Understanding the FAR: A Beginner’s Guide to Government Contracting (Part 19)
Government contracting plays a crucial role in promoting the growth of small businesses across the United States. Recognizing the importance of small businesses to the economy, the Federal Acquisition Regulation (FAR) dedicates an entire section—Part 19: Small Business Programs—to establishing policies that ensure small businesses have a fair opportunity to compete for federal contracts. This part of the FAR outlines the various programs and mechanisms through which the government supports small business participation, fostering diversity, innovation, and economic growth in the procurement landscape.
Part 19: Small Business Programs
Part 19 of the FAR covers the policies and procedures that federal agencies use to promote contracting opportunities for small businesses. These programs are designed to ensure that small, disadvantaged, veteran-owned, women-owned, and other qualifying businesses can participate in the federal procurement process.
Subpart 19.1 – Size Standards
Small Business Size Standards: One of the fundamental elements of small business programs is the size standards established by the Small Business Administration (SBA). These size standards vary by industry and are typically based on a company’s average annual receipts or the number of employees. To qualify for government contracts reserved for small businesses, a company must meet the SBA’s size standards for its industry, as defined under the North American Industry Classification System (NAICS) codes.
NAICS Codes: Each federal contract solicitation includes a NAICS code that determines the size standard for that particular contract. Businesses must verify their eligibility under the specific NAICS code to be considered for small business set-asides.
Subpart 19.2 – Policies for Small Business Programs
Set-Asides for Small Business: The government sets aside a significant percentage of contracts for exclusive competition among small businesses. These are known as small business set-asides, and contracting officers are required to reserve certain procurements for small businesses if there are at least two or more small business offers that can meet the government’s requirements at a fair market price.
Types of Set-Asides:
- Total Set-Asides: The entire contract is reserved for small businesses.
- Partial Set-Asides: Part of the contract is reserved for small businesses, while the remainder is open to all competitors.
- Specific Program Set-Asides: Contracts can also be set aside for businesses participating in specific programs like the 8(a) Business Development Program or the Women-Owned Small Business (WOSB) program.
Subpart 19.3 – Determining Small Business Status
Self-Certification: Small businesses self-certify their status when submitting bids or proposals. However, contracting officers or competitors can challenge a company’s small business status, prompting an official size determination from the SBA.
Joint Ventures and Size Status: Small businesses can form joint ventures with other small or large firms to compete for contracts. The joint venture must meet specific criteria to ensure that the small business retains control of the contract and remains eligible under the size standards.
Subpart 19.4 – Cooperation with the Small Business Administration (SBA)
Contracting Agency Coordination with SBA: Federal agencies work closely with the SBA to ensure compliance with small business goals. The SBA provides advice and oversight for small business programs, helps ensure that small businesses have access to federal contracting opportunities, and resolves disputes related to small business status or certification.
Small Business Specialists: Many federal agencies employ Small Business Specialists to help contracting officers meet small business goals. These specialists work within the agencies to identify contracting opportunities suitable for small businesses.
Subpart 19.5 – Set-Asides for Small Business
Automatic Set-Asides for Small Businesses: For acquisitions between the micro-purchase threshold and the simplified acquisition threshold, contracting officers are required to set aside contracts for small businesses, provided there are two or more small businesses that can meet the requirements at a fair price (known as the Rule of Two). If there is no reasonable expectation that at least two small businesses will submit offers, the contracting officer may issue the solicitation on an unrestricted basis.
Subpart 19.6 – Certificates of Competency and Determinations of Responsibility
Certificate of Competency (COC): If a small business is the apparent successful bidder or offeror but the contracting officer believes the company is not responsible (i.e., unable to fulfill the contract), the contracting officer must refer the matter to the SBA. The SBA may issue a Certificate of Competency (COC), which certifies that the small business is capable of performing the contract.
Role of the SBA: The SBA’s COC process ensures that small businesses are given every opportunity to prove their capability. A COC overrides the contracting officer’s determination and allows the small business to proceed with the contract award.
Subpart 19.7 – The Small Business Subcontracting Program
Subcontracting Plans: For larger contracts, businesses that are not classified as small may be required to submit a small business subcontracting plan. This plan outlines how the prime contractor will involve small businesses in performing significant portions of the contract.
Subcontracting Goals: The plan sets goals for using small businesses, including businesses owned by veterans, women, and socially or economically disadvantaged individuals. The government requires regular reporting on the contractor’s performance in meeting these goals, ensuring that large contractors provide opportunities for small business participation in federal contracts.
Subpart 19.8 – The 8(a) Business Development Program
8(a) Business Development Program: This SBA program helps small, disadvantaged businesses compete in the federal marketplace by providing technical and management assistance, as well as set-aside and sole-source contracting opportunities. The 8(a) program is designed to support businesses owned by socially and economically disadvantaged individuals.
Sole-Source Contracts: One of the key benefits of the 8(a) program is the ability to receive sole-source contracts, where contracts are awarded without competition, up to certain thresholds ($4 million for most contracts and $7 million for manufacturing contracts).
Business Development Assistance: The 8(a) program offers business development assistance, including training and mentorship, to help small businesses grow and succeed in the competitive federal marketplace.
Subpart 19.9 – Women-Owned Small Business (WOSB) and Economically Disadvantaged Women-Owned Small Business (EDWOSB) Programs
WOSB Program: The Women-Owned Small Business (WOSB) program provides set-aside opportunities for small businesses that are at least 51% owned and controlled by women. This program is designed to level the playing field for women entrepreneurs by increasing their access to federal contracts.
