Qualifying for set-asides

Ownership based Set-asides

  • Qualifying based on ownership Whether a company qualifies for most set-asides comes down to the people that own that company. And in each of these cases the company must be
    • Over 50% owned by people who belong to the group
    • Actively led and managed by the people who belong to the group
    • Example: A company is 51% owned by two veterans, and those two vets actively manage and lead the company, then that company qualifies for the Veteran Owned Set-Aside
  • Ownership based set-asides are:
    • Woman Owned (WOSB)
    • Economically Disadvantaged Woman Owned (EDWOSB)
    • Veteran Owned (VOSB)
    • Service Disabled Veteran Owned (SDVOSB)
    • Disadvantaged
    • 8(a)

Location Based Set-asides

  • Qualifying based on location: The HUBZone set-aside is the exception to the ownership model of determining whether a company qualifies. The HUBZone program is designed to help businesses that are located in economically disadvantaged areas so to qualify:
    • The company has to be headquartered in a HUBZone
    • The company’s major operations have to be in a HUBZone
    • One third of the company’s employees have to live in a HUBZone

HUBZone map: To see if a location is in a HUBZone

Size based set-asides

  • Are you a small business: This is a more complicated question than you might think because the answer changes depending on what kind of work you are doing at the moment:
    • Every government contract has a NAICS code associated with it
    • Each NAICS code has a “cut-off” for how big a company can be and still be small
    • So a company could be small when they are bidding on work in NAICS code 123
    • But be a large business when they are bidding on work in NAICS code 456
    • Depending on the NAICS code the size standard is either assessed based on
      • The company’s number of employees
      • The company’s average revenue over the last three years
  • If you are a truly new business don’t worry about this, you are small: The lowest small business size cut off is a few million dollars or 100 employees, so if you just started and have less than a mil in revenue don’t worry, you are small.
  • The size standards: If you aren’t sure whether you are small calculate two numbers:
    • Number of employees: Your total number of employees and be sure to include:
      • Any owners
      • Part time employees
      • Consultants and contractors that do a lot of work for you
    • Your revenue: Get your revenue figures for the last three years, average those numbers. This is your revenue for the purposes of assessing whether you are a small business. And a couple notes:
      • Be sure to include all your revenue (including non-government sales)
      • If you have been in business for less than three years and your average revenue over the years you have been in business is close to the small business cut-off go talk to an accountant to help you compute your revenue.

For a list of the small business size cut-offs by NAICS code see the downloadable excel in this class’ Course Materials