Small business set-asides in federal construction

The rule of two

A contracting officer must set an acquisition aside for small business when there is a reasonable expectation of offers from at least two responsible small businesses at fair market prices. Acquisitions above the micro-purchase threshold and up to the simplified acquisition threshold are generally reserved for small business automatically.

That expectation is usually established through market research — which is what a sources sought notice is. If capable small firms do not respond, the work can go full and open.

Size standards

Whether you count as small depends on the NAICS code on the solicitation, not on your firm as a whole. Construction codes use average annual receipts. Check the current SBA size standards table before every pursuit; the thresholds are adjusted periodically.

Limits on subcontracting

On any small business, SDVOSB, 8(a), HUBZone or WOSB set-aside, the prime must do a real share of the work itself: a general construction contractor may not pay more than 85 percent of the amount paid by the government to firms that are not similarly situated, and a specialty trade contractor may not pay more than 75 percent. Cost of materials is excluded from the calculation.

Bonding

Federal construction contracts above the Miller Act threshold require performance and payment bonds. Small contractors who struggle to get bonded can use the SBA Surety Bond Guarantee Program, which guarantees a share of the surety’s loss and makes underwriting easier.

Where the work is

USACE, NAVFAC and AFCEC run small business MATOCs and MACCs across most regions, GSA PBS sets aside a large share of its regional construction IDIQs, and VA applies its veteran-owned preferences first and small business second. The recompete dates of those vehicles are the most useful planning dates a small construction firm has.