A recent analysis published by Dow Jones VentureSource unveiled that the success rate of a business with five or more female executives rose by 61%.1 Relying on such statistics, one would expect government contractors to scramble to include additional female participation and to take advantage of the opportunities that come with the issuance of the “Women-Owned Small Business Federal Contract Program Final Rule” which is intended to facilitate the achievement of the Federal government’s goal to award 5% of its prime and subcontract dollars to Women- Owned Small Businesses (“WOSBs”) and Economically Disadvantaged Women-Owned Small Businesses (“EDWOSBs”). Logic, unfortunately, sometimes does not dominate the market as evidenced by the sharp decrease in women’s contracting opportunities over the past two fiscal years – the same time period in which government funds were set to increase for WOSBs.2 Too often regarded as the bottom feeders of lucrative government contracts, many agency contracting officers express reluctance to use WOSBs/EDWOSBs programs based on the increased administrative obligations and hesitancy as to the legitimacy of those who participate.
Some trepidation, unfortunately, is warranted as those that would not otherwise traditionally qualify manipulate their business organizations in a manner which provides the appearance of compliance and allows those ineligible to compete. This façade is often created when a woman is appointed as the executive in control, but in reality, is merely a female puppet figurehead or those seeking designation as an EDWOSB, are anything but economically challenged.
Time is of the essence for change: change in the mentality of agency officials who discount the value WOSB/EDWOSBs contribute to government contracts and change in the control mechanisms that allow one bad apple to topple the cart of opportunity. One way to hasten the pace of such a transformation is by ensuring and encouraging those truly suited participate and comply with each step of the process, demonstrate control, and insist the SBA investigate and penalize those who compete without qualification.
To qualify as a WOSB, the business must be: 51% “unconditionally” and “directly” owned and controlled by one or more women who are U.S. citizens and “small” as to the size standard corresponding with the North American Industry Classification System (“NAICS”) code assigned to the solicitation. To be deemed unconditional, the female owner must be able to provide documentation that her ownership is direct and without conditions, and involves her management of the day-to-day operations and long term business goals. As a matter of formality and evidence, the business must be listed in the Central Contractor Registration (“CCR”) system as a WOSB, have made certain representations in the Online Representations and Certifications Application (“ORCA”) and submit the required documents to the WOSB Program Repository. There is no minimum amount of time a WOSB must be in business before participating in the procurement process.
An EDWOSB is a business that meets the WOSB classification except that the business must be owned and controlled by a woman who is “economically disadvantaged.” To determine whether a WOSB may be considered economically disadvantaged, the SBA will complete a full examination of the woman’s personal net worth (which may not be more than $750,000 excluding her equity interest in her primary personal residence) by accounting for any funds invested in an IRA or other official retirement account; any personal income for the past three years (including bonuses, and the value of company stock given in lieu of cash); as well as her spouse’s and immediate family member’s financial situations to determine her access to credit and capital. Since the EDWOSB is by definition also a WOSB, an EDWOSB can submit an offer and receive a WOSB contract in addition to an EDWOSB contract.
Project Requirements under the WOSB Program
The solicitation or invitation must be assigned to one of the NAICS codes the SBA has designated as an underrepresented or substantially underrepresented by WOSBs. The anticipated award price may not exceed $5 million for manufacturing contracts and $3 million for all other contracts. Finally, the contracting officer must reasonably expect that at least two WOSBs/EDWOSBs will submit offers that meet the quantity, quality, and delivery requirements of the project and that the contract can be awarded for a fair and reasonable price.
Smell A Rotten Apple
Does that WOSB appear to have an artificial female principal? Or does that small business seem a bit too large? There are options. An EDWOSB or WOSB may file a written protest regarding ownership with the Director/Government Contracting officer at SBA headquarters and/or report a protest regarding size with the Size Specialist in the SBA Government Contracting Office. A protest may also be filed by any other “interested party” including the contracting officer or the SBA. If the SBA concurs with the content of the protest, the guilty party must remove its designation in the CCR/ORCA and will not be allowed to participate again until its ineligibility is cured.
An “eligibility examination” may also be conducted by the SBA at any time after a WOSB/EDWOSB certifies via CCR/ORCA that it is a WOSB/EDWOSB. The SBA’s decision to conduct the formal examination may be based on a protest or information provided by a third party. If the SBA determines that the business does not qualify as a WOSB/EDWOSB, the business must remove its WOSB/EDWOSB designation in the CCR/ORCA and may not apply again until a new examination verifies eligibility.
The punishment may not end there. If a company intentionally or negligently misrepresents its status as a WOSB/EDWOSB, criminal, civil and/or administrative sanctions may be imposed; including, fines of up to $500,000, imprisonment of up to 10 years, or both; civil penalties under the False Claims Act; double damages under the Program Fraud Civil Remedies Act; as well as suspension and/or debarment from all Federal procurement and nonprocurement transactions.
The government’s goal to award 5% of its prime and subcontract dollars to WOSBs/EDWOSBs provides women an opportunity to continue the trend of successful female leadership. Following the requirements of qualification and participation, WOSBs/EDWOSBs can demonstrate they are not bottom feeders but top-notch leaders that are changing the course of government contracting.