IG finds both agency implementation and SBA oversight of WOSB program to be flawed

Federal agencies’ contracting officers are awarding set-aside contracts without meeting the set-aside requirements associated with the Small Business Administration’s Woman-Owned Small Business (WOSB) program.   This finding, among others, appears in a report issued on May 14, 2015 by the SBA’s Office of Inspector General (OIG).

SBA - IGThe OIG report states that as much as $7.1 million worth of contracts received by WOSBs in fiscal year (FY) 2014 may be improper.  For example, 10 of 34 WOSB set-aside awards were for ineligible work, and 9 of these 34 were awarded to firms that did not provide required documentation to prove they were eligible WOSBs.

In addition to the 9 WOSB awards that did not have any ownership or control documentation in the SBA’s WOSB Repository, the OIG identified 13 of 25 firms in their audit sample that uploaded only some — but not all — of the required documentation to the Repository, thus also bringing their program eligibility into question.

Additionally, 12 businesses did not provide sufficient documentation to prove that a woman or women controlled the day-to-day operations of their firms.  These firms, which received $8 million in contracts, also may be ineligible for their WOSB set-aside awards.

The OIG report is critical not only of agencies’ implementation of the federal WOSB program but also of SBA’s lax oversight.  Accordingly, OIG made five recommendations to the SBA’s Associate Administrator for Government Contracting and Business Development calling for improvements in how SBA manages and administers the WOSB program.

It should be noted that even before the OIG’s report, the SBA’s WOSB program already was slated to undergo some major programmatic changes based on the National Defense Authorization Act (NDAA) for both FY 2013 and 2015.  The NDAAs stipulated considerable increases SBA’s oversight responsibilities.  Specifically, the FY 2015 Act will: 1) grant contracting officers the authority to award sole-source awards to WOSB firms, 2) remove firms’ ability to self-certify, and 3) require firms to be certified.  The SBA is still determining how it will implement these mandated changes.

The OIG’s full report can be downloaded here: Improvements_Needed_in_SBAs_Management_of_WOSB_Program-OIG_Report_15-10

The small-business conundrum

Recent news reveals that federal agencies overstated their success last year in contracting with small businesses that face socioeconomic disadvantages. It turns out that the Small Business Administration’s inspector general identified over $400 million of contract actions awarded to ineligible firms, thus overstating SB goaling performance in FY13.

Download the IG report here.

While reasons for misreporting are one issue, the perennial issue of meeting SB goals persists. Some people joke that when an agency fails to meet their SB target, the response is to increase it. Does goal setting work? Everyone agrees with fundamental ideals of small entrepreneurs and businesses bringing fresh ideas, outlooks, and solutions to government and societal problems.

Keep reading this article at: http://www.federaltimes.com/article/20141008/BLG06/310080012/The-small-business-conundrum 

Contracting officers now able to set-aside contracts of any dollar amount to WOSBs

An interim final rule published May 7, 2013 in the Federal Register and effective immediately will amend regulations to the U.S. Small Business Administration’s Women-Owned Small Business Federal Contract Program allowing for greater access to federal contracting opportunities for women-owned businesses as a result of the National Defense Authorization Act of 2013 (NDAA) signed in January.

The interim final rule removes the anticipated award price of the contract thresholds for women-owned small businesses (WOSB) and economically disadvantaged women-owned small businesses (EDWOSB) to allow them greater access to federal contracting opportunities without limitations to the size of the contract.   The rule can be accessed at: http://www.gpo.gov/fdsys/pkg/FR-2013-05-07/html/2013-10841.htm  and comments can be submitted on or before June 6, 2013, at www.regulations.gov, identified by the following RIN number:  RIN 3245-AG55.

As a result of the rule change, contracting officers will be able to set aside specific contracts for certified WOSBs and EDWOSBs at any dollar level which will help federal agencies achieve the existing statutory goal of five percent of federal contracting dollars being awarded to WOSBs. The SBA is currently working on the changes to the Federal Acquisition Regulations.

Prior to the rule change, the anticipated award price of the contract for women-owned and economically disadvantaged women-owned small businesses could not exceed $6.5 million for manufacturing contracts and $4 million for all other contracts.

