What is an SDVOSB set-aside?
An SDVOSB set-aside is a federal contracting tool that reserves a specific procurement, in full or in part, for Service-Disabled Veteran-Owned Small Businesses. It exists so that veterans who took on lasting injury in service can still compete for, and win, meaningful work after the uniform comes off.
The authority comes from the Veterans Benefits, Health Care, and Information Technology Act of 2006 and is implemented through FAR Subpart 19.14. Agencies are directed to use SDVOSB set-asides whenever there is a reasonable expectation that offers will come in from two or more qualified SDVOSBs at a fair market price.
Why agencies use SDVOSB set-asides
The federal government has a statutory goal of awarding at least 3% of all prime contract dollars to SDVOSBs each fiscal year. Set-asides are the most direct path to meeting that goal, and to attaching it to a procurement record that holds up under audit.
Hit the 3% federal goal
SDVOSB set-asides count toward the federal government's 3% contracting goal for service-disabled veteran-owned small businesses.
Streamlined competition
Sole-source and competitive set-asides cut down the bid pool to qualified firms, shortening award timelines.
Vetted ownership & control
Every SDVOSB award goes to a firm verified by SBA, service-disabled veteran ownership and day-to-day control are both required.
Mission-aligned partners
Agencies get suppliers who understand acquisition discipline, compliance, and the stakes of public service work.
Who qualifies as an SDVOSB
SDVOSB status is no longer self-certified. As of January 2023, all firms must be verified and listed in SBA's Veteran Small Business Certification (VetCert) program before competing for SDVOSB set-asides.
- At least 51% directly and unconditionally owned by one or more service-disabled veterans
- A service-disabled veteran holds the highest officer position and controls long-term decisions
- A service-disabled veteran manages day-to-day operations
- Qualifies as a small business under the relevant NAICS code size standard
- Verified and listed in SBA's Veteran Small Business Certification (VetCert) program
- Active and compliant registration in SAM.gov with current representations and certifications
How an SDVOSB procurement runs
- Step 01
Confirm the requirement
Identify the NAICS code, scope, and acquisition vehicle. Confirm SDVOSB set-aside eligibility under FAR 19.14.
- Step 02
Verify the firm
Check SBA's VetCert directory and SAM.gov status. Eligibility is checked at offer and at award.
- Step 03
Issue solicitation or sole-source
Use a sole-source award when a single qualified SDVOSB is identified and thresholds are met. Otherwise, run a competitive SDVOSB set-aside.
- Step 04
Execute & document
Standard FAR/DFARS execution with full audit trail. Closeout includes performance documentation supporting future agency goal reporting.
SDVOSB vs. VOSB, what's the difference?
VOSB (Veteran-Owned Small Business) requires veteran ownership and control. SDVOSB adds the requirement that the qualifying veteran has a service-connected disability rating. At the federal level, SDVOSB set-asides are the primary veteran-specific contracting tool. The Department of Veterans Affairs additionally runs its own "Vets First" program under 38 U.S.C. § 8127, which prioritizes VOSBs and SDVOSBs for VA-funded work.
Common pitfalls
- Lapsed VetCert or SAM.gov status at the time of award, eligibility is checked twice, at offer and at award.
- Failing the limitations on subcontracting rule, the SDVOSB prime must perform a minimum share of the work itself, varying by contract type.
- Control issues, a non-veteran investor or manager who controls long-term or day-to-day decisions disqualifies the firm regardless of paper ownership.
- Wrong NAICS code, the size standard varies by NAICS; a contract assigned to the wrong code can put small-business status at risk.