What Is Set Aside Contract


    A set-aside contract is a type of procurement process used by the government to prioritize the awarding of contracts to specific types of businesses. These businesses are typically known as small businesses, and they may be owned by veterans, minorities, or women.

    The federal government has a goal of awarding a certain percentage of its contracts to these groups, and set-aside contracts are one way to achieve that goal. These contracts are designed to provide opportunities for small businesses that may not have the resources to compete with larger companies.

    Set-aside contracts come in various forms, including total set-aside contracts and partial set-aside contracts. With a total set-aside contract, the entire contract is reserved for small businesses and cannot be awarded to larger companies. Whereas, in a partial set-aside contract, a percentage of the contract is set aside for small businesses, and the remainder is awarded to larger companies.

    To qualify for a set-aside contract, a business must meet certain criteria, such as being based in the United States, having a certain number of employees or annual revenue, and being owned and operated by a member of a specific group, such as a veteran, a woman, or a minority.

    Benefits of set-aside contracts include increased opportunities for small businesses, reduced competition from larger companies, and the potential for increased revenue. These contracts also help to promote diversity and support underrepresented groups in the business world.

    However, set-aside contracts can also present challenges for small businesses. The application process can be complex and time-consuming, and there may be stiff competition from other small businesses vying for the same contracts.

    In conclusion, set-aside contracts are a valuable tool for promoting diversity and supporting small businesses in the procurement process. While they can present challenges, the benefits of increased opportunities and potential revenue make them a worthwhile pursuit for eligible businesses.