Small Business Federal Contracting — Set-Asides, 8(a), HUBZone & SDVOSB

The federal government is the world's largest buyer of goods and services — spending over $700 billion annually on procurement. Federal law requires that a fair proportion of those contracts go to small businesses, with a government-wide goal of awarding at least 23% of all prime contract dollars to small businesses. To achieve this, the Small Business Act (15 U.S.C. §§ 631–657s) and its implementing programs create a system of set-asides, sole-source authorities, and preferential contracting programs that reserve certain contracts exclusively for small businesses. The major programs include: the 8(a) Business Development Program for socially and economically disadvantaged businesses, the HUBZone (Historically Underutilized Business Zones) program for businesses in distressed areas, the Service-Disabled Veteran-Owned Small Business (SDVOSB) program, and the Women-Owned Small Business (WOSB) program. In FY 2023, the federal government awarded approximately $178 billion — over 28% of eligible contract dollars — to small businesses.

Current Law (2026)

Legal Authority

• 15 U.S.C. § 631 — Declaration of policy (the federal government must aid, counsel, assist, and protect small business interests and ensure small businesses receive a fair proportion of government contracts)
• 15 U.S.C. § 637 — Additional powers (authorizes the 8(a) Business Development Program — SBA may enter into contracts with government agencies and subcontract performance to eligible socially and economically disadvantaged small business concerns)
• 15 U.S.C. § 644 — Awards or contracts (small businesses must receive awards when SBA and the contracting agency determine that a contract can be performed by small businesses; establishes the small business set-aside requirement and the government-wide contracting goals)
• 15 U.S.C. § 657a — HUBZone program (establishes the HUBZone program providing contracting preferences — set-asides, sole source, and price evaluation preference — for qualified small businesses located in historically underutilized business zones)
• 15 U.S.C. § 657f — Service-Disabled Veteran-Owned Small Business procurement program (authorizes sole-source and set-aside contracts for small businesses owned by service-disabled veterans)
• 15 U.S.C. § 657q — Consolidation of contract requirements (requires agencies to protect small business participation when consolidating contracts; bundling restrictions)
• 15 U.S.C. § 657r — Mentor-protégé programs (SBA must establish a government-wide mentor-protégé program allowing large businesses to mentor small businesses)

How It Works

Whether a company qualifies as "small" depends on its industry — SBA sets size standards for each NAICS code based on either annual revenue or number of employees (a general construction company is small below $39.5M in average annual receipts; a software publisher is small below 1,250 employees). The primary mechanism driving small business participation is the Rule of Two: for every contract above the micro-purchase threshold ($15,000 as of Oct. 1, 2025), the contracting officer must set aside the contract if two or more small businesses are expected to submit offers at fair market prices — this is a legal requirement, not a preference. The 8(a) Business Development Program is the most prominent set-aside vehicle: businesses owned by socially and economically disadvantaged individuals (racial minorities under a rebuttable presumption, or any individual demonstrating social disadvantage through personal experience) may enter the 9-year program and receive sole-source contracts up to $4.5M for services ($7M for manufacturing without competition), competitive 8(a) set-asides, and business development mentoring.

HUBZone (Historically Underutilized Business Zones) certifies small businesses with principal offices in and 35% of workforce from designated economically distressed areas, granting set-asides, sole-source authority, and a 10% price evaluation preference in full-and-open competitions. Service-Disabled Veteran-Owned Small Businesses (SDVOSB) and Women-Owned Small Businesses (WOSB) have their own set-aside and sole-source authorities — SDVOSB certification is now managed by SBA; the WOSB program authorizes set-asides in NAICS codes where SBA has determined WOSBs are underrepresented. Large businesses receiving federal prime contracts over $900,000 ($2M for construction) must submit small business subcontracting plans committing to specific percentage targets for SDB, HUBZone, SDVOSB, and WOSB firms; failure to make good-faith efforts toward those targets can result in damages assessed against the prime contractor.

