When to use Sole Source and Set-Asides

For both the federal government and small businesses, contracting can be a confusing process. Understanding a few ground rules, lets you make sure your team is effectively soliciting work from small businesses.

How many businesses can do the work?

Do you have a unique work need, or do you need special equipment for your work? This may reduce how many businesses can fulfill the diverse needs of your department. If there‘s only one company that fits the bill, you may want to consider a sole source award or opening up your solicitation to full competition. But if there are two or more small businesses that can complete the work for you, you’re eligible for a small business set aside.

How much is the contract?

Small business set asides are often based on the value of a contract. Contracts ranging in value from $3,500 to $150,000 are only set aside for small businesses to bid and compete on. You’ll need to conduct market research to assess how many firms are qualified for anything above $150,000. If it‘s more than two, the contract will be set aside for small businesses. For contracts more than $700,000, a small business must be part of the subcontracting plan.

Consider socioeconomic programs

To increase engagement with historically underutilized businesses and groups, the Small Business Administration provides special program designations. The SBA’s 8a and WOSB programs allow departments to work with small businesses. Set asides for disadvantaged small businesses can include direct awards, limiting competition with large businesses, or increasing department percentage or small business use.