Set-asides
Overview
Federal agencies are supposed to spend money with SmallBusinesses and small businesses with Socio-economic designators, such as woman or veteran owned small businesses. If a contract is set aside then only companies with that designation can bid. Reducing competition
Identify your differentiators/ strengths
- Assessing whether you are a small business:
- If you are a brand new business then there’s a 99% chance you are also small
- If you have made less than $10M/year over the last 3 years then there’s a 99% chance you are small
- But if you are a successful commercial company and you are expanding into federal you could be a large business already. The math for determining if you are small is a little complex so please see our class below
- Assessing whether you qualify for a socio-economic designation:
- Veteran, woman, and minority owned: If more than 50% of a company is owned by one or more people who qualify for the designator then the company can qualify (e.g. if two women own 51% or more of a company then that company can qualify for the Woman Owned Small Business set-aside
Review the upcoming acquisition
- Forecast items: Items listed in an agency forecast may contain the government’s current set-aside plan
- Re-competing items: The governments generally defaults to the set-aside of the previous generation of the contract. For more on re-competing contracts see our classes on how the government buys
- RFIs: When the government releases an RFI they typically share whether they anticipate setting it aside
- Sources Sought: If the government releases a sources sought this generally indicates that they want to set the contract aside and just needs to justify that decision
- RFP: Once an RFP is released it is too late to influence the set-aside.
Why your differentiator/strength helps the government
- Price: Setting a contract aside reduces competition so is unlikely to push costs down
- Quality: Setting a contract aside reduces competition so is unlikely to increase quality, with a couple exceptions:
- Block the incumbent: If the government is unhappy with the current vendor they can block that vendor from bidding by using a set-aside they don’t have
- If the contract relates to a group: If the government is buying educational services for women’s shelters or to survey the veterans community, or something similar where the contract specifically relates to a group then choosing a vendor connected to that group could lead to better outcomes
- Speed: Arguably set-aside contracts move faster because there are fewer proposals to read/review
- Administrative risk: If the government agency is below their set-aside spending targets in one of the set-asides you qualify for, then you can make the case that setting this contract aside helps them achieve their goals
Make your case/recommendation to the government
Along with all the typical ways to engage and influence government decision makers the government issues Sources Sought which give industry the opportunity to advocate for a contract being set aside. For more on the sources Sought see our linked class below
Other resources
List of further reading
Video Transcript(s):