How It Affects You

State Variations

Federal small business contracting programs are exclusively federal, but:

Implementing Regulations

• 13 CFR Part 124 — 8(a) Business Development Program (63 sections — SBA's implementing rules for the 9-year program for socially and economically disadvantaged small businesses; establishes who qualifies, how to apply, what contracting benefits participants receive, and how the program ends). Key provisions:

  • § 124.2 — Program duration: participants enter a 9-year program divided into two stages — a developmental stage (first 4 years, focused on growing competitive capability) and a transitional stage (final 5 years, focused on weaning off 8(a) contracts into open competition); once a firm leaves (by graduation, early termination, or voluntary withdrawal), neither that firm nor any successor under the same ownership may re-enter the program
  • § 124.103 — Who is socially disadvantaged: individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as members of a group; Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans receive a rebuttable presumption of social disadvantage; all other individuals may qualify by submitting a Social Disadvantage Narrative — a personal statement demonstrating they personally suffered social disadvantage affecting their entry and advancement in business; following Ultima Services Corp. v. USDA (2023), which struck down the race-based presumption, SBA now requires all participants (including presumption groups) to submit social disadvantage narratives for review
  • § 124.104 — Who is economically disadvantaged: the individual claiming social disadvantage must also be economically disadvantaged; thresholds: net worth ≤ $750,000 (excluding equity in primary residence and the value of the business); adjusted gross income ≤ $350,000 (3-year average); total assets ≤ $6 million; these thresholds rise slightly during the transitional stage; SBA looks at the individual owner's personal financial condition, not the business's revenues
  • §§ 124.105–124.106 — Ownership and control: the disadvantaged individual must unconditionally own at least 51% of the business and must control its management and daily operations; control is separate from ownership — the disadvantaged owner must actually manage the business, not just hold equity while a non-disadvantaged manager runs it; board composition, officer roles, and day-to-day authority are examined; SBA scrutinizes arrangements where the disadvantaged owner holds equity but a larger company or investor controls operational decisions
  • § 124.107 — Potential for success: SBA must find that the applicant has potential to succeed in federal contracting with program assistance; typically requires at least 2 years in business (SBA has discretion to waive this for exceptional circumstances); relevant factors include technical capability, contract performance history, business management experience, and capital resources
  • § 124.109 — Indian Tribes and Alaska Native Corporations: ANC-owned firms and tribal enterprises receive special provisions — ANCs may form wholly-owned subsidiaries for 8(a) participation without the standard ownership and disadvantage requirements; ANC subsidiaries are eligible for unlimited sole-source 8(a) awards without the dollar thresholds that apply to standard 8(a) firms; this has been a source of controversy given the competitive advantage it provides
  • § 124.112 — Ongoing eligibility review: SBA reviews participants annually to ensure they continue to meet eligibility standards; a participant that exceeds the economic disadvantage thresholds (net worth > $750,000 for developmental / $1.25M for transitional; assets > $6M developmental / $6.5M transitional) must notify SBA; firms that grow beyond small business size for their NAICS code during the program may have their contracting eligibility suspended

  Recent rulemakings: 88 FR 26205 (April 27, 2023) — Social Disadvantage Narrative rule, implementing the court's ruling in Ultima Services Corp. v. USDA by requiring all 8(a) participants to submit social disadvantage narratives describing personal experiences with discrimination; 89 FR 102489 (December 2024) — additional amendments implementing Ultima Services and refining the social disadvantage evaluation framework.

