Set-Aside (Set-Aside)
A procurement that is reserved exclusively for vendors meeting specific eligibility criteria, typically small businesses or businesses certified under SBA preference programs.
Definition
A set-aside restricts competition to a narrow pool of qualifying vendors. Federal small-business set-asides reserve specific contracts for small businesses meeting the relevant NAICS size standard. Within small-business set-asides, sub-categories (8(a), HUBZone, WOSB, EDWOSB, SDVOSB) provide even more limited competition. State and local agencies have analogous programs with different terminology — Maryland Small Business Reserve, NY MWBE, California SB certification, etc.
When it applies
Federal contracting officers must set aside acquisitions below the simplified acquisition threshold for small businesses when two or more small businesses are reasonably expected to compete at fair-market prices ("Rule of Two"). Sub-category set-asides (8(a), HUBZone, etc.) reduce the bidder pool further. For vendors, set-asides dramatically reduce competition — but require holding the relevant certification.