---
title: "How do federal set-asides work, and when must contracting officers use them under FAR Part 19?"
canonical: https://www.m-i-n-d.ai/minds/govcon/federal-set-asides-far-part-19
jurisdiction: "US Federal"
last_verified: 2026-08-22
license: CC BY 4.0 — https://creativecommons.org/licenses/by/4.0/
attribution: "Source: MIND (m-i-n-d.ai)"
---

# How do federal set-asides work, and when must contracting officers use them under FAR Part 19?

Federal set-asides under FAR Part 19 reserve acquisitions exclusively for small business concerns. For acquisitions above the micro-purchase threshold but not exceeding the simplified acquisition threshold, contracting officers must automatically set aside the acquisition when there is a reasonable expectation of offers from at least two responsible small businesses at fair market prices. For acquisitions exceeding the simplified acquisition threshold, the 'rule of two' applies: the contracting officer shall set aside the acquisition if there is a reasonable expectation that offers will be obtained from at least two responsible small businesses at fair market prices. Before making a set-aside, the contracting officer must first consider the socioeconomic programs (8(a), HUBZone, SDVOSB, WOSB) with no order of precedence (FAR 19.203).

## Details / How it works

FAR Part 19 implements small business acquisition preferences through set-asides, which reserve an acquisition exclusively for eligible small business concerns. 

**Automatic set-aside (below simplified acquisition threshold):** Each acquisition of supplies or services with an anticipated dollar value above the micro-purchase threshold but not exceeding the simplified acquisition threshold **shall** be set aside exclusively for small business concerns when there is a reasonable expectation that offers will be obtained from at least two responsible small business concerns and award will be made at fair market prices (FAR 19.502-2(a)).

**Rule of two (above simplified acquisition threshold):** For acquisitions above the simplified acquisition threshold, the contracting officer **shall** set aside the acquisition for small business when there is a reasonable expectation that (1) offers will be obtained from at least two responsible small business concerns, and (2) award will be made at fair market prices (FAR 19.502-2(b)). Before a small business set-aside, the contracting officer must first consider the socioeconomic programs — 8(a), HUBZone, SDVOSB, and WOSB set-asides. FAR 19.203 establishes there is no order of precedence among those four programs.

**Partial set-asides and multiple-award contract reserves** are addressed at FAR 19.502-3 and 19.502-4.

**Sole-source authorities:** Each socioeconomic program carries its own sole-source authority with dollar conditions in its FAR subpart (e.g., 8(a) at FAR 19.808-1, HUBZone at FAR 19.1306, SDVOSB at FAR 19.1406, WOSB/EDWOSB at FAR 19.1506).

## Numbers & thresholds

| Threshold | Description (as defined in FAR) |
|-----------|--------------------------------|
| Micro-purchase threshold | The lower boundary; acquisitions at or below this amount are not subject to automatic set-aside rules. |
| Simplified acquisition threshold | The dollar value that separates automatic set-asides from those requiring the 'rule of two' analysis. Acquisitions above this threshold are subject to the rule of two before a set-aside can be made. |

The exact dollar amounts are defined in FAR 2.101 and are not specified in the provided context.

## Exceptions & edge cases

**Partial set-asides (FAR 19.502-3):** When only part of an acquisition is reserved for small businesses, the contracting officer may use a partial set-aside.

**Multiple-award contract reserves (FAR 19.502-4):** For multiple-award contracts, the contracting officer may reserve one or more award positions for small businesses.

**Sole-source authorities:** Each socioeconomic program has its own sole-source authority, allowing awards without full competition under specific dollar conditions (e.g., 8(a) sole source up to $8.5M for manufacturing / $5.5M for other needs; HUBZone, SDVOSB, WOSB each have their own limits).

**No program precedence (FAR 19.203):** The four socioeconomic programs (8(a), HUBZone, SDVOSB, WOSB) have no order of precedence. The contracting officer may choose any program that is appropriate for the acquisition.

**Limitations on subcontracting (FAR 52.219-14):** Set-aside awards carry limitations on how much work may be subcontracted to firms that are not similarly situated (e.g., 50% for services/supplies, 85% for general construction), but these are enforced post-award and do not alter the set-aside decision itself.

## Sources

- [1] Acquisition.gov (FAR Council: GSA, DoD, NASA) — FAR Part 19 — Small Business Programs · https://www.acquisition.gov/far/part-19 · as of 2026-08-22