• 13 CFR Part 125 — Government contracting programs (small business set-asides, size standards for procurement, subcontracting requirements, certificate of competency)

• 13 CFR Part 126 — HUBZone Program (61 sections — SBA's rules for the Historically Underutilized Business Zone program; establishes which areas qualify as HUBZones, what a small business must do to become certified, and what contracting preferences apply). Key provisions:

  • § 126.103 — HUBZone area types: four categories of qualifying areas: (1) Qualified Census Tracts (QCTs) — census tracts with poverty rate ≥ 25%, median household income ≤ 60% of area median, or unemployment rate ≥ 1.5× the national average; (2) Qualified Non-Metropolitan Counties — counties outside metropolitan statistical areas with poverty rate ≥ 25% or unemployment rate ≥ 1.5× national average; (3) Redesignated Areas — formerly qualifying areas that lost HUBZone status when updated census data came in (retain HUBZone designation for 3 years to provide transition period); (4) Indian Reservations, Base Closure Areas (BRAC communities), and Governor-designated covered areas (up to 10 per Governor, per year)
  • § 126.105 — Map updates: SBA updates the HUBZone Map quarterly for QCTs and annually for non-metropolitan counties; a business whose principal office or employee residences are in an area that loses HUBZone status retains its certification for 3 years (a "lock-in" allowing HUBZone firms planning continuity before status expires); firms must monitor the HUBZone Map and notify SBA within 30 days of any material change
  • § 126.200 — Eligibility requirements: three core conditions must all be met: (1) the firm qualifies as a small business under its primary NAICS code; (2) the firm's principal office — where the largest number of employees report to work, or the firm's headquarters if employees work remotely — is located in a HUBZone; (3) at least 35% of the firm's employees reside in a HUBZone (employees' home addresses, not their work location); in addition, the firm must be owned and controlled by U.S. citizens, one or more Indian tribes or ANCs, a Community Development Corporation, or an NHO
  • § 126.207 — Non-HUBZone offices: the principal office must be in a HUBZone, but a certified firm may have other offices or facilities outside HUBZones; what matters for the principal office test is where the plurality of employees actually works, not the firm's state of incorporation or registered office address
  • §§ 126.300–126.301 — SBA certification required: a small business cannot self-certify as a HUBZone firm; it must apply to SBA and receive official certification through SBA's HUBZone certification portal; SBA verifies principal office location, employee residences (via employee attestations), ownership, and control; once certified, firms must recertify annually and notify SBA within 30 days of any change in principal office, employee headcount, or geographic HUBZone status

  Contracting preferences: certified HUBZone firms receive three benefits: sole-source awards up to $4.5M (services) or $7M (manufacturing); competitive HUBZone set-asides (contracts reserved exclusively for HUBZone firms when two or more compete); and a 10% price evaluation preference in full-and-open competitions (a HUBZone offer is evaluated as if it were 10% lower than its actual price). The 35% employee residency requirement is the most common compliance challenge — hiring for project needs can quickly push the percentage below threshold, triggering a need to self-report to SBA. Recent rulemakings: 84 FR 65243 (November 2019) — major HUBZone program rewrite establishing the current structure; 89 FR 102500 and 102504 (December 2024) — amendments coordinating HUBZone rules with the broader small business status reforms.

• 13 CFR Part 128 — Veteran Small Business Certification Program (VetCert) (31 sections — SBA's regulations for certifying VOSBs and SDVOSBs; SBA assumed certification from VA in January 2023 under the FY2021 NDAA):

  • § 128.200 — Qualification: veterans must unconditionally own at least 51% of the business; for SDVOSB, the veteran must have a service-connected disability rating from the VA (any percentage qualifies, including 10%); veterans with 100% P&T disability are eligible even if unable to manage day-to-day operations
  • § 128.203 — Control requirement: the qualifying veteran must also control the business (highest officer position, majority board control, no contractual limits on the veteran's authority); control is strictly enforced and is the most frequent basis for denial — silent partners or veterans without genuine management authority are disqualified
  • § 128.300–128.303 — Certification process: apply through the SBA Certify portal (certify.sba.gov); documentation required includes DD-214 (veteran status), VA rating letter (SDVOSB), ownership documents, and evidence of management control; SBA reviews within 90 days; certification must be renewed annually
  • § 128.400 — Program benefits: certified SDVOSBs/VOSBs may pursue: (1) set-aside contracts reserved exclusively for veteran-owned firms; (2) sole-source awards up to $4.5 million (services/supplies) or $7 million (manufacturing/construction) without competition; (3) VA Veterans First Contracting priority — the VA must exhaust SDVOSB set-aside possibilities before using other programs, making VA contracts the most valuable market for certified firms

