Nearly a decade in the making, on February 4, 2011, the Small Business Administration's Women-Owned Small Business ("WOSB") Federal Contract Program went into effect, designating two new kinds of favored concerns in federal contracting—WOSBs and Economically Disadvantaged Women-Owned Small Businesses ("EDWOSB")—for which contracting officers may set aside certain federal contracts. Undoubtedly, the new WOSB Program will have a significant impact on the federal contracting community, as it provides that WOSBs and EDWOSBs are to receive substantially similar treatment by contracting officers as those participating in SBA's HubZone and Service-Disabled Veteran-Owned Small Business programs.
On December 21, 2000, Congress enacted the Small Business Reauthorization Act of 2000, Public Law 106-554. Section 811 of the act newly authorized contracting officers to restrict competition for federal contracts to eligible WOSBs and EDWOSBs. Over the past decade, SBA has issued several rulemakings concerning the WOSB Program and on October 7, 2010, SBA issued a the Final Rule, amending 13 C.F.R. part 127, the “Women-Owned Small Business Federal Contract Assistance Procedures,” which had been promulgated in a Final Rule issued by the SBA in October of 2008.1
The revised program allows contracting officers, for the first time, to set aside certain contracts for WOSBs and EDWOSBs. The October 7, 2010 Final Rule also made numerous additional changes to the existing WOSB program. Some key changes in the new regulation include the following:
- the regulation now specifically identifies industries in which WOSBs are underrepresented or substantially underrepresented;
- the regulation removes the previous requirement that each federal agency must certify that it had engaged in discrimination against WOSBs in order for the program to apply to the agency;
- the regulation now allows WOSBs and EDWOSBs to self-certify their status or to be certified by an approved third-party certifier; and
- the regulation sets forth a more thorough explanation of the WOSB program and its eligibility requirements. 2
The WOSB program identifies 83 four-digit North American Industry Classification System (“NAICS”) codes where WOSBs are underrepresented or substantially underrepresented. Contracting officers may set aside a requirement for WOSBs if the NAICS code is in one of the identified industries in which WOSBs are substantially underrepresented, and contracting officers may set aside a requirement for EDWOSBs if the NAICS code is in one of the identified industries in which WOSBs are underrepresented. Before setting aside a requirement for either a WOSB or EDWOSB the contracting officer must also determine that the contract can be awarded at a fair and reasonable price and the contracting officer must have a reasonable expectation that two or more WOSBs or EDWOSBs will submit offers for the contract.3 Further, a contracting officer may set aside only those requirements where the anticipated award price of the contract does not exceed $5 million for manufacturing contracts or $3 million for all other contracts.4
The regulations do not authorize a contracting officer to make a sole source award to either a WOSB or EDWOSB under the WOSB Program. Thus, sole source awards must be justified by the determinations required by applicable regulations.5
Eligibility and Certification
To participate, concerns must meet the program eligibility requirements, which are modeled after the 8(a) Business Development program requirements, and either self-certify as a WOSB or EDWOSB, or obtain a third-party certification.
To qualify as a WOSB the concern must be a small business under SBA’s size standards, as defined by the concerns’ applicable NAICS, and not less than 51% “unconditionally and directly owned” by one or more women who are U.S. citizens.6 For ownership to be considered unconditional, “the ownership must not be subject to any conditions, executory agreements, voting trusts, or other arrangements that cause or potentially cause ownership interest benefits to go to another.”7 For ownership to be considered direct, the 51% ownership “may not be through another business entity or a trust (including employee stock owner-ship plan) that is in turn, owned and controlled by one or more women or economically disadvantaged women.”8 In addition to the requirement that a woman have at least 51% unconditional and direct ownership of the concern, a woman must also “control” the concern. With respect to the “control” requirement, the regulation provides that a woman must hold the highest officer position in the concern, must control both the long-term decision-making and the day-to-day management and administration of the concern, and manage the concern on a full-time basis.9
To qualify as an EDWOSB the concern must meet the aforementioned requirements and must also be considered “economically disadvantaged.” To be considered “economically disadvantaged” the concern’s owner must meet the financial requirements set forth in the program regulations at 13 C.F.R. § 127.203. In sum, the regulation provides that generally a woman will not be considered “economically disadvantaged” if her adjusted gross yearly income, averaged over the three years preceding certification, exceeds $350,000, her personal net worth exceeds $750,000, and the fair market value of all of her assets (including her primary residence and the value of the concern) exceeds $6 million.10
Offerors are also required to certify that they meet the above-stated program eligibility requirements to be eligible to compete for contracts set aside for WOSB or EDWOSB participants. WOSBs and EDWOSBs may either self-certify their status in their offer and contract or they may obtain certification from a SBA approved third-party certifier. A third-party certifier is a federal agency, a state government, or a national certifying entity approved by the SBA to provide WOSB and EDWOSB certifications. SBA is now accepting applications for third-party certifiers. Currently, no third-party certifiers have been approved by SBA.
Regardless of whether the concern elects to self-certify or obtain certification from a third-party certifier, the concern must upload certain documents verifying its eligibility to participate to the WOSB Program Repository. The repository is a secure, online database that is accessible only to the individual WOSBs and EDWOSBs, the contracting officer community, and the SBA. Specific guidance regarding the certification process and what supporting documents are required to be filed by the WOSB or EDWOSB in the program repository are provided in the Final Rule and in SBA’s Small Entity Compliance Guide to the WOSB Program, available at www.sba.gov/content/contracting-opportunities-women-owned-small-businesses.
An interested party may protest the size and/or the status of an apparent successful offeror on an WOSB or EDWOSB contract.11 If protesting both the size and the status of an apparent successful offeror, the protester must file two separate protests, a size protest pursuant to 13 C.F.R. part 121 and a WOSB or EDWOSB status protest pursuant to 13 C.F.R. part 127. The protester must present sufficient credible evidence to demonstrate that the concern is not owned and controlled by one or more women who are U.S. citizens and, in the case of an EDWOSB status protest, that the concern is not owned and controlled by one or more women who are economically disadvantaged.12 The protest and appeal process is consis-tent with the process traditionally used for all SBA size and status protests.
Once the Federal Acquisition Regulation provisions concerning the WOSB Program are finalized, concerns may visit the Federal Business Opportunities website at www.fbo.gov to find Federal government solicitations that are set aside for WOSBs or EDWOSBs. SBA expects to see the first WOSB and EDWOSB set aside contracts awarded through the program sometime in the fourth quarter of fiscal year 2011.13
Conclusion and Recommendations
Although the new rule provides WOSBs and EDWOSBs with greater access to federal contracting opportunities, the eligibility and participation requirements are lengthy and complex. Concerns that wish to participate in the WOSB Program should take the time now to:
- review the program requirements as set forth in the Final Rule and SBA’s Compliance Guide;
- upload the required supporting documents for program certification to the WOSB Program Repository; and
- update their status in both the Central Contractor Registration and the Online Representation and Certification Application in order to notify contracting officers of their eligibility to participate in the WOSB Program.14