Every firm that wishes to participate in the WOSB program must meet the eligibility requirements and either self-certify or obtain third party certification.  There are four approved third-party certifiers that perform eligibility exams: El Paso Hispanic Chamber of Commerce, National Women Business Owners Corporation, U.S. Women’s Chamber of Commerce, and the Women’s Business Enterprise National Council. Additional information and links about approved third-party certifiers are available at: http://www.sba.gov/content/contracting-opportunities-women-owned-small-businesses

To qualify as a WOSB, a firm must be at least fifty-one percent owned and controlled by one or more women, and primarily managed by one or more women.  The women must be U.S. citizens and the firm must be considered small according to SBA size standards.  To be deemed “economically disadvantaged,” a firm’s owners must meet specific financial requirements set forth in the program regulations.

The WOSB Program identifies eighty-three four-digit North American Industry Classification Systems (NAICS) codes where WOSBs are underrepresented or substantially underrepresented.   Contracting officers may set aside contracts in these industries if the contract can be awarded at a fair and reasonable price and the contracting officer has a reasonable expectation that two or more WOSBs or EDWOSBs will submit offers for the contract.

For more information on the Women-Owned Federal Small Business Contract Program or to access the instructions, applications or database, please visit www.sba.gov/wosb.

Defense Act causes SBA to lift dollar limits on WOSB set-asides

Women-owned small businesses will have greater access to federal contracting opportunities as a result of changes included in the National Defense Authorization Act of 2013 (NDAA) to the U.S. Small Business Administration’s Women-Owned Small Business Federal Contract Program.

“This new law is a prime example of how the Obama Administration is embracing a more inclusive view of entrepreneurship, helping small businesses and America succeed,” said SBA Administrator Karen Mills. “Today, women own 30 percent of all small businesses up from just 5 percent 40 years ago. As one of the fastest growing sectors of small business owners in the country, opening the door for women to compete for more federal contracts is a win-win.”

The NDAA removes the anticipated award price of the contract thresholds for women-owned small businesses (WOSB) and economically disadvantaged women-owned small businesses (EDWOSB) to allow them greater access to federal contracting opportunities without limitations to the size of the contract. Prior to the new law, the anticipated award price of the contract for women-owned and economically disadvantaged women-owned small businesses could not exceed $6.5 million for manufacturing contracts and $4 million for all other contracts.

The Women’s Federal Contract Program allows contracting officers to set aside specific contracts for certified WOSBs and EDWOSBs and will help federal agencies achieve the existing statutory goal of five percent of federal contracting dollars being awarded to WOSBs.

The law also requires the SBA to conduct another study to identify and report industries underrepresented by women-owned small businesses. As a result, more eligible women-owned businesses may be able to participate in SBA’s Women’s Federal Contract Program and compete for and win federal contracts.

These changes have not yet taken effect.  The SBA is working with the Office of Federal Procurement Policy under the President’s Office of Management and Budget on the implementation including changes to the Federal Acquisition Regulations.

Every firm that wishes to participate in the WOSB program must meet the eligibility requirements and either self-certify or obtain third party certification. There are four approved third-party certifiers that perform eligibility exams: El Paso Hispanic Chamber of Commerce, National Women Business Owners Corporation, U.S. Women’s Chamber of Commerce, and the Women’s Business Enterprise National Council. Additional information and links about approved third-party certifiers are available at www.sba.gov/wosb. To qualify as a WOSB, a firm must be at least fifty-one percent owned and controlled by one or more women, and primarily managed by one or more women. The women must be U.S. citizens and the firm must be considered small according to SBA size standards. To be deemed “economically disadvantaged,” a firm’s owners must meet specific financial requirements set forth in the program regulations.

The WOSB Program identifies eighty-three four-digit North American Industry Classification Systems (NAICS) codes where WOSBs are underrepresented or substantially underrepresented. Contracting officers may set aside contracts in these industries if the contract can be awarded at a fair and reasonable price and the contracting officer has a reasonable expectation that two or more WOSBs or EDWOSBs will submit offers for the contract.

