Government contracts generally fall under a few different categories, each of which involves specific requirements. Learn about the different ways of federal contracting.

types of government contractsUnderstanding the type of contract you are competing for can give you a better idea of what to expect and how to implement a more compelling proposal. These are the most common types of government contracts and what they require:

Set-aside contracts for small businesses

The government limits competition for certain contracts to small businesses in order to help provide a level playing field for small businesses. Those contracts are called “small business set-asides,” and they help small businesses compete for and win federal contracts.

There are two kinds of set-aside contracts:

  1. Competitive set-asides
  2. Sole-source set-asides

Competitive set-aside contracts

When at least two small businesses could perform the work or provide the products being purchased, the government sets aside the contract exclusively for small businesses. With few exceptions, this happens automatically for all government contracts under $150,000.

Some set-asides are open to any small business, but some are open only to small businesses who participate in SBA contracting assistance programs.

Sole-source set-aside contracts

Sole-source contracts are a kind of contract that can be issued without a competitive bidding process. This usually happens in situations where only a single business can fulfill the requirements of a contract.

To be considered for a sole-source contract, register your business with the System for Award Management (SAM) and participate in any contracting program you may qualify for. To learn more on SAM registration, click here.

In some cases, sole-source contracts must be published publicly, and will be marked with an intent to sole source. Potential vendors can still view and bid on these contracts. Once the bidding process begins, the intent to sole-source may be withdrawn.

Set-asides for government contracting programs

Some set-asides are for small businesses in certain socio-economic categories. You can bid on these set-aside contracts by participating in any of the SBA’s contracting assistance programs listed below:

Participating in one of these SBA programs means you will have fewer businesses to compete with to win a government contract. However, you must meet eligibility requirements and certify your business’ socio-economic status before you can bid on a set-aside contract.

How to certify

The certification process may vary depending on the SBA contracting program. For some, you can self-certify just by updating your business profile in the System for Award Management (SAM).

For other programs, you have to apply for certification. As part of the application, you’ll answer questions about your business and its ownership, and upload supporting documents. To learn more on federal certifications, click here.

Joint ventures

Two or more small businesses may pool their efforts by forming a joint venture to compete for a contract award. A joint venture of multiple small businesses still qualifies for small business set-aside contracts if its documentation meets SBA requirements.

Small businesses that have a mentor-protege relationship through the All Small Mentor-Protege program can form a joint venture with a mentor. These joint ventures can compete together for government contracts reserved for small businesses.

A joint venture can also bid on contracts that are set aside for service-disabled veteran-owned, women-owned, or HUBZone businesses, if a member of the joint venture meets SBA requirements to do so.

Contact Rafael Marrero & Company today to learn more on federal contracts and find out how your firm can successfully enter the federal marketplace.

Call 1-888-595-6221 for a free consultation or email

A nationally recognized expert in federal contracting, small business entrepreneurship, vendor, and project/program management. A graduate of the prestigious Stanford and Cornell Universities, Dr. Rafael Marrero is a former Fortune 500 procurement executive, two-time Inc. 500 honoree, network news commentator, and Amazon best-selling author.

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