There is a lot going on in our society today, especially when it comes to small businesses, who are disadvantaged in times like these. The government has special programs set up to support socio-economically disadvantaged businesses. This has been taking place for decades. They've been well ahead of the private industry on this topic for many years... it’s called a “set-aside” program.
When the government goes out to buy something, they won't just put it out for free and open competition. They'll take certain procurements and set them aside for socio-economically disadvantaged businesses.
For example, if they wanted to buy office supplies, they would not allow big companies, like Office Depot or Staples to go after that business. They'll set it aside and say only certain businesses can bid on this opportunity. It allows those businesses to flourish and grow. The government wants to help small businesses, minority-owned businesses, and women-owned businesses thrive.
Across the country, the classifications can vary from municipality to municipality. There are four major types you'll typically hear about from within the federal government, but a lot of local agencies will carry these forward as well. These four classifications are:
Service Disabled Veteran-Owned
The first socio-economic set aside is an 8(a) Business. The local federal government tries to award at least 5% of all federal contracting dollars to small disadvantaged businesses each year. This typically covers African-American owned businesses, Hispanic owned businesses, and Native American owned businesses.
The second is HUB Zones. The government set up these “hub-zones” to help businesses flourish in certain areas and try to award at least 3% of all federal prime contracting dollars to HUBZone certified businesses each year.
Third and fourth are women-owned businesses and service-disabled-veteran owned businesses which can qualify for up to 5% of and veteran-disabled businesses that qualify for 3% of annual federal funds.
There are about 15 to 20 different classifications across the country. If you're going to go do business with a government agency, contact them about the different variety of classifications they may have. It'll help you win government business, eliminating some of the free and open competition. The government sets these up to help YOU win more business and to keep small businesses operational.