  The VetCert unification in 2023 merged SBA's federal program with VA's former Center for Verification and Evaluation — a single certification now qualifies for all federal agencies. Self-certification is no longer permitted for SDVOSB set-asides; firms must hold valid SBA VetCert. Recent rulemakings: 89 FR 102509 (December 2024) — updated control requirements and recertification procedures.

• 13 CFR Part 134 — Rules of Practice for SBA's Office of Hearings and Appeals (OHA) (170 sections — the SBA's internal quasi-judicial appellate court that resolves disputes about small business size, status, and eligibility; 12 subparts covering each category of appeal and protest):

  • Subpart B — General Rules of Practice (28s): OHA Administrative Judges hear cases; proceedings are on the written record (generally no live testimony); respondents have 15 days to respond to appeals; OHA decisions are the final agency action for most matters and are subject to judicial review in federal district court; the requesting party bears the burden of proof; ex parte communications with OHA judges are prohibited; OHA publishes its decisions, which create binding precedent within SBA
  • Subpart C — Size Determination Appeals (17s): any party to a size protest at a contracting agency may appeal an area office size determination to OHA within 15 business days of receiving the determination; OHA reviews de novo whether the concern qualifies as small under the applicable size standard (receipts, employees, or both) for the NAICS code assigned to the procurement; affiliation rules (whether two entities must be treated as one for size purposes) are frequently contested — common affiliation theories include the ostensible subcontractor rule, the mentor-protégé exception, and the totality of the circumstances test
  • Subpart D — 8(a) Program Appeals (9s): firms denied admission to or early terminated from the 8(a) Business Development Program may appeal to OHA; OHA reviews whether SBA complied with the governing statute and regulations; OHA may not substitute its judgment for SBA's discretionary decisions about 8(a) program management
  • Subpart G — WOSB/EDWOSB Status Protests (15s): any interested party may protest that a concern claiming Women-Owned Small Business (WOSB) or Economically Disadvantaged WOSB (EDWOSB) status does not qualify; protests must be filed within 5 business days of bid opening or award; OHA examines whether the concern is 51%+ owned and controlled by women and, for EDWOSB, whether the owner qualifies as economically disadvantaged (personal net worth ≤$850,000 excluding primary residence and business)
  • Subpart J — VOSB/SDVOSB Status Protests (13s): protests that a concern claiming Veteran-Owned Small Business (VOSB) or Service-Disabled VOSB status is ineligible; primary issues are whether the veteran or service-disabled veteran unconditionally owns and controls the business; OHA reviews SBA's Veteran Small Business Certification (VetCert) program determinations; following SBA's assumption of the SDVOSB certification function from VA in 2023, OHA handles all SDVOSB/VOSB status appeals
  • Subpart M — HUBZone Protests (16s): protests that a concern is not a Certified HUBZone Small Business Concern; issues include whether the firm's principal office is in a HUBZone, whether 35% of its employees reside in HUBZones, and whether the firm is owned and controlled by U.S. citizens; OHA reviews the SBA HUBZone program office's protest determination
  • Subpart L — SBA Loan Review Appeals (14s): borrowers may appeal final SBA loan review decisions — e.g., a determination that an SBA lender is owed reimbursement of a guarantee but the borrower failed to use loan proceeds for authorized purposes; this is the only OHA subpart that involves financial decisions directly affecting SBA borrowers (not small business status)

• 13 CFR Part 121 — Small Business Size Regulations (77 sections — the foundational SBA regulation that defines what "small business" means in practice: the industry-specific numerical size standards, the affiliation rules that determine when multiple businesses must be counted as one, the procedures for size protests, and the consequences of misrepresentation):

