FAR 52.219-7—Notice of Partial Small Business Set-Aside.
Plain-English Summary
FAR 52.219-7, Notice of Partial Small Business Set-Aside, explains how a solicitation and resulting contract are handled when only part of the requirement is reserved for small business participation. It defines what counts as a small business concern for purposes of the clause, including the role of affiliates and SBA affiliation rules, and states that the clause applies only to partially set-aside contracts. It tells offerors how to compete for the set-aside portion, the non-set-aside portion, or both, and requires the contracting officer to specify whether separate offers or one combined offer are allowed. It also explains that offers from firms that are not small business concerns are nonresponsive for the set-aside portion and must be rejected for that portion, while small businesses may compete for both portions if the solicitation allows. For multiple-award contracts, it clarifies that small businesses do not compete against other-than-small businesses for orders under the set-aside part, but may compete for orders under the unrestricted part if they received an award for that portion. The alternate paragraph adds a special rule for Federal Prison Industries, Inc., requiring its offers to be solicited and considered for both portions despite the general set-aside limitation. In practice, this clause is about structuring competition correctly, protecting the reserved work for eligible small businesses, and avoiding evaluation errors that could invalidate an award or protest outcome.
Key Rules
Small business definition
The clause uses the solicitation’s size standards and SBA affiliation rules to determine whether an offeror qualifies as a small business concern. Affiliation can arise through ownership, control, management, or contractual relationships, and SBA’s rules at 13 CFR 121.103 govern the analysis.
Applies only to partial set-asides
This clause is used only when a requirement has been partially set aside for small business concerns. It does not apply to total set-asides or unrestricted procurements.
Set-aside portion is reserved
The identified portion of the requirement is reserved for award to one or more small business concerns. Offers from firms that are not small business concerns are nonresponsive for that portion and must be rejected.
Small businesses may compete for both portions
Small business concerns may submit offers for the set-aside portion, the non-set-aside portion, or both, depending on how the solicitation is structured. The contracting officer must indicate whether offerors must submit separate offers or may submit one combined offer.
Multiple-award order competition
For partial set-asides of multiple-award contracts, small businesses do not compete against other-than-small businesses for orders under the set-aside part. They may compete for orders under the unrestricted part only if they received an award for that non-set-aside portion.
Federal Prison Industries exception
Under Alternate I, offers from Federal Prison Industries, Inc. must be solicited and considered for both the set-aside and non-set-aside portions, overriding the general rule in paragraph (c).
Responsibilities
Contracting Officer
Identify the portion of the requirement that is set aside, decide whether offerors must submit separate offers or one combined offer, and ensure the solicitation reflects the correct competition structure. The contracting officer must also evaluate offers consistently with the clause, reject non-small-business offers for the set-aside portion, and apply the Federal Prison Industries exception when Alternate I is used.
Offeror
Determine whether it qualifies as a small business concern under the solicitation size standard and SBA affiliation rules, then submit offers only for the portions it wants to compete for and in the format required by the solicitation. If competing for the set-aside portion, the offeror must be eligible as a small business.
Small Business Concern
Compete for the set-aside portion only if it meets the applicable size standard and affiliation requirements, and may also compete for the unrestricted portion if the solicitation permits. For multiple-award contracts, it may compete for orders under the unrestricted portion only if it received an award for that portion.
SBA
Determine affiliation issues under 13 CFR 121.103 when size status or control questions arise. SBA’s rules control the affiliation analysis used to decide whether an offeror qualifies as a small business concern.
Agency
Use the clause only when a requirement is partially set aside and ensure the solicitation and award structure support the intended small business participation. The agency must also preserve the integrity of the set-aside by limiting the reserved portion to eligible small businesses.
Federal Prison Industries, Inc.
When Alternate I applies, submit offers that will be considered for both the set-aside and non-set-aside portions of the requirement. Its offers are treated as an exception to the normal restriction on non-small-business participation in the set-aside portion.
Practical Implications
This clause matters because it controls who can compete for each part of a split requirement, so a solicitation mistake can lead to an improper evaluation or protest risk.
Offerors should pay close attention to whether the solicitation requires separate proposals or allows one combined offer; missing that instruction can make an otherwise acceptable offer unusable.
Contracting officers must verify small business status for the set-aside portion and watch for affiliation issues, since apparent size can be defeated by control relationships or other SBA affiliation factors.
For multiple-award contracts, the order-level competition rules are easy to misapply: small businesses do not automatically compete for unrestricted orders unless they actually hold an award for the non-set-aside portion.
When Alternate I is used, Federal Prison Industries must be included in both portions, so evaluators should not treat it like a typical non-small-business offeror for the set-aside segment.
Official Regulatory Text
As prescribed in 19.507 (d) , insert the following clause: Notice of Partial Small Business Set-Aside (Nov 2020) (a) Definition . Small business concern , as used in this clause— (1) Means a concern, including its affiliates, that is independently owned and operated, not dominant in the field of operation in which it is bidding on Government contracts, and qualified as a small business under the size standards in this solicitation. (2) Affiliates , as used in paragraph (a)(1) of this clause, means business concerns, one of whom directly or indirectly controls or has the power to control the others, or a third party or parties control or have the power to control the others. In determining whether affiliation exists, consideration is given to all appropriate factors including common ownership, common management, and contractual relationships. SBA determines affiliation based on the factors set forth at 13 CFR 121.103. (b) Applicability. This clause applies only to contracts that have been partially set aside for small business concerns. (c) General. (1) A portion of this requirement, identified elsewhere in this solicitation, has been set aside for award to one or more small business concerns identified in 19.000 (a)(3). Offers received from concerns that do not qualify as small business concerns shall be considered nonresponsive and shall be rejected on the set-aside portion of the requirement. (2) Small business concerns may submit offers and compete for the non-set-aside portion and the set-aside portion. (d) The Offeror shall— [ Contracting Officer check as appropriate. ] □ Submit a separate offer for each portion of the solicitation for which it wants to compete (i.e. set-aside portion, non-set-aside portion, or both); or □ Submit one offer to include all portions for which it wants to compete. (e) Partial set-asides of multiple-award contracts. (1) Small business concerns will not compete against other than small business concerns for any order issued under the part or parts of the multiple-award contract that are set aside. (2) Small business concerns may compete for orders issued under the part or parts of the multiple-award contract that are not set aside, if the small business concern received a contract award for the non-set-aside portion. (End of clause) Alternate I (Mar 2020) . As prescribed in 19.507 (d), add the following paragraph (f) to the basic clause: (f) Notwithstanding paragraph (c) of this clause, offers from Federal Prison Industries, Inc., will be solicited and considered for both the set-aside and non-set-aside portion of this requirement.