Federal Procurement Goals

In order to ensure that small, minority- and woman-owned businesses get their fair share of federal procurement dollars, the Small Business Administration (SBA) negotiates annual procurement goals with each federal agency and review each agency's results. Procurement goals are established in terms of percentage of annual expenditures.

• 23% of all prime contracts is to be set aside for small businesses
• 5% of all prime and subcontracts is to be set aside for small disadvantaged businesses
• 5% of all prime and subcontracts is to be set aside for woman-owned businesses
• 3% of all prime contracts is to be set aside for HUBZone small businesses
• 3% of all prime and subcontracts is to be set aside for to Service Disabled Veteran-Owned Small businesses

For additional information on small business prime and subcontracting goals by federal agencies, visit About SBA Programs

The Different Federal Procurement Set-Aside Programs

Small Business

Under the Small Business Act, federal government agencies may set aside procurements exclusively for small businesses. Announcements placed on FedBizOpps (www.fbo.gov), the federal government's online procurement portal for purchases over $25,000, will indicate those solicitations that have been set aside for small businesses. Set-asides are only made when enough qualified small businesses are expected to bid or offer services, in order to ensure adequate competition.

The SBA establishes small business size standards, based on employment and/or annual receipts, on an industry-by-industry basis. The standards apply for SBA program participation as well as all other federal government programs and actions where eligibility as a small business is a factor or a consideration. For more detailed information, visit SBA Size Standards.

Small Disadvantaged Business (SDB)

A federal designation, an SDB is a small business that is at least 51 percent owned, controlled and operated by one or more socially and/or economically disadvantaged individuals or stockholders. Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identification as members of certain groups. Within the socially disadvantaged classification, economically disadvantaged individuals are those whose ability to compete in the economy has been impaired due to diminished capital and credit opportunities. Officially designated socially and economically disadvantaged groups include African-Americans, Native Americans, Hispanic Americans, Asian Pacific-Americans and Asian Indian-Americans. Members of other groups must provide evidence that they are economically and socially disadvantaged. SBA determines eligibility on a case-by-case basis. For more details on SDB definitions, visit the SDB program.

The following programs can be especially helpful to socially and/or economically disadvantaged business owners:

• 8(a) Business Development Program
  This program provides SDBs with technical and management assistance as well as access to the federal procurement market through sole-source, limited competition contracts and special procurement set-asides. All 8(a) firms must be unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and U.S. citizens. The 8(a) Program Web site, provides more detailed information on 8(a) program eligibility criteria, the application process, other resources and contact information.
• SDB Certification
  Businesses receiving small disadvantaged business certification from the SBA are eligible for special federal contract bidding benefits and set-asides; 8(a) firms automatically qualify for SDB certification. To receive SDB benefits as a prime contractor, a business must either be SDB-certified or have a completed SDB application pending at the SBA or through a private certifier at the time of its offer. A company may self-certify as an SDB during the subcontracting process. For more information, visit SDB Certification. Federal agencies are authorized to set aside competitions solely for SDBs. These competitions are announced on FedBizOpps as set-asides for SDBs. An agency may issue solicitations that give up to a 10 percent price evaluation preference to such businesses.

Woman-Owned Business

A business is defined as woman-owned if it is at least 51 percent owned and controlled by a woman or women who are U.S. citizens. There is no formal woman-owned business certification program for the federal government procurement process. Instead, firms self-certify that they are woman-owned. Currently, there are no procurement set-asides for woman-owned businesses. Instead, federal agencies and many prime contractors are required to ensure full participation by women in the federal contracting process through established contracting goals.

Federal acquisition regulations also require agencies to actively encourage their prime contractors to use woman-owned small businesses as subcontractors. Many federal agencies have designated a woman-owned business "advocate" to act as a liaison with and provide outreach to woman-owned small businesses.

HUBZone Business

SBA's Historically Underutilized Business Zone (HUBZone) Empowerment Contracting Program gives federal contracting preferences to certified small businesses in targeted urban and rural locations. Certification is awarded to small businesses that are owned and controlled by one or more U.S. citizens and have a principal office located in a HUBZone. Additionally, at least 35 % of a certified firm's employees must reside in a HUBZone.

Designated HUBZones in the Crater Area of Coverage are Buckingham County, Brunswick County, Charlotte County, Emporia, Franklin City, Franklin County, Greensville County, Halifax County, Henry County, Lunenburg County, Martinsville, Mecklenburg County, Patrick County, Prince Edward County, Surry and Sussex County. SBA's HUBZone Web site provides more details on this program.

Service-Disabled Veteran-Owned Business

A business can claim service-disabled veteran-owned small business status if it is 51 percent owned by one or more service-disabled veterans, and the management and daily business operations are controlled by one or more service-disabled veterans or, in the case of a veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran. A service-disabled veteran means a veteran with a disability that is service-connected. This can be 0%-100%. There is no formal certification program for service-disabled veterans. A veteran or a service-disabled veteran self-certifies his/her status when he/she responds to a government solicitation. A Defense Department Form 214 and a Veteran's Administration certified letter as to disability can serve as proof of being a service-disabled veteran. For more information, visit SBA's SDVOB Program or www.vetbiz.gov.