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Chapter 4: Small Business Set-Asides

Topics in This Chapter

  1. Background
  2. Small Business Set-Asides
  3. Parity Rule

This part sets forth policy and procedure concerning full and partial small business set aside actions. The following is HHS’ expansion and interpretation of key aspects of the Federal Acquisition Regulations (FAR) and the U.S. Health and Human Services Acquisition Regulations (HHSAR).


In the Small Business Act of 1953, as amended, Congress declared that small businesses should receive a fair proportion of the Government's purchases and contracts for property, services and construction. Section 15 of the Act established the statutory authority for procurement set-asides and FAR Subpart 19.5 provides the procedures for setting aside requirements for small business concerns.

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An acquisition shall be conducted as a small business set aside whenever the CO determines a reasonable expectation of receiving at least two offers from small business concerns and awards will be issued at fair market prices. This is commonly known as the "Rule of Two" (refer to FAR Subpart 19.502-2).

Past acquisition history is not the only factor to consider in determining whether a reasonable expectation exists. In accordance with FAR Subpart 19.502 the OPDIV SBS and SBA PCR are responsible for market research analysis oversight to ensure that the capabilities demonstrated by small businesses concerns are fairly considered. Refer to Chapter Two (2) of this manual for more details regarding Market Research.

Repetitive Set-Aside Policy

Once a product or service has been acquired successfully on the basis of a set-aside, the CO shall make every effort to ensure that future purchases for that product or service are acquired using set-aside procedures.

Partial Set-Aside Policy

Whenever an acquisition has been determined not to be appropriate for the set-aside program, the CO shall consider whether a partial set-aside is conducive before issuing the requirement as a full and open. Refer to FAR Subpart 19.502-3 to review a list of partial set-aside procedures that are permissible. Partial set-asides procedures shall not be used in construction acquisitions..

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In accordance with the Small Business Jobs and Credit Act of 2010 (H.R. 5297), 8(a) Program, HUBZone, woman owned (WOSB) and service disabled veteran owned (SDVOSB) small businesses have equal standing.  The CO should make every effort to consult with the SBS when a full or partial small business set aside is considered. The CO should also take into consideration its Operating Division’s (OPDIV) current small business goal achievement for the fiscal year. (Refer to the SBPM Chapter 1, Subpart C to review information regarding HHS’ goals.)  Market research must be conducted to determine and document the socio economic program selected. 

Once a product or service has been acquired successfully by a contracting office on the basis of an 8(a) set-aside, all future requirements for that specific product or service must be acquired using 8(a) set-aside procedures.

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