Plain-English definitions of the terms you’ll meet in federal and state contracting — set-asides, registration, thresholds, and contract vehicles.
The 8(a) Business Development Program is a nine-year SBA program for small businesses at least 51% owned and controlled by socially and economically disadvantaged U.S. citizens. Participants gain access to 8(a) sole-source and competitive set-aside contracts plus business-development mentoring. It is a one-time program — firms cannot re-enter after their nine-year term.
HUBZone (Historically Underutilized Business Zone) is an SBA program that helps small businesses located in economically distressed areas compete for federal contracts. To qualify, a firm’s principal office must sit in a designated HUBZone and at least 35% of its employees must live in a HUBZone. Certified firms get HUBZone set-asides, sole-source awards, and a 10% price evaluation preference.
A Service-Disabled Veteran-Owned Small Business (SDVOSB) is a small business at least 51% owned and controlled by one or more veterans with a service-connected disability. SDVOSBs can win SDVOSB set-aside and sole-source federal contracts. Since January 1, 2023, certification is handled government-wide by the SBA through its VetCert system.
A set-aside is a federal or state contract reserved for a specific category of small business, so qualifying firms compete only against each other instead of against large companies. The most common federal set-asides are Total Small Business, 8(a), HUBZone, WOSB/EDWOSB, and SDVOSB. The government has a statutory goal of awarding at least 23% of prime contract dollars to small businesses each year.
A Women-Owned Small Business (WOSB) is a small business at least 51% owned and controlled by one or more women who are U.S. citizens. An Economically Disadvantaged WOSB (EDWOSB) meets the same test plus SBA economic-disadvantage thresholds. Both can win WOSB/EDWOSB set-aside contracts in industries where women-owned firms are underrepresented — and certification is required.
A CAGE (Commercial and Government Entity) code is a five-character alphanumeric identifier assigned by the Defense Logistics Agency (DLA) that identifies a specific business facility at a specific location. U.S. entities are assigned a CAGE code automatically as part of [SAM.gov registration](/glossary/sam-gov-registration); foreign entities use an NCAGE code.
A NAICS (North American Industry Classification System) code is a six-digit number that classifies a business by industry. In government contracting, every solicitation lists a NAICS code, and yours determines which opportunities fit, which [set-asides](/glossary/set-aside) you can pursue, and the SBA size standard that defines whether you count as a "small business." The current edition is NAICS 2022.
SAM.gov registration is the free, mandatory process of listing your business in the System for Award Management (SAM.gov) so it can receive federal contracts and grants. Registration generates your [UEI](/glossary/uei) and [CAGE code](/glossary/cage-code), captures your [NAICS codes](/glossary/naics-code) and certifications, and must be renewed every year to stay active.
The Unique Entity ID (UEI) is a 12-character alphanumeric identifier the U.S. federal government uses to identify your business across its award systems. It replaced the DUNS number on April 4, 2022, and is generated for free directly in SAM.gov — there is no separate third-party request and no fee.
The Federal Acquisition Regulation (FAR) is the primary set of rules governing how U.S. executive-branch agencies acquire goods and services. Codified in Title 48 of the Code of Federal Regulations, it standardizes the procurement process — solicitation, evaluation, award, and administration — and supplies the contract clauses you’ll see incorporated into federal solicitations.
The micro-purchase threshold (MPT) is the dollar amount below which federal agencies can buy goods or services with minimal procedure — often on a government purchase card and without competitive quotes. As of October 1, 2025, the standard micro-purchase threshold is $15,000 (raised from $10,000 by the FAR’s inflation adjustment of acquisition-related thresholds).
The simplified acquisition threshold (SAT) is the dollar amount below which federal agencies may use streamlined "simplified acquisition procedures" (FAR Part 13) instead of full negotiation rules. As of October 1, 2025, the SAT is $350,000 (raised from $250,000 by the FAR’s inflation adjustment). Acquisitions between the micro-purchase threshold and the SAT are typically reserved for small businesses.
A capability statement is a one-page marketing document that gives a government buyer a fast snapshot of your business: what you do, what makes you different, proof you can deliver, and how to find you. It’s the single most-requested document when introducing your firm to a contracting officer or responding to a [sources sought](/glossary/sources-sought) notice.
The GSA Schedule — officially the Multiple Award Schedule (MAS) — is a long-term, governmentwide contract administered by the General Services Administration. Once you’re awarded a Schedule contract, any federal agency (and some state and local buyers) can purchase your offerings at pre-negotiated prices and terms, without running a full open-market procurement each time.
An IDIQ (Indefinite Delivery/Indefinite Quantity) contract provides for an indefinite quantity of supplies or services over a fixed ordering period. The government commits to a guaranteed minimum and an overall ceiling, then buys the actual work through individual task orders (services) or delivery orders (supplies). Many IDIQs are multiple-award, so several contractors compete for orders.
RFP, RFQ, and RFI are three distinct types of government solicitation. An RFI (Request for Information) — like a sources sought — is market research that awards nothing. An RFQ (Request for Quotation) asks for a price quote under simplified procedures and is largely price-driven. An RFP (Request for Proposal) asks for a full technical and price proposal and is evaluated on best value.
A sources sought notice is a market-research request — not a solicitation. An agency posts it to identify businesses capable of meeting a future requirement and to gauge whether enough small firms exist to justify a [set-aside](/glossary/set-aside). No contract is awarded from a sources sought, but a strong response can influence how the agency structures the eventual solicitation.