What is a set-aside?

By Chris Wiedemann, consultant

Over the last few months, I’ve blogged on the basics of government contracting and selling to government customers – focusing on things like contract vehicles, the Federal Acquisition Regulations, the General Services Administration and federal cybersecurity requirements.

Taken together, those topics describe a basic framework for government procurement and the way industry interacts with it. They also demonstrate that public sector customers (both federal and state/local) behave differently than customers in the commercial space.

However, we haven’t yet addressed one of the most fundamental differences between public and private sector customers: The government, in addition to needing industry to help fulfill its mission, has a broad incentive to encourage economic growth across all sectors of American industry. Often, this growth means prioritizing small businesses over large corporations in contracting – and there are a set of contracting tools, known as set-asides, that enable just that.

Put simply, a set-aside is a contract that has been specifically designated (or “set aside”) for small businesses, generally because the customer has done market research and determined that their need can be met by a small business.

Each agency has annual targets for small business spending, and those targets are fairly granular – they are broken out into several different categories, all defined by the Small Business Administration (SBA). The broadest of these is the general small business set-aside, but there are more narrowly-defined categories for specific types of businesses.

For example, agency small business targets will include a certain percentage of annual expenditure through businesses owned by economically disadvantaged individuals (known as 8(a) set-asides), women-owned businesses, minority-owned businesses or service-disabled, veteran-owned businesses (SDVOSBs).

Government-wide, the goal is to have 23 percent of prime contracts and 33.7 percent of subcontracts go to small businesses. In addition, there are more specific targets for individual set-asides as well as individual agencies. Most agencies meet or exceed those targets, which is a fairly recent achievement.

Set-asides matter for the tech industry because, to state the obvious, you can’t access opportunities that are set aside unless you meet the criteria for that set-aside. That means you need a small business strategy in place to maximize your exposure to opportunity – either by acquiring small business designations yourself or by building a robust channel that includes partners that cover as many small business bases as possible.

Fortunately, immixGroup’s Partner Alliances team is here to help you build out your partner base and make sure you can chase as many opportunities as possible. Reach the team at PartnerAlliances@immixgroup.com.

Looking for more guidance on selling technology to government? Stay tuned for registration and agenda details for our annual Government IT Sales Summit on Nov. 16, 2017, in Reston, Va.