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Many questions have recently been received regarding federal government contracting small business set aside designations. This article will explain the designation types and suggest the best ways to establish and use them in your business planning.
There are 7 major small business set-aside designations in federal government contracting:
1. Small Business - Established by North American Industry Classification (NAICS) Code for all categories of government business (Please download the "SBA Small Business Size Standards" at the "Box Net" Cubicle on the right margin of this web site for further information). Every federal procurement has a NAICS Code assigned to it and is registered on the below web site if it exceeds $25k:
2. Minority Business Enterprise (MBE) - A good interim designation while an 8(a) application is in process for minority-owned companies:
National Minority Supplier Development Council MBE Information
3. Woman-Owned Business - Applicable to Women-Owned Businesses only:
SBA Woman-Owned Business Information and Application Site
4. Veteran-Owned Business - Applicable to Veteran-Owned Businesses only
SBA Veteran-Owned Business Program Information
5. Service Disabled Veteran-Owned Business - Applicable to Service Disabled Veteran-Owned Businesses only
SBA Service Disabled Veteran-Owned Business Information
6. Small/Disadvantaged Business SBA 8(a) Program - Requires 2 years in business and a lengthy application process with the SBA at the following web site:
SBA 8(a) Information and Application Site
7. Historically Under-Utilized Business (HUB) Zone Located - Pertains to small businesses located in geographic areas with a historical record of low government contracting. This designation requires application at the following HUB Zone Site Web Site:
Hub Zone Information and Application Site
QUALIFICATIONS, REGISTRATION, CERTIFICATIONS AND REPRESENTATIONS
To qualify as a small business for a given solicitation an enterprise must have registered at the System for Award Management Web Site under the applicable NAICS code for the procurement and meet the SBA eligibility size standards for that code.
A small business also certifying under the above must have individuals qualifying for the designations with at least 51% ownership interest and an operating role in the company. 60% is recommended to avoid the appearance of a front. Silent partners and investors without qualifying status or an operating role in the firm do not count toward the designation. It is suggested that ownership interest be specified by name on the articles of incorporation with the state and by % of ownership in an operating agreement or similar document.
To qualify as a HUB Zone Enterprise the business must be located in a HUB Zone and a qualifying percentage of the members (owners or employees) of the business must also live in the applicable HUB Zone.
Carefully select your small business designations when preparing your business and marketing plans for federal government contracting. Keep in mind that self-certifications are verified through records checks and site visits by contracting officers, DCMAO and Source Selection Boards for federal procurements before contract awards are made.
A small business set-aside designation can be a valuable tool if adequately documented, registered, certified and prudently used for bidding work that your enterprise is capable of performing successfully.