What Is a Set-Aside Contract?

A set-aside is a contract reserved for small businesses, or for one type of small business such as HUBZone or women-owned firms. Others can't bid.

Set-aside contracts explained All glossary terms

Set-aside in plain English

A plain small business set-aside needs no certification. You must meet the size standard for the contract's NAICS code and say so in your SAM.gov registration.

Program set-asides are narrower. Contracts set aside for 8(a), HUBZone, women-owned or service-disabled veteran-owned businesses require certification, from SBA for free or, for women-owned firms, from an SBA-approved third-party certifier.

Above $15,000, a buy must be set aside for small businesses when the rule of two is met. With fewer eligible competitors, set-asides are often the best odds a new contractor gets.

Related terms

Rule of two: The rule of two requires a set-aside for small businesses when at least two responsible small businesses are expected to offer at fair market prices.
Small business size standard: A size standard is SBA's cutoff for counting as a small business in an industry. SBA sets one per NAICS code, in average annual receipts or employees.
8(a) program: The 8(a) program is SBA's nine-year business development program for small businesses owned by socially and economically disadvantaged U.S. citizens.
HUBZone: A HUBZone is a Historically Underutilized Business Zone. SBA's HUBZone program helps small businesses based in these areas win federal contracts.
WOSB (women-owned small business): A WOSB is a small business at least 51% owned and controlled by women who are U.S. citizens, with women managing daily operations.
SDVOSB (service-disabled veteran-owned small business): An SDVOSB (service-disabled veteran-owned small business) is a small business at least 51% owned and controlled by service-disabled veterans.

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