Small business set-asides explained: 8(a), HUBZone, SDVOSB and WOSB

Last reviewed Nov 5, 2026 against the official sources listed below.

A small business set-aside is a federal contract that only small businesses can compete for. Agencies must set aside a contract over the simplified acquisition threshold (currently $350,000) when they reasonably expect offers from at least two responsible small businesses at fair market prices. Some set-asides are limited further to firms certified by the U.S. Small Business Administration (SBA): 8(a) for socially and economically disadvantaged owners, HUBZone for firms in historically underutilized business zones, SDVOSB for service-disabled veteran owners, and WOSB or EDWOSB for women owners. You apply for these certifications for free through SBA Certifications.

What is a set-aside?

The Federal Acquisition Regulation defines it plainly: "A 'set-aside for small business' is the limiting of an acquisition exclusively for participation by small business concerns." Whether your business is small depends on the SBA size standard for the NAICS code on the contract, so you can be small for one contract and not for another.

Bid notices on SAM.gov and on LibertyBids show the set-aside type when the agency states one. Set-aside contracts tend to have fewer, smaller competitors, so they are a good place for a small contractor to start.

When does an agency have to set a contract aside?

Under FAR 19.502-2(b), the contracting officer "shall set aside any acquisition over the simplified acquisition threshold for small business participation when there is a reasonable expectation that" offers will come from at least two responsible small businesses and award will be made at fair market prices. This is often called the rule of two.

Since October 1, 2025, the simplified acquisition threshold is $350,000 and the micro-purchase threshold is $15,000 (FAR 2.101).

Agencies decide this during market research, which often includes a sources sought notice. Answering one tells the contracting officer that your small business can do the work.

What are the federal small business goals?

SBA says the government works to give small businesses at least 23 percent of all federal contracting dollars. On top of that, the prime contracting goals are 5 percent for women-owned small businesses, 5 percent for service-disabled veteran-owned small businesses and 3 percent for small businesses in HUBZones. Agencies are graded on how well they meet their goals, which is one reason contracting officers look for certified firms.

Who qualifies for the 8(a) Business Development program?

From the SBA certifications page, an 8(a) firm must:

Be a small business that has not been in the 8(a) program before.
Be at least 51 percent owned and controlled by U.S. citizens who are socially and economically disadvantaged.
Have owners with a personal net worth of $850,000 or less, adjusted gross income of $400,000 or less, and assets totaling $6.5 million or less.
Show good character and the potential for success.

Certification lasts a maximum of nine years. 8(a) firms can compete for 8(a) set-asides and receive sole-source contracts up to $8.5 million for manufacturing NAICS codes and $5.5 million for other work.

The 8(a) program is changing. In 2025 and 2026 SBA audited the program, suspended 1,091 firms in January 2026, moved to terminate hundreds more, and in June 2026 said it had submitted a proposed rule to change how firms are admitted. Check sba.gov for the current rules before you apply.

Who qualifies for HUBZone?

A HUBZone business must be small by SBA size standards, be at least 51 percent owned and controlled by U.S. citizens (or certain other eligible owners such as a Community Development Corporation or agricultural cooperative), have its principal office in a HUBZone (historically underutilized business zone), and have at least 35 percent of its employees living in a HUBZone. Check the SBA HUBZone map to see whether your office and employees are in a HUBZone.

HUBZone firms can compete for HUBZone set-asides and get a 10 percent price evaluation preference in full and open competitions. Under FAR 19.1307, the contracting officer adds 10 percent to the other offers when comparing prices, except offers from HUBZone firms and otherwise successful offers from small businesses. Do not confuse federal HUBZone with the Texas state HUB (now VetHUB) program, which is a separate state certification.

Who qualifies as a service-disabled veteran-owned small business (SDVOSB)?

Since January 1, 2023, SBA (not the VA) certifies veteran-owned businesses through its VetCert program. To be certified as an SDVOSB, a small business must be at least 51 percent owned and controlled by one or more veterans rated as service-disabled by the VA. Veteran-owned small businesses (VOSB) have the same rule without the disability rating.

The government aims to award at least 5 percent of federal contracting dollars to SDVOSBs each year, and some contracts are limited to SDVOSB program participants.

Who qualifies for WOSB and EDWOSB?

A women-owned small business (WOSB) must be at least 51 percent owned and controlled by women who are U.S. citizens. WOSB set-asides are limited to industries, identified by NAICS code, where women-owned businesses are underrepresented. SBA keeps the list of eligible NAICS codes.

Some of those contracts are limited further to economically disadvantaged women-owned small businesses (EDWOSB). Among other tests, EDWOSB owners must have a personal net worth under $850,000.

How do I get certified?

Register in SAM.gov first so agencies can award you contracts (see our SAM.gov guide). Then create an account at SBA Certifications, which SBA describes as its free online certification process. There you can check your eligibility, read the checklists and pre-application guides, and apply. WOSB firms, for example, must apply there to compete for WOSB set-asides, and must update their SAM.gov profile every year to keep their status.

When you set up a LibertyBids alert, add your certifications and we rank set-aside bids you qualify for higher and mark the ones you do not.

Frequently asked questions

What is the rule of two in federal contracting?

Under FAR 19.502-2(b), an agency must set aside a contract over the simplified acquisition threshold for small businesses when it reasonably expects offers from at least two responsible small businesses and award at fair market prices.

What is the simplified acquisition threshold in 2026?

$350,000, and the micro-purchase threshold is $15,000. Both were raised on October 1, 2025 from $250,000 and $10,000 (FAR 2.101).

How much is the HUBZone price preference?

10 percent. In full and open competitions, the contracting officer adds 10 percent to other offers when comparing prices, except offers from HUBZone firms and otherwise successful offers from small businesses (FAR 19.1307).

Who certifies SDVOSBs now?

The U.S. Small Business Administration, through its VetCert program, since January 1, 2023. Before that the Department of Veterans Affairs handled certification.

Does SBA certification cost money?

No. SBA describes SBA Certifications (certifications.sba.gov) as its free online certification process.

Official sources

Rules and amounts change. Always confirm with the official source and the solicitation itself before you bid. Spotted something out of date? Email support@libertybids.com.