Set Aside Contracts: Everything You Need To Know
Set aside contracts are contracts offered by the government agencies to contractors and businesses that have complied with a variety of complex requirements. 3 min read
Set aside contracts are contracts offered by the government agencies to contractors and businesses that have complied with a variety of complex requirements.
Effect On Preferences For Women
Adarand
Like the state of race relations in this country today, the Supreme Court’s decision in Adarand is both clouded and controversial. Nevertheless, all companies, whether minority-owned or not, with government contracts — notably construction firms — stand to gain from a clear understanding of the latest precedent in this area.
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Setting Aside A Class Of Acquisitions For Small Business
A class of acquisitions of selected products or services, or a portion of the acquisitions, may be set aside for exclusive participation by small business concerns if individual acquisitions in the class will meet the criteria in 19.502-1, 19.502-2, or 19.502-3. The determination to make a class small business set-aside shall not depend on the existence of a current acquisition if future acquisitions can be clearly foreseen.
The determination to set aside a class of acquisitions for small business may be either unilateral or joint.
Each class small business set-aside determination shall be in writing and must
Specifically identify the product and service it covers
Provide that the set-aside does not apply to any acquisition automatically reserved for small business concerns under 19.502-2.
Provide that the set-aside applies only to the contracting office making the determination and
Provide that the set-aside does not apply to any individual acquisition if the requirement is not severable into two or more economic production runs or reasonable lots, in the case of a partial class set-aside.
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Us Department Of Transportation Revised Regulations
Similarly, USDOT responded to Adarand Constructors and its progeny by issuing revised regulations to implement minority set-aside provisions in current federal transportation authorization measures. The Transportation Equity Act for the 21st Century , as enacted by Congress in 1998, provided that
xcept to the extent that the Secretary determines otherwise, not less than 10 percent of the amounts made available for any program under titles I, III, and V of this Act shall be expended with small business concerns owned and controlled by socially and economically disadvantaged individuals.51
One in a succession of laws dating back more than two decades, TEA-21 lapsed on May 31, 2005, but was extended by P.L. 109-59, signed into law during the 109th Congress.52 The new law continued through FY2009 the longstanding DOT policy of setting aside 10% of federal highway and surface transportation funds for small disadvantaged firms “xcept to the extent the Secretary of Transportation determines” otherwise.
The revised DOT regulations track the Small Business Act in defining disadvantaged business enterprises , including the presumption regarding designated minority groups and women, except that any small business owner with more than $750,000 in assetsâor who is otherwise shown not to be socially or economically disadvantagedâis disqualified. Members of non-designated groups may qualify for DBE status if the individual demonstrates social and economic disadvantage in fact.53
What Is It And What Does Minority Owned Business Status Mean
First, a little background: under the Small Business Act, 23 percent of federal government contracts are required to be rewarded to small businesses. So theres plenty of cash up for grabs for minority owned small businesses.
Now, 5 percent of that federal government contract budget is allocated specifically to businesses that are owned by members of economically or socially disadvantaged groups. This is part of the 8 Business Development Program, which aims to help organizations owned by members of minority groups remain competitive in the government contracting market.
All businesses must show a demonstrated potential for success to qualify for minority owned business status, so its a real mark of distinction.
In short: the 8 Business Development Program aims to foster diversity and competition in the marketplace by reserving a portion of federal contracts for minority-owned businesses. Next, well get into a little more depth about the requirements for organizations that want to register with the program.
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This A Big Step Toward Leveling The Playing Field Said One Advocate
The White House announced on Thursday more actions to help small businesses get involved with federal contracting, particularly by increasing agencies accountability and transparency.
President Biden announced in June he seeks to double the share of contracts that go to small, disadvantaged businesses by fiscal 2025 as part of his administrations goal to narrow the racial wealth gap. Also on November 18, the administration released an outline of its presidents management agenda that prioritizes creating more opportunities for underserved entrepreneurs and all businesses in the federal marketplace. The new actions build on these initiatives.