EDWOSB Program: A subset of the WOSB program, the Economically Disadvantaged Women-Owned Small Business (EDWOSB) program provides additional opportunities for women who meet certain economic criteria.
Set-Asides and Sole-Source Contracts: The government sets aside contracts for WOSBs and EDWOSBs in industries where women-owned businesses are underrepresented. In addition, sole-source contracts are available to WOSBs and EDWOSBs under certain circumstances.
Subpart 19.13 – Historically Underutilized Business Zone (HUBZone) Program
HUBZone Program: The HUBZone program helps small businesses located in Historically Underutilized Business Zones (HUBZones) by providing set-aside opportunities and access to sole-source contracts. To qualify, a business must be located in a designated HUBZone and have at least 35% of its employees residing in a HUBZone.
Priority in Contracting: HUBZone-certified businesses receive priority consideration for federal contracts and have a 10% price evaluation preference in full and open contract competitions.
Subpart 19.14 – Service-Disabled Veteran-Owned Small Business (SDVOSB) Program
SDVOSB Program: This program provides contracting opportunities for small businesses that are at least 51% owned and controlled by service-disabled veterans. The government sets aside a portion of its contracts for SDVOSBs and awards sole-source contracts when applicable.
Supporting Veteran Entrepreneurs: The SDVOSB program helps veterans transition from military service to entrepreneurship by providing access to the federal marketplace and supporting their businesses through set-asides and preference programs.
Key Principles for Small Business Programs
To effectively navigate Part 19 of the FAR, here are some key principles and best practices:
- Know Your Size Standard: Understand the SBA’s size standards for your industry and verify your eligibility to compete for small business set-aside contracts.
- Leverage Set-Asides: Take advantage of set-aside contracts reserved for small businesses, WOSBs, 8(a) firms, HUBZone businesses, and SDVOSBs.
- Collaborate Through Subcontracting: If you’re a larger business, incorporate small business subcontracting goals into your contracts, and if you’re a small business, explore subcontracting opportunities to work with larger prime contractors.
- Utilize SBA Programs: Participate in the SBA’s business development programs, such as 8(a) and HUBZone, to receive technical assistance, mentorship, and access to sole-source contracts.
Practical Application: Case Studies
Let’s explore some hypothetical scenarios to illustrate how these principles apply in real-world situations:
Scenario 1: Competing for a Small Business Set-Aside
Your small IT consulting firm wants to bid on a government contract for cybersecurity services. Here’s how you ensure compliance with Part 19:
- NAICS Code Verification: You check the solicitation’s NAICS code and verify that your company meets the size standard for that industry.
- Set-Aside Eligibility: Since the contract is a small business set-aside, you ensure that your company is eligible and submit a competitive proposal.
Scenario 2: Leveraging the 8(a) Program for Sole-Source Contracts
Your small, disadvantaged business is enrolled in the 8(a) program and looking to grow through federal contracting. Here’s how you navigate Part 19:
- Sole-Source Contract Opportunity: You identify a federal contract opportunity that can be awarded on a sole-source basis under the 8(a) program and submit your proposal.
- Business Development Support: You take advantage of the business development assistance provided by the SBA to strengthen your company’s management and technical capabilities.
Scenario 3: Prime Contractor Subcontracting with Small Businesses
Your large construction company wins a government contract to build a new federal facility. Here’s how you comply with Part 19:
- Subcontracting Plan: As a prime contractor, you develop a small business subcontracting plan that includes goals for subcontracting with HUBZone businesses and SDVOSBs.
- Reporting Compliance: You regularly report on your company’s progress in meeting these subcontracting goals and work to ensure that small businesses are actively involved in the project.
Best Practices for Small Business Programs
Here are some practical tips to help your business stay compliant with Part 19 of the FAR:
- Certify and Maintain Your Status: Ensure your business maintains its small business certifications (e.g., 8(a), HUBZone, SDVOSB) and renew them as needed.
- Build Relationships with Agencies: Work closely with SBA Small Business Specialists and federal contracting officers to identify contracting opportunities and demonstrate your business’s capabilities.
- Participate in SBA Programs: Join the SBA’s programs, such as 8(a) or HUBZone, to gain access to additional resources, mentorship, and set-aside opportunities.
Conclusion
Part 19 of the FAR is dedicated to empowering small businesses to participate in federal contracting. From set-asides and sole-source contracts to subcontracting opportunities and business development programs, the federal government has created a range of mechanisms to ensure that small businesses can compete and thrive in the government marketplace.
If you’re interested in getting certified for any of the socio-economic certifications mentioned in this article—whether it’s 8(a), HUBZone, SDVOSB, or WOSB—FedBiz Access is here to help. With over 23 years of experience, we’ve assisted small businesses in getting certified and successfully navigating the government marketplace. Schedule a complimentary consultation with a FedBiz Specialist today to see if your business qualifies for these certifications and to fast-track your certification process.
About Us:
FedBiz Access is the leading government contracting business development and marketing firm that offers research and engagement strategy coaching, registrations, certifications, and GSA Schedules, as well as marketing packages to target government buyers. We have over 23 years of experience working with thousands of small and medium sized businesses worldwide, helping them win over $35.8 billion in awards. From registration to award, FedBiz helps you succeed in the government marketplace. 🦅
Important Note: This information is accurate as of 10/21/2024. The Federal Acquisition Regulation (FAR) is updated regularly.
