Set-aside contracts

Setting a contract aside blocks large businesses

  • There are roughly 800,000 registered government contracting companies
  • The vast majority of those 800K are small, so it may not seem like setting a contract aside for small business would help
  • But large businesses win a disproportionate volume of all contracts
  • So by blocking larges the government ensures that a small, who might not have been able to compete against the larges, wins

Impact of your chances of winning (in practice):

  • The competition among smalls is still intense: As a rule of thumb the government only needs 3 bidders to generate the competition they want to keep prices down
  • There are tens of thousands of small businesses with each set-aside: In every set-aside, and in every industry, there are lots of companies, so you are almost always going to be competing against someone

How a contract is set-aside

  • Before the government sets a contract aside they have to reasonably expect that two companies with that set-aside will bid on the contract. So the government will:
  • Sources sought: The government will survey the market to see if there are two companies who are likely to bid.
    • The government publishes a Sources Sought
    • Companies respond with information that demonstrates that they can do the work and that they have one or more set-asides
  • Rule of two: The government will review the responses to see if they got two responses from companies with the same set-aside. If they did the government can set the contract aside, if they don’t the government can’t

What this means for you

  • Respond: If you are interested in a contract, and there is a sources sought respond to it
    • Best case: The contract is set-aside and you have just reduced the competition and increased your chances of winning
    • Worst case: That government customers knows your name and knows that you have a set-aside

Rants and Reflections

My unscripted thoughts after coaching hundreds of small government contractors over the last 10 years

Other resources (Individual contract checks)

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List of further reading

Video Transcript(s):

Odds are that your first contract will be as a sub to another small business, so you need to find small businesses you could work with, and start building relationships with them.

And, FedScout makes this easy. Click on the partner button below and FedScout will show you all the small businesses in your industry that have won work at one of your selected sub-agencies.

And if you’ve uploaded your linkedin connections we'll do our best to identify people you know at each small business.

And like with customers, select the companies and the people that you want to target and we’ll add them to your relationship manager.