Small Business Programs in Federal Procurements: Part Two

government contracts

This article is the second of two posts on small business programs in government contracts. Here, we will follow up to our first article that gave a general overview with more details on the specifics of each program.

As part of the small business / socio-economic programs in federal procurements, the government and the SBA have identified certain classifications that identify the type of small business concern competing for a contract. An entity can hold one or more of these designations, agency goals in the Goaling Program are organized according to these classifications, and contracts are “set-aside” according to these categories. Here is an overview of the basic programs.

SMALL BUSINESS (SB) – These concerns are classified as being located in the U.S., organized for profit, including affiliates that are independently owned and operated, not dominant in field of operations in which it is bidding on Government contracts, and meets the SBA’s size standards included in a particular Solicitation. Size standard is based upon the North American Industrial Classification Standard (NAICS) assigned to the specific procurement dependent upon product/service purchased and is normally dependent on number of employees or size of revenues.

WOMAN-OWNED SMALL BUSINESS (WOSB) – These businesses are small business that are at least 51% owned by one or more women, and whose management and daily business operations are controlled by one ore more women.

SMALL DISADVANTAGED BUSINESS (SDB) – Entities in this classification are small businesses, unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of the United States. Unlike small business and woman-owned businesses, which are self-certified, SDB’s must obtain certification directly from the SBA.

SMALL DISADVANTAGED BUSINESS 8(A) CERTIFIED (8(A)) – These concerns are small businesses that self-certify as a SDB, but that are SBA-certified into the 8(a) Business Development Program for a period of 9 years.

HISTORICALLY UNDERUTILIZED BUSINESS ZONE (HUBZONE) – These companies are small businesses, owned and controlled by at least 51% by U.S. citizens, and whose principal office is located in a designated HUBZone and at 35% of its employees live in a HUBZone. HUBZone businesses are SBA-certified; you cannot self-certify.

VETERAN-OWNED SMALL BUSINESS (VOSB) – These entities are small businesses that are veteran-owned as defined in 38 USC 101(2), at least 51% owned by one or more veterans, and management and daily operations are controlled by one or more veterans. VOSB’s are self-certified.

SERVICE-DISABLED VETERAN OWNED SMALL BUSINESS (SD-VOSB) – These concerns are small businesses that are at least 51% owned by one or more service-disabled veterans, and management and daily business operations are controlled by one or more service disabled veterans. Or, in the case of a service-disabled veteran with permanent and severe disability, owned by the spouse or permanent caregiver of such veteran.

SET-ASIDE – While not a small business classification, the term set-aside in government contracting is important for small companies. When a contract or a portion thereof is set-aside, it means that the particular contract or portion thereof is reserved specifically for small-business classifications. This means that large companies cannot compete for the contract or portion that is set-aside for small businesses.