SDVOSB Sole-Source Ceiling
$4.5M / $7M
Also known as: SDVOSB sole-source dollar limit
At a Glance
- Current amount
- $4.5 million (supplies/services); $7 million (manufacturing, NAICS sector 31–33)
- Where it is set
- FAR 19.1406, implementing 15 U.S.C. § 657f
- What it allows
- A sole-source SDVOSB award without competition when set-aside conditions are met and price is fair and reasonable
- Includes options?
- Yes — the anticipated award price including options must not exceed the ceiling
- Inflation-adjusted?
- Yes — the dollar limits are periodically re-indexed
What It Is
The SDVOSB sole-source ceiling is the dollar limit under which a contracting officer may award a contract directly to a single service-disabled veteran-owned small business without competing it, under FAR 19.1406 (implementing 15 U.S.C. § 657f). A sole-source SDVOSB award is permitted when the contracting officer does not have a reasonable expectation that two or more SDVOSBs will submit offers (so a competitive set-aside is not possible), the SDVOSB is determined to be a responsible contractor able to perform, the award can be made at a fair and reasonable price, and the anticipated award price — including options — will not exceed the applicable ceiling: $7 million for a requirement assigned a manufacturing NAICS code (sector 31–33) or $4.5 million for any other requirement. Above those ceilings, a sole-source SDVOSB award is not authorized and the requirement must be competed (as an SDVOSB set-aside if the rule of two is met, or otherwise). The ceiling exists to let agencies steer meaningful but bounded work to a capable veteran-owned firm quickly when competition is not realistic, without opening the door to unlimited non-competitive awards.
What Changes at This Dollar Level
- At or below the ceiling, a contracting officer may award directly to one SDVOSB without competition when the sole-source conditions are met.
- The ceiling is $7 million for manufacturing NAICS codes and $4.5 million for all other requirements.
- The anticipated award price including all options — not just the base — must stay under the ceiling.
- Above the ceiling, the requirement must be competed rather than sole-sourced to an SDVOSB.
Key Features
| Feature | What It Means |
|---|---|
| Two ceilings by industry | Manufacturing requirements (NAICS sector 31–33) carry a $7 million ceiling; everything else is capped at $4.5 million. |
| Options count | The limit is measured against the anticipated award price including options, so a modest base with large option years can still exceed the ceiling. |
| Only when competition is not realistic | Sole source is available only when the contracting officer does not expect two or more SDVOSB offers — if the rule of two is met, the buy should be a competitive SDVOSB set-aside instead. |
| Still needs a fair price and a responsible firm | Even without competition, the award must be at a fair and reasonable price to a firm the contracting officer finds responsible and capable of performing. |
What It Means for an SDVOSB
The sole-source ceiling is one of the most valuable tools a service-disabled veteran-owned small business has, because it lets an agency hand you a contract up to $4.5 million (or $7 million for manufacturing) without a competition — provided the contracting officer cannot reasonably expect two or more SDVOSBs to bid and finds your price fair. That makes positioning everything: if you are the demonstrably capable, VetCert-certified firm a program office already knows in a niche where few other SDVOSBs exist, you are a candidate for a sole-source award rather than an open fight. Watch the option math, because the ceiling counts options — a base-plus-options requirement that looks small in year one can blow past the cap over its full life and force the buy into competition. And remember the ceiling is a limit, not a right: the agency still must document why competition was not realistic and that your price is reasonable.
Watch Out For
- Forgetting options — the ceiling applies to the anticipated award price including options, not just the base period.
- Assuming sole source is available whenever you want it — it is only authorized when the contracting officer does not expect two or more competitive SDVOSB offers.
- Applying the $7 million figure to non-manufacturing work — the higher ceiling is limited to manufacturing NAICS codes (sector 31–33).
- Treating the ceiling as a guaranteed award — the firm must still be responsible and the price fair and reasonable.
Run the Numbers
Frequently Asked
What is the SDVOSB sole-source dollar limit?
Under FAR 19.1406, a contracting officer may award an SDVOSB contract on a sole-source basis — without competition — when the anticipated award price, including options, will not exceed $7 million for a requirement within a manufacturing NAICS code (sector 31–33) or $4.5 million for any other requirement. The award is allowed only when the contracting officer does not reasonably expect two or more SDVOSBs to submit offers, the firm is responsible, and the price is fair and reasonable.
When can an agency use an SDVOSB sole-source award?
A sole-source SDVOSB award is authorized when four conditions are met: the contracting officer does not have a reasonable expectation that two or more SDVOSBs will submit offers (so a competitive set-aside is not possible), the SDVOSB is determined responsible and able to perform, the award can be made at a fair and reasonable price, and the anticipated award price including options is at or below the applicable ceiling ($4.5 million, or $7 million for manufacturing). If two or more SDVOSBs are expected, the buy should be a competitive SDVOSB set-aside instead.
Do option years count toward the sole-source ceiling?
Yes. The ceiling is measured against the anticipated award price including options, not just the base period. A requirement with a small base and several priced option years can exceed the $4.5 million (or $7 million) ceiling over its full life, which would make a sole-source SDVOSB award improper and require the requirement to be competed.
Primary Sources
- FAR 19.1406 — Sole source awards to SDVOSB concerns
- 15 U.S.C. § 657f — SDVOSB contracting
- FAR 19.1405 — SDVOSB set-aside procedures
Plain-English reference, not legal advice. Acquisition-related dollar thresholds are periodically re-indexed for inflation and the underlying FAR sections and statutes are amended from time to time — always confirm the current figure and its exceptions against the FAR and the actual solicitation before relying on it, and consult qualified counsel for your specific situation.
Change log (1)
- LaunchedPublished the federal procurement dollar thresholds reference covering the dollar lines that shape an SDVOSB set-aside — the micro-purchase threshold (FAR 2.101), the simplified acquisition threshold and the automatic small-business reserve (FAR 2.101 / 19.203), the commercial simplified-procedures ceiling (FAR 13.500), the SDVOSB sole-source ceiling (FAR 19.1406), the subcontracting-plan threshold (FAR 52.219-9), the certified cost or pricing data / TINA threshold (FAR 15.403-4), the Cost Accounting Standards threshold (48 CFR 9903.201-1), the Service Contract Labor Standards (41 U.S.C. § 6702) and Davis-Bacon (40 U.S.C. § 3142) labor thresholds, and the FFATA subaward reporting threshold (FAR 52.204-10) — each with an at-a-glance quick-facts card showing the current dollar amount, a what-changes-at-the-line list, a key-features table, an SDVOSB-specific angle, watch-outs, FAQPage, Article, Dataset, and BreadcrumbList structured data, primary-source citations, and cross-links into the glossary, regulation explainers, clauses, how-to guides, FAQ, and the size-standard, set-aside eligibility, subcontracting, and price-to-win calculators.