Overview
This section defines the purpose and mechanics of small business set-asides and reserves, establishing the Contracting Officer's authority and responsibility to prioritize small business participation in federal acquisitions. It outlines the procedural requirements for reviewing acquisitions to ensure they are awarded to small businesses whenever feasible and at a fair market price.
Key Rules
- Definitions of Set-Asides and Reserves:
- Set-asides limit competition exclusively to small business concerns and can be total or partial.
- Reserves are used in multiple-award contracts to ensure small business participation under full and open competition, but they are only permitted if a total or partial set-aside is not feasible.
- Decision Authority: The Contracting Officer (CO) makes the final determination on set-asides or reserves, though they must consider recommendations from the SBA Procurement Center Representative (PCR) and agency Small Business Offices (OSDBU/OSBP).
- Mandatory Review: The CO must review all acquisitions to determine set-aside potential. For acquisitions exceeding the micro-purchase threshold, the CO must make documentation available for SBA PCR review upon request.
- Solicitation Requirements: All solicitations for set-asides or reserves must clearly specify the applicable North American Industry Classification System (NAICS) code and the corresponding size standard.
- Fair Market Price Ceiling: A contract cannot be awarded via a small business set-aside if the resulting cost to the government exceeds a "fair market price," unless otherwise authorized by law.
Practical Implications
- Market Research Criticality: COs must conduct thorough market research early in the acquisition process to justify whether an acquisition should be set aside, as these decisions are subject to oversight and recommendation by the SBA.
- Compliance for Small Businesses: Small business contractors must verify that they meet the specific NAICS size standards cited in the solicitation, as these codes dictate eligibility for the set-aside or reserve.