Small Business Set-Asides: 8(a), SDVOSB, HUBZone Overview

Eligibility requirements

• The business must be a small business by SBA size standards for its primary NAICS code
• The principal office must be located in a designated HUBZone (check the SBA's HUBZone map at maps.certify.sba.gov)
• At least 35% of the company's employees must reside in a HUBZone (they do not need to work at the HUBZone office, just live in one)
• The business must be owned and controlled at least 51% by U.S. citizens, a Community Development Corporation, an agricultural cooperative, an Indian tribe, or a Native Hawaiian organization

One of the most valuable HUBZone benefits is the 10% price evaluation preference in full-and-open competition. When a HUBZone firm bids on a contract that is not set aside, the government adds 10% to non-HUBZone competitors' prices for evaluation purposes. This means a HUBZone firm bidding $100,000 would be compared against a non-HUBZone firm whose $105,000 bid is evaluated as $115,500. This preference applies even on full-and-open procurements, giving HUBZone firms a competitive edge beyond set-asides.

HUBZone sole-source thresholds mirror other programs: $4.5 million for services and $7 million for manufacturing. The SBA recertifies HUBZone firms every three years, and you must maintain your principal office location and 35% employee residency requirement continuously. If a HUBZone is redesignated, firms in that area may receive a grace period to remain certified while they adjust.

Women-Owned Small Business (WOSB)

The Women-Owned Small Business Federal Contracting Program authorizes contracting officers to set aside contracts for women-owned firms in industries where WOSBs are underrepresented. The government-wide goal is 5% of prime contract dollars. Unlike some other programs, WOSB set-asides are restricted to specific NAICS codes that the SBA has identified as underrepresented based on periodic industry analyses.

There are two sub-categories within the program. A WOSB is a firm that is at least 51% owned and controlled by one or more women. An Economically Disadvantaged Women-Owned Small Business (EDWOSB) adds an economic disadvantage requirement, with the owner's personal net worth under $850,000 and adjusted gross income averaging under $400,000 over three years. EDWOSBs have access to additional NAICS codes beyond those available to WOSBs.

Since 2020, SBA certification has been required for the WOSB program, replacing the previous self-certification process. Firms must apply through the SBA's certification portal and demonstrate ownership, control, and economic disadvantage (for EDWOSB). The SBA maintains the list of eligible NAICS codes, and sole-source authority was expanded in recent years to match other programs at $4.5 million for services and $7 million for manufacturing. If your firm qualifies, check whether your primary NAICS codes are on the eligible list before investing in certification.

Mentor-Protege Programs

Mentor-Protege programs are force multipliers for small businesses pursuing set-aside work. These programs pair small businesses (proteges) with experienced firms (mentors) to build capability, past performance, and competitive positioning. The SBA's All Small Mentor-Protege Program is the most widely used, but several agencies operate their own programs with unique benefits.

SBA All Small Mentor-Protege Program

• Open to all small businesses with any socioeconomic designation (8(a), SDVOSB, HUBZone, WOSB) as well as firms without special designations
• Mentor-protege joint ventures can compete for set-aside contracts as small businesses, even if the mentor is a large business, provided the protege qualifies as small
• Joint ventures under the program receive past performance credit from both the mentor and protege, solving the chicken-and-egg problem of needing past performance to win work
• The mentor can own up to 40% of the joint venture, while the protege must manage day-to-day operations and hold at least 51% ownership

Agency-specific programs

• DoD Mentor-Protege Program: Provides reimbursement to mentors for developmental assistance. Mentors can receive direct reimbursement, credit toward small business subcontracting goals, or both. This financial incentive makes large primes more willing to invest in developing small business partners.
• DHS Mentor-Protege Program: Focuses on building small business capacity for homeland security missions, with proteges gaining access to DHS-specific training and networking opportunities.
• NASA Mentor-Protege Program: Targets technology-intensive small businesses and provides access to NASA research facilities, equipment, and technical expertise.

The strategic value of mentor-protege relationships extends beyond individual contracts. A strong mentor-protege partnership builds the past performance database that a small business needs to eventually compete independently. Plan your mentor-protege arrangement with an exit strategy: after three to five years, you should have enough standalone past performance to compete without the mentor's credentials.

CRM for Set-Aside Tracking

If your pipeline management system does not track set-aside types, you are flying blind. Every opportunity in your CRM should have a set-aside classification field that records whether the procurement is full-and-open, small business set-aside, 8(a) competitive, 8(a) sole-source, SDVOSB, HUBZone, WOSB, EDWOSB, or some combination. Our Winning Federal Contracts guide covers the full pipeline management framework, but set-aside tracking deserves special emphasis.

Why set-aside tracking in your CRM matters

• Win rate analysis by set-aside type: You should know your win rate on 8(a) competitive versus SDVOSB set-asides versus full-and-open. If your SDVOSB win rate is 45% but your full-and-open rate is 12%, that tells you exactly where to focus business development resources.
• Pipeline forecasting: Set-aside contracts have different probability weighting than full-and-open. Your pipeline forecast should account for the higher win probabilities on restricted competitions when calculating expected revenue.
• Certification ROI: Track how many opportunities in your pipeline are available because of each certification. If you are considering HUBZone certification, you should be able to quantify how many current pipeline opportunities would become accessible.
• Recertification alerts: SBA certifications expire and require renewal. Your CRM should trigger alerts 90 days before any certification expires so you never lose eligibility on active opportunities.
• Teaming partner qualifications: When tracking teaming partners, record their certifications as well. An opportunity might not be accessible to your firm directly, but a joint venture with a certified partner could open the door.

Build custom reports and dashboards that slice your pipeline by set-aside type. At minimum, you should have a dashboard showing total pipeline value by set-aside category, average days-to-close by set-aside type, and win/loss trends over time. This data drives strategic decisions about which certifications to pursue, which agencies to target, and how to allocate your limited business development budget.

Building Your Set-Aside Strategy

Understanding set-aside programs in isolation is not enough. The real competitive advantage comes from integrating set-aside strategy into your broader capture management approach. Start by auditing which certifications your firm currently holds or qualifies for. Many small businesses leave money on the table by not pursuing all available designations. A firm that is both SDVOSB and HUBZone certified, for instance, can compete in two restricted pools instead of one.

Next, analyze your target agencies' small business spending data. USASpending.gov publishes detailed breakdowns of each agency's small business obligations by socioeconomic category. If the Department of Energy consistently exceeds its HUBZone goals but falls short on SDVOSB, that tells you which designation carries more weight with DOE contracting officers. Agencies under pressure to meet specific goals are more likely to create set-asides in those categories.

Consider the timeline dimension as well. The 8(a) program's nine-year window is a depreciating asset. If you are in year six with limited 8(a) contract revenue, you need to aggressively pursue sole-source and competitive 8(a) opportunities before graduation. Similarly, if your revenue is approaching the size standard threshold, prioritize winning set-aside contracts now, because once you exceed the threshold, those opportunities disappear.

Set-aside programs are one piece of a comprehensive federal contracting strategy. They determine which opportunities you can pursue, but winning still requires disciplined capture management, strong past performance, competitive pricing, and compliant proposals. The contractors who grow fastest in the GovCon space are those who combine the right certifications with systematic pipeline management and a CRM that tracks every variable. Your set-aside status opens the door. Everything else determines whether you walk through it.