  • § 121.101 — What are SBA size standards?: size standards define whether a business is "small" and thus eligible for government programs reserved for small businesses; a business that exceeds the standard for its NAICS code industry is ineligible for small business set-aside competitions; every federal procurement assigns a NAICS code, and the applicable size standard flows from that code
  • § 121.102 — How standards are established: SBA considers degree of competition, average firm size, start-up costs, and federal procurement share; size standards are expressed as either maximum annual receipts (most service and retail industries — typically $8M to $47M) or maximum number of employees (manufacturing, mining, wholesale — typically 500 to 1,500 employees)
  • § 121.103 — Affiliation rules: the most litigated provision in Part 121 — two businesses are affiliates and must be counted together when one controls the other, or when a third party controls both; common affiliation bases: (a) common ownership — entities with 50%+ shared ownership; (b) common management — an officer/director controlling both; (c) newly organized concern — a firm formed by key employees of a large company may be affiliated with it; (d) joint venture — all JV members are affiliated with each other for the size of the JV; (e) ostensible subcontractor — a subcontractor that performs the primary and vital requirements of a prime contract may be found affiliated with the prime; the ostensible subcontractor rule is most frequently invoked in service and construction set-asides where the prime heavily relies on a single large subcontractor
  • § 121.104 — Annual receipts calculation: receipts = all revenue from all sources averaged over the three most recently completed fiscal years; receipts of all affiliates are included; a business less than 3 years old averages over its actual operating period
  • § 121.106 — Employee count: SBA counts all individuals — full-time, part-time, temporary, and staffing agency workers — averaged over the 12 most recent pay periods; employees of all affiliates are included; size is determined at time of self-certification on the offer
  • § 121.108 — Penalties for misrepresentation: a contractor misrepresenting small business status is subject to the Presumption of Loss — the government presumes damages equal to the entire contract value (not just the competitive advantage gained); criminal penalties under 18 U.S.C. § 1001 (false statements), False Claims Act liability for treble damages, and debarment are also available; these are among the largest penalty multipliers in federal procurement law
  • § 121.201 — Size standards table by NAICS code: the master table — SBA has established specific size standards for each 6-digit NAICS industry code; the table is updated periodically through rulemaking; the SBA published a comprehensive update in 2022 that increased most manufacturing employment standards; current table available at sba.gov/size-standards
  • §§ 121.1001–121.1010 — Size protests and formal size determinations: any offeror, contracting officer, or SBA may protest a competitor's small business size; protests must be filed with the contracting officer within 5 business days of award notification; credible protests are forwarded to the SBA Area Office, which has 15 business days to make a formal size determination; affiliation analysis is conducted on the record — the Area Director reviews the protested firm's ownership, management relationships, key employees, and subcontracting arrangements

  13 CFR Part 121 is the regulatory foundation for all small business contracting — without the size standards and affiliation rules, "small business set-aside" is a meaningless category. The affiliation analysis (§ 121.103) is where most size disputes arise: private equity portfolio companies, joint ventures, and contractor teams regularly trigger affiliation questions. The ostensible subcontractor rule (§ 121.103) is particularly significant in service contracts, where a small prime that passes most work to a large subcontractor can be found ineligible as a result.

• 48 CFR Part 19 — FAR Small Business Programs (set-asides, sole source authority, subcontracting plans, goals, SBA coordination)

• 48 CFR Part 815 (VAAR) — Veterans Affairs Acquisition Regulation: Contracting by Negotiation — Source Selection (8 sections). The VA acquisition regulation that implements the Veterans First Contracting Program preference requirements at 38 U.S.C. § 8127 through mandatory evaluation factors in competitively negotiated (non-set-aside) VA contracts. Key provisions:

  • § 815.304-70 — Evaluation factor commitments: VA contracting officers must include clause 852.215-70 (SDVOSB and VOSB Evaluation Factors) in every negotiated solicitation and contract — even those that are not set aside for veteran-owned firms; the clause directs contracting officers to give preference to VOSB offers and additional preference to SDVOSB offers over non-veteran-owned competitors with otherwise equal or similar ratings; it also requires use of a contractor's past performance in meeting SDVOSB subcontracting goals as a non-price evaluation factor, and treats proposed inclusion of SDVOSB/VOSB subcontractors as an evaluation factor in negotiated awards
  • § 815.304-71 — Clause insertion: when clause 852.215-70 is included in a solicitation, contracting officers must also insert clause 852.215-71 (Evaluation Factor Commitments), which makes the offeror's stated commitments to SDVOSB/VOSB subcontracting a contract obligation subject to enforcement — not just a proposal representation
  • § 815.370 — Only one offer policy: when only a single offer is received in response to a VA solicitation, the contracting officer must determine whether the price is fair and reasonable and whether circumstances warrant readvertising; this provision applies particular scrutiny to single-offer situations to prevent circumvention of the competitive preference structure

  The VA Veterans First Contracting hierarchy (created by 38 U.S.C. § 8127 and implemented through the VAAR) requires VA contracting officers to first exhaust SDVOSB set-aside competition, then VOSB set-aside competition, before using other small business programs (8(a), HUBZone, WOSB, general set-aside) or full-and-open competition. Part 815's evaluation factor requirements fill the gap for contracts that are NOT set aside — ensuring veteran-owned firms receive preference even in competitive, full-and-open procurements where the set-aside hierarchy doesn't apply. The VA awarded approximately $26 billion in total contracts in FY 2023, with roughly $9 billion going to SDVOSB/VOSB firms — making it the single most important federal market for veteran-owned businesses. SBA assumed the SDVOSB/VOSB certification function from VA's Center for Verification and Evaluation in January 2023 under the FY2021 NDAA; SBA's VetCert certification (under 13 CFR Part 128) is now required for VA Veterans First Contracting eligibility.

• 48 CFR Part 819 (VAAR) — Veterans Affairs Acquisition Regulation: Small Business Programs: the VA's acquisition regulation governing how contracting officers implement the Veterans First Contracting Program — covering the set-aside decision sequence, sole-source awards, tiered evaluations, and the specific mechanics of applying the statutory SDVOSB/VOSB preference hierarchy in every VA acquisition. Where Part 815 governs evaluation factors in negotiated (non-set-aside) VA contracts, Part 819 governs the set-aside and sole-source tools that apply before a solicitation even issues. Key provisions:

  • § 819.203-70 — Priority for SDVOSB/VOSB contracting preferences: contracting officers must apply the preferences in 38 U.S.C. §§ 8127–8128 before using FAR Part 19 programs; the VA-specific hierarchy supersedes the government-wide small business preference hierarchy for all VA acquisitions
  • § 819.7005 — Contracting order of priority: for any acquisition requirement, the contracting officer must consider acquisition methods in the following sequence: (1) SDVOSB set-aside (if the "Rule of Two" is met — reasonable expectation of two or more eligible SDVOSB offerors at fair market price); (2) VOSB set-aside (if the Rule of Two is met for VOSB but not SDVOSB); (3) other small business programs (8(a), HUBZone, WOSB, general set-aside) per FAR Part 19; (4) full-and-open competition; this cascade means VA contracting officers must document why each higher-priority set-aside does not apply before descending to the next option
  • § 819.7006 — SDVOSB set-aside procedures: when the Rule of Two is satisfied for SDVOSBs, the contracting officer shall set aside the contract for SDVOSB competition; set-asides above the simplified acquisition threshold ($250,000) require the contracting officer to post in SAM.gov and conduct market research confirming SDVOSB availability; the mandatory nature of the set-aside (as opposed to the discretionary FAR set-aside standard) is a key distinction between VA and other agencies
  • § 819.7007 — VOSB set-aside procedures: mirrors §819.7006 but for VOSB (when two or more eligible VOSBs, but not two SDVOSBs, are expected); VOSB set-asides are a fallback — the contracting officer must first confirm that the SDVOSB Rule of Two is not met before proceeding to a VOSB set-aside
  • § 819.7008 — SDVOSB sole-source awards: the contracting officer may award sole-source to a VIP-listed SDVOSB without competition when: (a) the anticipated contract value (including options) does not exceed $4.5 million for most contracts, or $7 million for manufacturing contracts; (b) the SDVOSB is determined capable at a fair and reasonable price; and (c) award would not have a negative impact on more than one veteran-owned small business; unlike FAR 19.502's sole-source authority, VA sole-source requires documentation that competition among SDVOSBs is not practical — not merely that one SDVOSB can do the work
  • § 819.7009 — VOSB sole-source awards: parallel authority for VOSB (same dollar thresholds: $4.5M services, $7M manufacturing); applies only when the SDVOSB sole-source authority is unavailable and the VOSB Rule of Two is not met; the VA sole-source hierarchy mirrors the set-aside hierarchy — SDVOSB sole-source is always considered before VOSB sole-source
  • § 819.7010 — Tiered set-aside evaluation: in certain circumstances (particularly indefinite-delivery contracts and multi-award orders), the contracting officer may use a tiered evaluation approach — simultaneously considering SDVOSB, VOSB, and other small business tiers within a single solicitation; if the SDVOSB tier does not produce acceptable offers, the contracting officer automatically moves to the VOSB tier, then to the small business tier, without re-soliciting; this avoids the delay of sequential re-solicitations while preserving the preference hierarchy
  • § 819.7004 — Limitations on subcontracting: SDVOSB/VOSB set-aside contracts are subject to SBA's limitations on subcontracting (13 CFR § 125.6) — the prime SDVOSB/VOSB cannot subcontract more than 50% of the work (for services) or 85% (for construction) to non-SDVOSB/VOSB firms; in a VA set-aside, only other VIP-listed SDVOSBs (for SDVOSB set-asides) are considered "similarly situated" entities that don't count against the limit

  Part 819's mandatory set-aside sequence — and particularly the "Rule of Two" applied to the SDVOSB tier before any other small business program is considered — makes VA the agency with the strongest statutory veteran contracting preference in the federal government. The practical effect: a large general contractor that is not SDVOSB/VOSB certified has very limited access to VA contracts, regardless of technical capability or competitive price. Certified SDVOSB/VOSB firms with a history of VA contracting should monitor the VetCert portal for certification renewal deadlines (SBA VetCert annually); a lapsed certification means the firm is no longer VIP-listed and cannot compete on set-aside solicitations during the gap. Recent rulemakings: 88 FR 54042 (August 2023) — VAAR updates implementing the FY2021 NDAA SBA certification transfer, aligning Part 819 with SBA's VetCert requirements under 13 CFR Part 128; 88 FR 54051 (August 2023) — final rule updating clause references and removing outdated VA-CVE certification language.

• 40 CFR Part 33 — Participation by Disadvantaged Business Enterprises in EPA Programs (38 sections across 5 subparts — EPA's MBE/WBE utilization requirements for recipients of EPA financial assistance; authority: 42 U.S.C. § 4370d and 15 U.S.C. § 637; last amended 87 FR 30397 (May 2022)):