The federal government is the largest purchaser of goods and services in the world, buying everything from software and building construction to financial and asset managementmaking its procurement a powerful tool to advance equity and build wealth in underserved communities, said a fact sheet from the White House. Despite this, less than 10% of federal agencies total eligible contracting dollars typically go to small, disadvantaged businesses, a category under federal law for which Black-owned, Latino-owned, and other minority-owned businesses are presumed to qualify.
OMB will also ensure agencies small business contracting offices have direct reporting lines to senior leadership.
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The Supreme Court Declines To Decide The Case
It came as no great surprise, therefore, that the Justices complied with the government’s request and dismissed the case.42 In a per curiam opinion, the Court emphasized technical flaws with the present appeal, as framed during oral arguments. First, Adarand was challenging a by now defunct aspect of the program that the Tenth Circuit had not ruled upon, asking “whether the various race-based programs applicable to direct federal contracting could satisfy strict scrutiny.” Nor had the company sought review of those aspects of the DOT statute and regulations respecting the state and local procurement program on whose constitutionality the appeals court had spoken. Consequently, the Supreme Court declined to reach the merits of a controversy regarding which neither the parties nor the courts below appeared to be reading from the same page.
The Court’s disposition of the final Adarand appeal means that a definitive review of federally mandated affirmative action must be postponed to another day. That day, however, may not be too far distant. Percolating in the lower federal courts are cases that pose similar questions regarding the power of Congress to enact racial preferences in federal contracting as were bypassed by the Court’s inconclusive determination in Adarand.
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Effect Of Affirmative Action Decision On Small Minority
This article was edited and reviewed by FindLaw Attorney Writers| Last updated March 26, 2008
In a sharply divided 5-4 decision, the United States Supreme Court, in Adarand Constructors, Inc. v. Federico Pena, Secretary of Transportation, overruled past precedent and sharply restricted federal contracting preferences for small minority-owned businesses. The Adarand decision directly threatens the Department of Transportation’s $2.2 billion in annual contract set-asides for small minority-owned businesses, as well as the overall $6.4 billion in annual contracts the federal government sets aside for these businesses. The Adarand decision will, in turn, have a significant impact on Minnesota businesses with federal contracts, especially Minnesota’s small minority-owned construction businesses.
“The decision will have a significant impact on Minnesota small minority-owned construction businesses….”
In Adarand, the Supreme Court expressly did not eliminate per se either the Department of Transportation’s or any other federal agency’s set-aside program based on race, despite calls to do so by two of the justices. Rather, the Court ruled that the Department of Transportation’s program and other federal contract set-asides based on race must withstand “strict scrutiny.” This standard is consistent with that used in the review of similar affirmative action programs adopted by the states and cities. See, e.g., Richmond v. J.A. Croson, 488 U.S. 469 .
Who Can Get Small Business Set
Set-aside contracts exist for pretty much every kind of private sector work the government needs, from construction to catering. In addition to general small businesses, there are several specific categories of small businesses that the government aims to support through set-asides, including 8 business development, Women-Owned Small Businesses , Service-Disabled Veteran-Owned Businesses, and HUBZone businesses.
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Socioeconomic Programs For Small Businesses
Small Business Set-Asides â This program requires agencies to limit competition on certain contracts to qualified small businesses so that small firms do not have to compete with large ones for the same contracts. However, because the law requires the Government to buy at competitive prices, contracts are set aside when two small businesses are expected to submit offers to ensure adequate competition. SBA establishes size standards that determine a firm’s eligibility to offer on set-asides. These standards are established on an industry-by-industry basis, using dollar volume of sales or number of employees, to determine eligibility.
