Purchasing & Small Business

Small Disadvantaged Business

A Small Disadvantaged Business (SDB) is a small business that is at least 51 percent owned by one or more individuals who are both socially and economically disadvantaged. SDB status makes a company eligible for bidding and contracting benefit programs involved with federal procurement. Businesses must be certified by the Small Business Administration (SBA) to qualify for SDB status. FAR Subpart 19.304 requires an SDB at the time of its offer (prime or subcontracting) to have certification from SBA or to have completed and submitted an SDB application.

Small Disadvantaged Business (SDB) Criteria

You may register your business as a Small Disadvantaged Business if you meet the following criteria:

  • The firm must be 51% or more owned and controlled by one or more disadvantaged persons.
  • The disadvantaged person or persons must be socially disadvantaged and economically disadvantaged.
  • The firm must be small, according to SBA’s size standards.

AcqNotes Tutorials

Small Disadvantaged Business (SDB) Disadvantaged Persons

The SBA defines socially disadvantaged groups or persons as those who have historically been subjected to “racial or ethnic prejudice or cultural bias” within the larger American culture. Identified groups include African Americans, Asian Pacific Americans, Hispanic Americans, Native Americans, and Subcontinent Asian Americans. Members of other groups may qualify if they can satisfactorily demonstrate that they meet established criteria.

Small Business Certification [1]

Before you can begin a business with the government, your business must obtain the proper certifications. The Federal government sets aside certain contract bid opportunities exclusively for small businesses. To compete for these contracts, you must first register as a vendor with the government.

As part of the registration process, you will be required to enter information about your company in the System of Awards Management (SAMS) database. In SAMS, you may self-certify yourself as a small business, but you must meet the Federal government’s definition of a small business.

Steps to Registering as a Federal Contractor [1]

  1. Obtain a D-U-N-S Number – You will need to obtain a Dun & Bradstreet D-U-N-S® Number. This is a unique nine-digit identification number for each physical location of your business. The assignment of a D-U-N-S Number is free for all businesses required to register with the federal government for contracts or grants. Visit the D-U-N-S Request Service to register.
  2. Register your Business with the SAMS – You need to register your business with the federal government’s System of Awards Management (SAM).
  3. Find the NAICS Codes for Your Company – North American Industry Classification System (NAICS) code for administrative, contracting, and tax purposes.  Read Identifying Industry Codes for more information.
  4. Obtain Past Performance Evaluations – Businesses interested in getting on the U.S. General Services Administration (GSA) Schedule for contracts should obtain an Open Ratings, Inc. Past Performance Evaluation.

Other Disadvantaged Company Types

There are several other types of disadvantaged companies. A few of these are:

  • Women Owned Small Business: authorizes contracting officers to set aside certain federal contracts for eligible women-owned small businesses.
  • HUBZone Business: Helps small businesses in urban and rural communities gain preferential access to federal procurement opportunities.
  • Service Disabled Small Business: provides procuring agencies with the authority to set acquisitions aside for exclusive competition among service-disabled veteran-owned small business concerns.


  • The System for Award Management (SAM) has replaced the Central Contractor Registration (CCR)

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Updated: 9/26/2022

Rank: G6.8

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