SMALL BUSINESS PROGRAMS: FEDERAL SMALL
BUSINESS CONTRACTING – FULL EXAM PREP Q&A
ON SBA SET-ASIDES, SIZE STANDARDS, 8(A),
HUBZONE, WOSB, SDVOSB, SUBCONTRACTING PLANS,
AND THE RULE OF TWO – INCLUDES FAR PART 19
REFERENCES (most recent) 2026 edition.
1. Which federal agency is primarily responsible for establishing small business size
standards and administering small business programs in government contracting?
a) General Services Administration (GSA)
b) Small Business Administration (SBA)
c) Government Accountability Office (GAO)
d) Department of Commerce
b) Small Business Administration (SBA)
Rationale: The SBA sets size standards, certifies small businesses, and administers
programs such as 8(a), HUBZone, and SDVOSB.
2. Under FAR Part 19, a small business set-aside must be made when there is a reasonable
expectation that offers will be obtained from at least how many responsible small
businesses, and award will be made at a fair market price?
a) One
b) Two
c) Three
d) Five
b) Two
Rationale: FAR 19.502-2 requires the rule of two — a set-aside is mandatory when at
least two small businesses are expected to compete and price will be fair and reasonable.
3. The size standard for most manufacturing industries is expressed in terms of:
a) Annual revenue averaged over three years
b) Number of employees
c) Net worth
d) Square footage of facility
b) Number of employees
, Rationale: Size standards for manufacturing are typically based on the average number
of employees over the preceding 12 months; service industries generally use revenue.
4. The 8(a) Business Development Program is designed to assist:
a) All small businesses equally
b) Small businesses owned and controlled by socially and economically disadvantaged
individuals
c) Women-owned businesses only
d) Large businesses seeking to subcontract
b) Small businesses owned and controlled by socially and economically disadvantaged
individuals
Rationale: Section 8(a) of the Small Business Act authorizes the SBA to enter into
contracts with agencies and subcontract them to certified disadvantaged firms.
5. A contractor must perform at least what percentage of the cost of contract performance
incurred for personnel on a service contract set aside for small business, not including
the cost of materials?
a) 15%
b) 30%
c) 50%
d) 85%
c) 50%
Rationale: The limitations on subcontracting clause at FAR 52.219-14 require the prime
contractor to perform at least 50% of the cost of the contract incurred for personnel on
service contracts.
6. The HUBZone program requires that at least 35% of the contractor's employees reside in
a HUBZone. HUBZone stands for:
a) Highly Urbanized Business Zone
b) Historically Underutilized Business Zone
c) Housing and Urban Business Zone
d) Heavy Use Business Zone
b) Historically Underutilized Business Zone
Rationale: The HUBZone program stimulates economic development in distressed areas
by providing contracting preferences to firms that employ residents of those zones.
7. A Women-Owned Small Business (WOSB) set-aside may only be used for industries
where the SBA has determined that WOSBs are:
a) Underrepresented or substantially underrepresented
b) The majority of businesses
, c) Exempt from size standards
d) Not eligible for 8(a) certification
a) Underrepresented or substantially underrepresented
Rationale: The WOSB Federal Contract Program authorizes set-asides only in industries
where WOSBs are underrepresented or substantially underrepresented, as designated by
SBA.
8. The Service-Disabled Veteran-Owned Small Business (SDVOSB) sole-source award
threshold is currently:
a) $4 million ($6.5 million for manufacturing)
b) $8 million ($10 million for manufacturing)
c) $1 million ($2 million for manufacturing)
d) $500,000 ($750,000 for manufacturing)
a) $4 million ($6.5 million for manufacturing)
Rationale: The SBA may make sole-source awards to SDVOSBs up to $4 million for non-
manufacturing and $6.5 million for manufacturing, with agency approval.
9. A subcontracting plan is required for negotiated acquisitions over:
a) $100,000
b) $250,000
c) $750,000
d) $2,000,000
*c) $750,000**
*Rationale: FAR 19.702 requires subcontracting plans for contracts over $750,000 ($1.5
million for construction), when subcontracting possibilities exist.
10. The nonmanufacturer rule allows a small business that does not manufacture the
product to be considered a small business if the product is manufactured by a small
business in the United States. What is the maximum size (in employees) for a
manufacturer to qualify under this rule?
a) 100 employees
b) 500 employees
c) 500 to 1,500 employees, depending on NAICS
d) No limit
c) 500 to 1,500 employees, depending on NAICS
Rationale: The nonmanufacturer rule waives the manufacturing performance
requirement if the actual manufacturer is a small business that meets the applicable size
standard, typically 500 to 1,500 employees.
