Small business set-asides, explained
A set-aside reserves a federal contract for a certain kind of business. If you qualify, you only compete against others that qualify too, which can mean a handful of bidders instead of dozens. About a quarter of federal contract dollars go to small businesses each year, and set-asides are the main reason.
The rule of two
Under the Federal Acquisition Regulation (FAR 19.502-2), a contracting officer must set a contract aside for small businesses when they reasonably expect offers from at least two responsible small businesses at fair market prices. That is why answering sources sought notices matters: your response is the evidence that small businesses are out there.
Are you a small business?
It depends on the NAICS code of the contract, not on your company alone. The SBA sets a size standard for every code, usually as average annual receipts over the last years or as a number of employees. For most construction codes the limit is tens of millions of dollars in average receipts: general building and heavy construction codes have higher limits than specialty trades. You can be small for one code and not for another. Check the current SBA table of size standards before you bid, because the limits are adjusted from time to time.
The set-aside types you'll see on SAM.gov
| Set-aside | Who can bid |
|---|---|
| Total small business (SBA) | Any business that is small under the size standard for the contract's NAICS code. |
| 8(a) | Firms in the SBA 8(a) Business Development program: small businesses at least 51% owned and controlled by socially and economically disadvantaged individuals. The program lasts nine years. |
| HUBZone | SBA-certified small businesses with their principal office in a Historically Underutilized Business Zone and at least 35% of employees living in one. |
| SDVOSB | Service-disabled veteran-owned small businesses certified through the SBA's VetCert program. |
| WOSB and EDWOSB | Small businesses at least 51% owned and controlled by women, certified by the SBA, in industries where women-owned firms are underrepresented. EDWOSB adds economic limits on the owners. |
| VOSB | Veteran-owned small businesses, mainly for Department of Veterans Affairs contracts. |
The catch: limitations on subcontracting
Winning a set-aside means you must do a real share of the work yourself. For general construction, the small business may not pay more than 85% of the contract amount to subcontractors that are not similarly situated. For specialty trade construction the limit is 75%, and for services it is 50%. Materials are excluded from the calculation. Plan your bid with these limits in mind.
Where to find them
Every notice on SAM.gov shows its set-aside. On BidFox you can browse open set-aside contracts by type, state and NAICS code, and our alerts give set-aside notices extra points, because they are the ones a small business is most likely to win.
Last reviewed October 20, 2026. This guide is general information, not legal advice. Rules and dollar thresholds change, so check the solicitation and the official sources linked above.