Small Disadvantaged Business Program â For the purpose of improving and stimulating this small business segment, EPA established a realistic Department-wide goal for the award of contracts to small business concerns owned and controlled by socially and economically disadvantaged individuals. OSBP is also responsible for the Department’s program to encourage greater economic opportunity for minority entrepreneurs. To implement these requirements, goals are established for award of contracts to small disadvantaged businesses.
8 Program â OSBP promotes increased utilization of small businesses owned and controlled by socially and economically disadvantaged individuals certified under the SBA Section 8 Program.
The purpose of the 8 Program is to:
HubZone Program – A “HUBZone” is an area that is located in one or more of the following:
Effect On Minnesota’s Minority
AdarandMinneapolis Star Tribune
Some minority-owned businesses in Minnesota generate as much as 90 percent of their revenues as a result of minority business development goals or government set-aside programs. The state’s top minority construction firms earn more than $100 million in revenues other minority-owned businesses, including those in food, computers, freight, and real estate, bring in revenues exceeding $400 million, according to the National Association of Minority Contractors and the Metropolitan Economic Development Association .
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Who Is Eligible For Small Business Set Asides
The government uses set aside contracts for almost every type of private sector work imaginable. The purpose of the Small Business Administration’s 8 program to put small business owners in disadvantaged areas on equal footing to larger companies when it comes to bidding on government contracts.
If you want to be considered an 8 business, you will need to meet the following qualifications:
The 8 program lasts for nine years and provides eligible businesses with training, counseling, and the ability to procure federal contracts.
If more than two small businesses are available to complete a contract, and the contract is valued at $100,000 or less, it will be set aside. Usually, the decision to set aside a contract will be made after a good deal of market research has been performed. Depending on the nature of the contract, it can be set aside partially or fully.
Businesses that have fewer than 500 employees, or whose revenue is under $5 million, is considered a small business by the SBA.
The goal of the government is to offer small businesses 23 percent of prime contracts. However, this percentage can be higher.
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Minority Contracting And Affirmative Action For Disadvantaged Small Businesses: Legal Issues
Since the early 1960s, minority participation âgoalsâ have been an integral part of federal policies to promote racial and gender equality in contracting on federally financed construction projects and in connection with other large federal contracts. Federal contract âset-asidesâ and minority subcontracting goals evolved from Small Business Administration programs to foster participation in the federal procurement process by small disadvantaged businesses , or small businesses owned and controlled by âsocially and economically disadvantagedâ individuals. Minority group members and women are presumed to be socially and economically disadvantaged under the Small Business Act, while non-minority contractors must present evidence to prove their eligibility. âGoalsâ or âset-asidesâ for minority groups, women, and other âdisadvantagedâ individuals have also been routinely included in federal funding measures for education, defense, transportation, and other activities over much of the last two decades.
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Why Should I Register
You may be wondering why you should register for minority owned business status. Youve already got a competitive organization, dont you? Why should you bother with all the fuss and red tape involved in applying for another government registration if youre perfectly able to compete as is?
First off, just let me mention that 5 percent again. Five percent of government contracts are reserved for small minority owned businesses. So if your company fits the bill and youre not registered, youre kissing any chance of competing for that share of the market goodbye.
If youre one of those great-hearted souls who passes up a chance at that slice of the pie, thats your decision. But I think youre the type who jumps on an opportunity when you see one.
And if thats not enough reason for you, minority owned business status gives you exclusive access to many other competitive advantages. The SBA offers specialized training programs and mentoring to registered organizations, free of charge. You also get admitted to opportunity fairs and networking events through theNational Minority Supplier Development Council. Dont you think you should grab the chance?
If youre still here, Im assuming youre interested in taking a closer look at the registration process and thats where well be going next.
Government Contracting Program May Be Failing Minority Businesses
A federal program that subsidizes minority-owned businesses is not equipping them for success, a new study finds.
Minorities face all sorts of headwinds when trying to start a business in the United States. Researchers have shown that black people have less access to higher education, receive worse terms when applying for loans, and have fewer self-employed family members from whom to learn the entrepreneurial arts. The fact is that Americans from minority communities are less represented than white people in the countrys business culture.