For more information on the Women-Owned Small Business Program or to access the instructions, applications or database, please visit www.sba.gov/wosb.

COs must verify WOSB/EDWOSB status independent of SAM info

Ever since last year’s launch of the System for Award Management (SAM) — the federal database that replaced Central Contractor Registration (CCR) — there have been a myriad of problems involving system stability, data entry by vendors, access by users, and data migration from CCR to SAM.  Over time, some of these issues have been resolved.  However, new problems have arisen, and the latest one that has come to our attention could effect the eligibility of women owned businesses for federal contract set-asides.

The Contracting Education Academy at Georgia Tech has learned that SAM may not correctly display a company’s Women-Owned Small Business (WOSB) or Economically Disadvantaged Small Business (EDWOSB) designation. This means some small businesses that are legitimate WOSB/EDWOSB concerns are unable to visibly display their status in SAM at this time.   Reports indicate that the Small Business Administration (SBA) has called this latest challenge to the attention of the General Services Administration (GSA), SAM’s administrator.

While this problem is resolved, Contracting Officers are reminded that the identification of a woman-owned small business in SAM is not the authentication source required by regulations at 13 CFR 127.300(c).

The Code of Federal Regulations at 13 CFR 127.301(2) indicate that a Contracting Officer may accept a concern’s (bidder or proponent) representation as a WOSB or EDWOSB if the apparent successful offeror provides the appropriate documentation, as described in §127.300(e) at the time of initial offer.

Here are three ways a Contracting Officer can verify a WOSB/EDWOSB concern’s legitimacy:

  1. If an WOSB/EDWOSB concern has a valid certificate from one of SBA’s four approved third party certifiers (i.e., El Paso Hispanic Chamber of Commerce, National Women Business Owners Corporation, U.S. Women’s Chamber of Commerce, and Women’s Business Enterprise National Council), the concern can submit the certificate along with a signed copy of SBA form 2413 Woman-Owned Small Business (WOSB) or SBA form 2414 (EDWOSB) form to the Contracting Officer to validate the concern’s eligibility status.  Furthermore, the WOSB/EDWOSB concern must have the same documentation uploaded into SBA’s WOSB Repository at the time of initial offer.  (Under no circumstances are certifications to be accepted from parties other than the four organizations approved by the SBA; in other words, state certifications or any other forms of certification are not to be considered or accepted.)
  2. The WOSB/EDWOSB concern may submit a hard copy (signed) of all the required documents mandated by in the Code of Federal Regulations 13 CFR 127.300(e) and a signed copy of SBA WOSB form 2413 or to the EDWOSB form 2414,  for verification of WOSB/EDWOSB status.  These records are to be maintained for six years in the contract file.
  3. If the WOSB/EDWOSB concern is also an SBA-certified 8(a) concern, the concern may submit a copy of the SBA 8(a) BD Participant certificate and the signed SBA WOSB form 2413 or to the EDWOSB form 2414.

In all instances, Contracting Officers are required to verify a concern’s status in SBA’s WOSB Program Repository.  It is the obligation of the WOSB or EDWOSB to provide current, accurate and complete documents to the Contracting Officer for each contract award, via the Repository.

Ultimately, it is the responsibility of the Contracting Officer to verify WOSB/EDWOSB status.  If the Contracting Officer has information that calls into question the eligibility of a concern as an WOSB/EDWOSB, or the concern fails to provide all of the required documents to verify its eligibility, the Contracting Officer is to not award a WOSB/EDWOSB contract to that business concern.

In summary, regardless of how a business concern is listed in SAM, Contracting Officers should affirm the status of WOSB and EDWOSB concerns by checking their documentation online in the WOSB Program Repository per 13 CFR 127.300(c).  Apparent awardees can only provide access to those Contracting Officers who are registered for the WOSB Program Repository.  Contracting Officers should go to: https://eweb.sba.gov/gls/dsp_login.cfm and click on “Request SBA User ID” to establish an account.

To access a copy of the Contracting Education Academy’s presentation on various issues involving the System for Award Management (SAM), including helpful tips and work-arounds for both the vendor and acquisition communities, please click here.