  • Subpart A — General Provisions (§§ 33.101–33.106): Part 33 applies to all procurement under EPA financial assistance agreements — grants, cooperative agreements, and capitalization grants for revolving loan funds (state revolving funds under the Clean Water Act and Safe Drinking Water Act) — for construction, equipment, services, and supplies performed entirely within the United States; recipients (state agencies, local governments, water authorities, universities) must ensure their contractors and subcontractors comply; EPA may withhold payments, disallow costs, or terminate awards for noncompliance, and may refer cases for prosecution under 18 U.S.C. § 1001 or the Program Fraud Civil Remedies Act
  • Subpart B — Certification (§§ 33.201–33.212): firms must be certified as minority-owned businesses (MBEs) or women-owned businesses (WBEs) to count toward EPA DBE objectives; EPA accepts certification by SBA under the 8(a) or SDB programs, or by a state or local DBE certifying agency whose program meets EPA criteria; "MBE" means a firm at least 51% owned and controlled by one or more minorities (Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, or Subcontinent Asian Americans); "WBE" means a firm at least 51% owned and controlled by women; certification establishes both eligibility and the availability count used in the fair share analysis
  • Subpart C — Good Faith Efforts (§§ 33.301–33.304): when MBE/WBE firms are reasonably available in the relevant market, recipients and their prime contractors must make good faith efforts to use DBE firms in procurement; good faith efforts include affirmative outreach (notifying DBE associations, soliciting bids from certified firms, breaking contracts into smaller scopes to encourage DBE participation), documenting the solicitation process, and negotiating with DBEs that submit higher-than-average bids; failure to make documented good faith efforts is independently citable as noncompliance
  • Subpart D — Fair Share Objectives (§§ 33.401–33.412): recipients must negotiate fair share objectives with their EPA award official — annual percentage targets for MBE participation and WBE participation in procurement funded by the EPA assistance agreement; the objectives are based on an availability analysis comparing the percentage of certified MBE and WBE firms in the relevant market to the total number of available firms; objectives are agreement-specific and updated at each award renewal; recipients that consistently miss their fair share objectives without documented good faith efforts face compliance action
  • Subpart E — Recordkeeping and Reporting (§§ 33.501–33.503): recipients must maintain records of all procurement steps and DBE outreach for the duration of the award plus 3 years; EPA-required reports must document the number and dollar value of contracts awarded to MBE and WBE firms versus total procurement; this data feeds EPA's annual report to Congress on DBE utilization in EPA-funded programs

  EPA's Part 33 program is among the most significant agency-specific DBE programs outside the transportation sector. The largest transportation-sector DBE program is DOT's 49 CFR Part 26 (highway, transit, and airport construction contracts); airports that receive FAA development grants must also run a separate Airport Concession DBE program under 49 CFR Part 23, which extends disadvantaged business requirements to terminal concession operators — restaurants, retail, and car rental. See Airport Concession DBE Program. EPA funds approximately $6–8 billion per year in state revolving fund capitalization grants and direct assistance — the majority flowing through state environmental agencies that in turn contract out treatment plant construction, infrastructure upgrades, and environmental services. For a small engineering firm or construction company certified as MBE or WBE, EPA-assisted water and wastewater infrastructure projects represent a substantial market: prime contractors seeking EPA-funded state contracts must demonstrate DBE outreach, creating recurring subcontracting opportunities for certified firms. Recent rulemakings: 87 FR 30397 (May 2022) — technical corrections; 79 FR 76054 (December 2014) — updated certification standards and fair share methodology.

Pending Legislation

• HR 818 (Rep. Stauber, R-MN) — SPUR Act: expand small business contracting opportunities in underserved communities by strengthening HUBZone and other small business set-aside programs. Status: Passed House.

See also SBA Programs and Federal Procurement & Contracting for related small business legislation.

Recent Developments

The government exceeded the 23% small business prime contracting goal for the 10th consecutive year in FY 2023, awarding over $178 billion. SBA consolidated SDVOSB certification (previously at VA) under its own authority, streamlining the process. The SBA's online certification portal now handles 8(a), HUBZone, SDVOSB, and WOSB certifications through a single platform. The mentor-protégé program has expanded to allow any small business (not just 8(a) firms) to participate. Category management and government-wide contract vehicles have raised concerns about contract consolidation reducing small business opportunities, prompting SBA to push for better small business participation requirements in large-scale contracts.

• A January 2026 Wall Street Journal report highlighted uncertainty surrounding U.S. small-business programs amid congressional disputes over SBA authorization and funding levels, with the agency's future scope and priorities becoming a point of partisan contention.