The U.S. Small Business Administration runs a program designed to change the status quo. Under Section 8 of the Small Business Act of 1953, Congress directed this federal agency to steer government contracts to businesses owned by citizens from minority backgrounds and others with socioeconomic hardships. The 8 Business Development Program, as its known, helps these people with management training, technical assistance and mentoring, and access to government contracts without competition for up to nine years. The idea is to grow businesses in disadvantaged communities, according to the SBA: The 8 program is an essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society. The program helps thousands of aspiring entrepreneurs to gain a foothold in government contracting.
Key takeaways:
Helpful resources:
Other research:
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Anecdotes As Evidence: Proving Public Contracting Discrimination In A Strict Scrutiny World
Engage Volume 16, Issue 2
| Topics: |
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Note from the Editor:
This article is about the use of anecdotal evidence to justify racial preferences in public contracting under City of Richmond v. Croson
The perception is just there that if youre Black or if youre a woman you probably dont know how to do X, Y and Z type of work. So theyve already put in that pigeonhole.1
This excerpt is typical of the anecdotal evidence which has appeared in hundreds of disparity studies since the United States Supreme Courts decision in City ofRichmond v. Croson, the landmark case regarding race conscious procurement programs.2 In Croson, the Supreme Court struck down Richmonds public contracting racial preference, in part because the citys anecdotal evidence of racial discrimination was insufficient to withstand scrutiny under the Equal Protection Clause. The citys anecdotal evidence was testimony offered at a public hearing. Anecdotal evidence consists primarily of personal accounts of discrimination told from the perspective of the person claiming discrimination. This article examines the use and misuse of anecdotal evidence in public contracting discrimination cases since Croson.
I. City of Richmond v. Croson
II. Croson-Proofing Preference Programs Through Disparity Studies
A. Anecdotal Evidence and Strict Scrutiny
B. Allocating the Burden
III. The Sufficiency of Anecdotal Evidence
A. Anecdotes Alone Are Never Enough
B. Crosons Progeny on Anecdotes
1. Interviewer Bias
2. Response Bias
What To Know About Federal Small Business Set
Congress created the Small Business Administration in 1958. At the time of the SBAs inception, Congress mandated a per annual small business contracting goal of not less than 23 percent of the total value of all prime contract awards. The goal was to allow small businesses to flourish and compete with larger companies in varied industries.
Small business set-asides refer to that portion of federal contracts that must be awarded to small businesses. Annually, the federal government secures approximately $500 billion in private sector contracts, meaning theres a lot of work out there for enterprising small business owners.
These small business set-asides are often a great way for a small or new company to break into an industry dominated by big players heres what you need to know.
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How To Become Certified As A Small Minority Woman Or Veteran
For a vendor, being certified as a small business, MWBE, VBE or other special designation has many benefits when it comes to bidding on government contracts. When a government agency posts a bid, they are obliged to award 23% of all contracting dollars to small businesses in addition, they have award sub-goals that they must meet for each small business category. For example, women-owned and small disadvantaged businesses must each be awarded 5% of a contracts total dollar value, while Service Disabled Veteran-owned and HUBZone businesses must each be awarded 3% of the total contract.
Government agencies also administer what are called Set-Asides, contracts that are reserved exclusively for small businesses, MWBEs or veteran-owned businesses.
If youre new to government bidding, you might have been unaware of the benefits that certification provides for your business. Becoming certified can take time, but its worth the effort because it guarantees you a fair shot at bidding on, and winning, government contracts.
One question that many small business owners have is How do I get certified? In this article we will discuss the steps you need to take in order to get certified, and link to some resources that will help you with your application and answer any questions you may have about the certification process.
Register Your Business
Working with the Federal Government
Eligibility Requirements
The Application and Certification Process