BUSINESS CONTRACTING – FULL EXAM PREP Q&A
ON SBA SET-ASIDES, SIZE STANDARDS, 8(A),
HUBZONE, WOSB, SDVOSB, SUBCONTRACTING PLANS,
AND THE RULE OF TWO – INCLUDES FAR PART 19
REFERENCES (most recent) 2026 edition.
1. Which federal agency is primarily responsible for establishing small business size
standards and administering small business programs in government contracting?
a) General Services Administration (GSA)
b) Small Business Administration (SBA)
c) Government Accountability Office (GAO)
d) Department of Commerce
b) Small Business Administration (SBA)
Rationale: The SBA sets size standards, certifies small businesses, and administers
programs such as 8(a), HUBZone, and SDVOSB.
2. Under FAR Part 19, a small business set-aside must be made when there is a reasonable
expectation that offers will be obtained from at least how many responsible small
businesses, and award will be made at a fair market price?
a) One
b) Two
c) Three
d) Five
b) Two
Rationale: FAR 19.502-2 requires the rule of two — a set-aside is mandatory when at
least two small businesses are expected to compete and price will be fair and reasonable.
3. The size standard for most manufacturing industries is expressed in terms of:
a) Annual revenue averaged over three years
b) Number of employees
c) Net worth
d) Square footage of facility
b) Number of employees
, Rationale: Size standards for manufacturing are typically based on the average number
of employees over the preceding 12 months; service industries generally use revenue.
4. The 8(a) Business Development Program is designed to assist:
a) All small businesses equally
b) Small businesses owned and controlled by socially and economically disadvantaged
individuals
c) Women-owned businesses only
d) Large businesses seeking to subcontract
b) Small businesses owned and controlled by socially and economically disadvantaged
individuals
Rationale: Section 8(a) of the Small Business Act authorizes the SBA to enter into
contracts with agencies and subcontract them to certified disadvantaged firms.
5. A contractor must perform at least what percentage of the cost of contract performance
incurred for personnel on a service contract set aside for small business, not including
the cost of materials?
a) 15%
b) 30%
c) 50%
d) 85%
c) 50%
Rationale: The limitations on subcontracting clause at FAR 52.219-14 require the prime
contractor to perform at least 50% of the cost of the contract incurred for personnel on
service contracts.
6. The HUBZone program requires that at least 35% of the contractor's employees reside in
a HUBZone. HUBZone stands for:
a) Highly Urbanized Business Zone
b) Historically Underutilized Business Zone
c) Housing and Urban Business Zone
d) Heavy Use Business Zone
b) Historically Underutilized Business Zone
Rationale: The HUBZone program stimulates economic development in distressed areas
by providing contracting preferences to firms that employ residents of those zones.
7. A Women-Owned Small Business (WOSB) set-aside may only be used for industries
where the SBA has determined that WOSBs are:
a) Underrepresented or substantially underrepresented
b) The majority of businesses
, c) Exempt from size standards
d) Not eligible for 8(a) certification
a) Underrepresented or substantially underrepresented
Rationale: The WOSB Federal Contract Program authorizes set-asides only in industries
where WOSBs are underrepresented or substantially underrepresented, as designated by
SBA.
8. The Service-Disabled Veteran-Owned Small Business (SDVOSB) sole-source award
threshold is currently:
a) $4 million ($6.5 million for manufacturing)
b) $8 million ($10 million for manufacturing)
c) $1 million ($2 million for manufacturing)
d) $500,000 ($750,000 for manufacturing)
a) $4 million ($6.5 million for manufacturing)
Rationale: The SBA may make sole-source awards to SDVOSBs up to $4 million for non-
manufacturing and $6.5 million for manufacturing, with agency approval.
9. A subcontracting plan is required for negotiated acquisitions over:
a) $100,000
b) $250,000
c) $750,000
d) $2,000,000
*c) $750,000**
*Rationale: FAR 19.702 requires subcontracting plans for contracts over $750,000 ($1.5
million for construction), when subcontracting possibilities exist.
10. The nonmanufacturer rule allows a small business that does not manufacture the
product to be considered a small business if the product is manufactured by a small
business in the United States. What is the maximum size (in employees) for a
manufacturer to qualify under this rule?
a) 100 employees
b) 500 employees
c) 500 to 1,500 employees, depending on NAICS
d) No limit
c) 500 to 1,500 employees, depending on NAICS
Rationale: The nonmanufacturer rule waives the manufacturing performance
requirement if the actual manufacturer is a small business that meets the applicable size
standard, typically 500 to 1,500 employees.
