Federal contracts for small businesses: SAM registration, set-asides and the certifications a foreign-owned company can use

Washington buys everything from software and lab equipment to cleaning services and engineering studies, and the law requires that a fixed share of that spending goes to small businesses. Many European owners assume the federal market is closed to them. It is not: a US company owned from abroad can register, bid and win as a small business. What it usually cannot use are the special certifications, because most of them require American owners.

Why the federal market is worth a look

The Small Business Act requires the President to set government-wide goals for contracts with small companies every year, and it sets the floors:

Each agency gets its own goal and is measured against it, which is why contracting officers actively look for small firms. The disadvantaged business goal had been set at 15 percent in recent years; in its January 2026 announcement the SBA stated that it had been cut back to the statutory 5 percent.

For a European company with a US subsidiary, the general 23 percent goal is the relevant one. It is also the largest.

Can a foreign-owned company qualify as small?

Yes. The SBA's definition of a business concern in 13 CFR 121.105 asks for an entity organized for profit, with a place of business located in the United States, that either operates primarily within the US or makes a significant contribution to the US economy through payment of taxes or use of American products, materials or labor. It does not restrict who owns the company. A Delaware or Texas corporation owned by a family in Bavaria or a group in Lyon can therefore be a small business concern, provided it meets the size standard for its industry.

Two limits apply. First, size is counted with affiliates: the SBA counts the receipts or employees of the company and all of its domestic and foreign affiliates, so a small US arm of a large European group is usually not small. Second, in a joint venture claiming small business status, foreign business entities may hold no more than 49 percent.

Size standards are set per industry code, either as average annual receipts or as a number of employees. Look up the code that fits each contract, not only your main code. If you do not yet have the US entity, our page on US business entity types helps you choose, and the guide to branch or subsidiary explains why a separate US company is usually the right vehicle.

Registration: SAM.gov and the Unique Entity ID

Every company that wants to bid on federal contracts registers in the System for Award Management at SAM.gov. The registration assigns the company a Unique Entity ID, collects its legal and banking details and holds its representations, including the size status claimed for each industry code.

• It costs nothing. SAM.gov states that there is no charge to obtain a Unique Entity ID, register or maintain the registration, and the General Services Administration says you do not need to pay a third party to complete it. Companies that send official-looking letters offering registration for a fee are selling you a free form.
• It expires. The registration must be renewed every 365 days to stay active. A lapsed registration can cost you an award or a payment.
• It needs a US tax identity. The company needs its EIN and its legal name and address exactly as they appear in IRS records. Our guide to applying for an EIN covers that step.

Fill in the representations carefully. A size or ownership claim in SAM.gov is a statement to the federal government, and we see more trouble from careless certifications than from lost bids.

The thresholds that decide who may bid

Two dollar thresholds in the Federal Acquisition Regulation shape the small business market. They were raised for inflation on October 1, 2025:

Lower thresholds apply to construction subject to the prevailing wage rules ($2,000) and to services covered by the Service Contract Labor Standards ($2,500).

Between the two main thresholds, the law reserves contracts exclusively for small businesses. The Small Business Act and FAR 19.502-2 require each acquisition above the micro-purchase threshold and up to the simplified acquisition threshold to be set aside for small business, unless the contracting officer cannot expect offers from two or more responsible small businesses that are competitive on market price, quality and delivery. This is known as the rule of two. Above $350,000 the contracting officer also sets the contract aside when the rule of two is met.

For a new entrant this is the sweet spot: contracts large enough to matter, with competition limited to companies of your size.

The certifications and who can hold them

Beyond the general small business status, the SBA runs several programs that give access to set-aside or sole-source contracts. Each one has an ownership rule, and that rule decides whether it is open to you.

A European family that later becomes American, or that brings in a US citizen partner with real control, may qualify for one of the programs. A company owned from abroad competes in the general small business pool, which is still the largest.

The 8(a) program in 2025 and 2026

The 8(a) program has been through its most turbulent period since it was created. The main steps:

• June 2025: the SBA began an audit of the program covering high-dollar and limited-competition contracts going back about fifteen years.
• December 2025 to January 2026: all 4,300 firms in the program were asked for three years of financial records by January 19, 2026. On January 28, 2026 the SBA announced that it had suspended 1,091 firms, about a quarter of the program, for failing to meet that deadline.
• June 11, 2026: the SBA proposed removing the rebuttable presumption that members of certain groups are socially disadvantaged, for individually owned firms.
• August 11, 2026: the final rule was published. Individual applicants now have to establish social disadvantage without the presumption; firms owned by tribes, Alaska Native Corporations, Native Hawaiian Organizations and Community Development Corporations are not affected.

For most of our readers the 8(a) program is closed anyway because of the citizenship rule. The episode matters for another reason: agencies that relied heavily on 8(a) sole-source awards are looking for other small businesses to fill the gap, and an open small business competition is where a well-prepared newcomer can win.

Buy American and trade agreements

Who owns your company is one question. Where your product is made is another, and for European manufacturers it is often the more important one.

Under the Buy American statute as implemented in FAR 25.101, a manufactured end product counts as domestic if it is manufactured in the United States and the cost of its domestic components exceeds 65 percent of the cost of all components for items delivered in 2024 through 2028, rising to 75 percent for items delivered from 2029. Iron and steel products follow separate rules, and the component test is waived for commercially available off-the-shelf items.

The Trade Agreements Act gives the President authority to waive the Buy American statute for eligible products from countries that have signed international procurement agreements with the United States. Whether a waiver applies depends on the size and type of the contract, so check the clauses in each solicitation. The domestic content test is written for manufactured products, which is one reason many European groups enter the federal market with engineering, software or consulting first. Our overview of US market entry discusses where to start.

A realistic path for a European-owned company

1. Form the US company and give it a real US place of business. An address where work is done, not only a mailbox.
2. Get the EIN, the bank account and the SAM.gov registration. Choose your industry codes and check the size standard for each.
3. Start below $350,000. Small set-aside contracts build the past performance record that larger bids require. Subcontracting to an established prime contractor is the other classic entry point.
4. Read the solicitation twice. Domestic content clauses, security requirements and certification representations decide eligibility before price does.
5. Keep your integrity rules strict. Federal employees may generally accept unsolicited gifts of no more than $20 per occasion and $50 a year from one source. Our guide to bribery rules and the FCPA explains the limits.
6. Budget for the shutdown risk. Federal funding lapses happen; plan your cash so that a delayed payment does not become a crisis.

Federal contracting rewards patience and paperwork. Companies that treat it as a long-term channel, with clean books and accurate filings, do well; companies that expect quick wins usually give up after the second lost bid.