Similarly Situated Entity
Also known as: SSE, similarly situated subcontractor
What you do here: Team with subs that share your size and status so their work counts as your own
At a Glance
- Who it's for
- A prime that subcontracts to firms sharing its size and set-aside status
- What it does
- Lets the sub's work count as the prime's self-performance for the 50/85/75 test
- Governing authority
- 13 CFR § 125.6(c) (definition and effect)
- Two-part test
- Sub must be (1) small for the assigned NAICS and (2) the same status as the prime
- Effect
- SSE work is excluded from the amount the prime is treated as subcontracting
What It Is
A similarly situated entity (SSE) is a subcontractor that shares two things with the prime: it is a small business under the NAICS code assigned to the contract, and it holds the same set-aside program status as the prime — so on an SDVOSB set-aside, an SSE is a small, certified SDVOSB subcontractor. The concept exists to soften the limitations on subcontracting. Normally, every dollar a prime pushes to a subcontractor counts against the prime's self-performance floor. But under 13 CFR § 125.6(c), work performed by a similarly situated entity is *not* counted as subcontracted — it counts toward the prime's own self-performance. In other words, an SDVOSB prime and its SDVOSB subs are measured together against the 50% (services), 15%/25% (construction), or 50% (supplies manufacturing) floor. This lets a prime build a genuinely veteran-owned team, add capacity, and still comply — as long as the teammates truly qualify as similarly situated and actually perform the work.
When You Use It
- Whenever a prime wants a subcontractor's work to count toward the limitations-on-subcontracting self-performance floor.
- When an SDVOSB prime teams with other certified SDVOSBs to expand capacity without violating the 50% rule.
- When structuring a proposal so the team, not just the prime alone, satisfies the self-performance test.
- When defending a limitations-on-subcontracting challenge by showing subcontracted work went to SSEs.
Key Features
| Feature | What It Means |
|---|---|
| Two-part test | The sub must be (1) small for the NAICS assigned to the contract and (2) in the same SBA program as the prime (SDVOSB, WOSB, HUBZone, or 8(a), matching the set-aside). |
| Work counts as self-performance | Amounts a prime pays an SSE for work are not counted toward the limit on subcontracting — the prime and SSE are aggregated for the self-performance floor. |
| Status measured at the right time | Similarly-situated status is generally assessed as of the date the parties enter the subcontract, and the sub must maintain its small size for the contract's NAICS. |
| Real performance required | The SSE must actually perform the work; paper arrangements that route work back to a non-SSE don't count and can be a compliance problem. |
| Program-specific | 'Same status' means the same set-aside program — an SDVOSB sub is an SSE on an SDVOSB set-aside but not on a WOSB set-aside. |
The SDVOSB Angle
The similarly situated entity rule is the single most useful teaming tool for an SDVOSB prime: it turns a fellow SDVOSB's subcontracted labor into *your* self-performance for the limitations on subcontracting. That means you can assemble a larger, all-veteran team and still clear the 50% floor. Build your bid around SSE partners for the work you'd otherwise struggle to self-perform, verify each teammate is small for the contract's NAICS and certified in VetCert, and keep the documentation to prove it if a competitor files a limitations-on-subcontracting or status protest.
How to Set It Up
- Confirm each intended SSE sub is small for the NAICS assigned to the contract and holds the matching set-aside status.
- Verify SDVOSB subs are certified in SBA VetCert at the time you enter the subcontract.
- Structure the work so the prime plus its SSE subs together meet the limitations-on-subcontracting floor.
- Document each SSE's status and the work it actually performs, and keep records through performance.
- Re-check status if the subcontract or scope changes materially during performance.
Watch Out For
- A subcontractor that isn't certified in your program (or isn't small for the contract's NAICS) is not an SSE — its work counts against you.
- Counting SSE work only helps if the SSE actually performs it; funneling the work onward defeats the rule.
- 'Same status' is program-specific — an 8(a) or WOSB sub is not an SSE on an SDVOSB set-aside.
- Losing track of a sub's size or certification mid-performance can retroactively break your compliance math.
Run the Numbers
Frequently Asked
What is a similarly situated entity?
A similarly situated entity is a subcontractor that is (1) a small business for the NAICS code assigned to the contract and (2) in the same SBA set-aside program as the prime — for example, a certified SDVOSB subcontractor on an SDVOSB set-aside. Under 13 CFR § 125.6(c), work performed by a similarly situated entity counts toward the prime's self-performance and is not treated as subcontracted for the limitations on subcontracting.
How does using a similarly situated entity help with the limitations on subcontracting?
Normally, work a prime subcontracts counts against its self-performance floor (e.g., a services prime must self-perform at least 50% of the cost of personnel). When the subcontractor is a similarly situated entity, that work is excluded from what counts as subcontracted — the prime and the SSE are measured together. This lets an SDVOSB prime team with other SDVOSBs, add capacity, and still meet the 50% (or construction/supply) requirement.
Does an 8(a) or WOSB subcontractor count as a similarly situated entity on an SDVOSB set-aside?
No. 'Similarly situated' requires the same set-aside status as the prime for that specific procurement. On an SDVOSB set-aside, only a small, certified SDVOSB subcontractor is a similarly situated entity. An 8(a), WOSB, or HUBZone firm — even if small — is not an SSE for an SDVOSB set-aside, so its subcontracted work counts against the prime's self-performance floor.
Primary Sources
- 13 CFR § 125.6 — Limitations on subcontracting (SSE)
- FAR 52.219-14 — Limitations on Subcontracting (clause)
Plain-English reference, not legal advice. Teaming, joint-venture, affiliation, and subcontracting rules are fact-specific and the SBA regulations and FAR are amended from time to time — always read the current 13 CFR and FAR text, confirm the requirements with the contracting officer and your SBA resources, and consult qualified counsel before structuring a joint venture, teaming agreement, or subcontract you intend to rely on.
Change log (1)
- LaunchedPublished the federal teaming, joint venture & subcontracting arrangements reference covering how an SDVOSB works with other firms on a set-aside — the prime contractor and subcontractor roles, the FAR Subpart 9.6 contractor team arrangement (teaming agreement), the SDVOSB joint venture (13 CFR § 128.402), the SBA mentor-protégé joint venture (13 CFR § 125.9), the similarly situated entity that counts a sub's work as self-performance (13 CFR § 125.6), the ostensible subcontractor rule (13 CFR § 121.103(h)), general affiliation (13 CFR § 121.103), the small business subcontracting plan (FAR Subpart 19.7 / 52.219-9), and flow-down clauses (FAR 52.212-5 / Subpart 44.2) — each with an at-a-glance quick-facts card, a when-you-use-it list, a key-features table, an SDVOSB-specific angle, a how-to-set-it-up checklist, watch-outs, FAQPage, Article, Dataset, and BreadcrumbList structured data, primary-source citations, and cross-links into the glossary, regulation explainers, how-to guides, set-aside comparisons, FAQ, clauses, forms, and the limitations-on-subcontracting, subcontracting-goal, set-aside eligibility, and size-standard calculators.