One of the most important advantages of participating in the SBA’s small business socioeconomic programs is the reduced competition that comes from set-aside procurements. In order to protect this advantage, it is imperative for contractors to understand under what circumstances a procurement must be set-aside.

For acquisitions exceeding the simplified acquisition threshold, which in most cases is $150,000.00, the contracting officer must first consider setting aside the acquisition for one of the small business socioeconomic programs (i.e. 8(a) contractors, Service-Disabled Veteran Owned Small Businesses, HUBZone contractors, or Women-Owned Small Businesses). If the contracting officer has a “reasonable expectation” that the agency will receive at least two offers at a fair market price from contractors in a particular socioeconomic program, the procurement must be set-aside.

The contracting officer’s determination that a procurement should not be set-aside must be based on “reasonable efforts” to identify set-aside eligible contractors. Generally, a search on the SBA Dynamic Small Business Search database is sufficient. But, the GAO has determined that if a contracting officer is aware of set-aside eligible contractors who have previously bid on similar procurements, it is reversible procurement error to issue a full and open procurement without first contacting those contractors to ascertain interest and capability. In fact, we were recently successful in protesting a Federal Highway Administration (FHWA) procurement on similar grounds.  In that case, the Contracting Officer issued a solicitation using full and open competition despite the fact that she had actual knowledge of three HUBZone contractors who had previously bid on a similar scope of work. Shortly after filing the protest, FHWA took corrective action and canceled the solicitation in order to re-solicit as a HUBZone set-aside.

As contractors learn of new solicitations utilizing full and open competition, it is important to consider whether a set-aside would be more appropriate. Otherwise, eligible contractors may not be taking full advantage of the benefits provided by participating in one of SBA’s small business socioeconomic programs.