[Federal Register Volume 73, Number 191 (Wednesday, October 1, 2008)]
[Rules and Regulations]
[Pages 56940-56956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23138]
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SMALL BUSINESS ADMINISTRATION
13 CFR Parts 121, 125, 127, and 134
RIN 3245-AF40
The Women-Owned Small Business Federal Contract Assistance
Procedures
AGENCY: Small Business Administration.
ACTION: Final rule.
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SUMMARY: This final rule amends the U.S. Small Business Administration
(SBA) regulations governing small business contracting programs to set
forth procedures that will govern the new Women-Owned Small Business
(WOSB) Federal Contract Assistance Procedures as authorized in the
Small Business Act.
DATES: Effective Date: This rule is effective October 31, 2008.
Applicability Date: This final rule will be effective 30 days after
publication. This final rule does not identify the industries in which
WOSBs are underrepresented or substantially underrepresented in Federal
procurement because SBA is awaiting comments on its proposed rule
before concluding its eligibility determinations. SBA's determination
of the industries in which WOSBs are underrepresented or substantially
underrepresented in Federal procurement will be effective not less than
30 days after its publication date.
FOR FURTHER INFORMATION CONTACT: Linda Korbol, Assistant Administrator
for Women's Procurement, Office of Government Contracting, (202) 205-
7341 or [email protected].
SUPPLEMENTARY INFORMATION: On December 27, 2007, SBA proposed to amend
its regulations in the Federal Register, 72 FR 73285, with a request
for comments to implement the WOSB Federal Contract Assistance
Procedures
[[Page 56941]]
(Procedures). These Procedures are authorized under Section 811 of the
Small Business Reauthorization Act of 2000, Public Law 106-554, which
is codified at Section 8(m) of the Small Business Act (Act), 15 U.S.C.
637(m).
The proposed rule concerned procedures to increase Federal
procurement opportunities for WOSBs. More specifically, the proposed
rule contained provisions that would authorize contracting officers to
restrict competition to eligible WOSBs for Federal contracts not
exceeding $3 million ($5 million for manufacturing) in those industries
in which WOSBs are underrepresented or substantially underrepresented
and in which the procuring agency has determined that the set-aside
would satisfy constitutional requirements. The proposed rule also set
forth the standards for determining the eligibility of a concern as a
WOSB or EDWOSB and required any firm receiving a contract under these
procedures to certify its status as a ``small business concern owned
and controlled by women'' as defined in Sec. 3(n) of the Small
Business Act, 15 U.S.C. 632(n). In addition, the proposed rule
identified the industries in which WOSBs were determined to be
underrepresented and substantially underrepresented in Federal
contracting. The proposed rule also established standards for
eligibility examinations and protest procedures, as well as the
penalties that can be imposed for a concern's misrepresentation of its
status as an EDWOSB or WOSB. Lastly, the rule proposed the relevant
conforming amendments to SBA's current procurement and appeal procedure
regulations.
Discussion of Comments on the Proposed Rule
The comment period for the Proposed Rule closed on March 31, 2008.
SBA received approximately 1,720 comments. These comments are available
to the public for viewing at http://www.regulations.gov. The large
majority of comments were received from individuals. Of the 1,720
comments, SBA received approximately 1,610 comments from individuals,
thirty-one comments from individuals using form letters from various
associations or organizations, forty-five comments from associations or
organizations, thirty-one comments from members of Congress, and three
comments from other Federal agencies through the public comment process
and posted online at www.regulations.gov.
Of the 1,720 comments received, approximately twenty-seven of the
comments were not applicable to the rule; four of the comments
requested an extension of the public comment period; and 1,689 of the
comments requested withdrawal of the proposed rule and/or stated
opposition to some portion of the proposed rule. Of the comments that
opposed the proposed rule, 1,591 comments requested that the proposed
rule be withdrawn; 828 comments stated that some aspect of the proposed
rule frustrated Congressional intent; 173 comments opposed the method
by which the proposed rule requires a procuring agency to determine
that the set-aside is consistent with constitutional standards; 104
comments were concerned with the methodology used by SBA to determine
industries in which WOSBs were underrepresented or substantially
underrepresented; thirty-six comments alleged that SBA and/or the
Kauffman-RAND Institute for Entrepreneurship Public Policy (RAND) study
applied the incorrect level of scrutiny to determine
underrepresentation or otherwise addressed Constitutional concerns;
seven comments addressed SBA's use of the value of contract dollars to
determine underrepresentation; and four comments opposed the proposed
self-certification process.
Extension of the Public Comment Period
The SBA received several comments that requested an extension of
the public comment period. In response to these comments and the
general high level of interest that the proposed rule generated during
the public comment period, SBA agreed with the recommendation in these
comments and therefore reopened the comment period for an additional 30
days in order to allow the public more time to submit comments on the
proposed rule. See 73 FR 10697. As a result, the comment period closed
on March 31, 2008 and SBA received approximately 1,720 comments.
General Comments on Implementation of the Procedures
Of the comments that opposed the proposed rule, over 700 requested
that SBA withdraw the proposed rule but did not provide a substantive
reason why SBA should take such action. Accordingly, and for the
reasons below, SBA will continue with this final rule setting forth the
contracting procedures for WOSBs. In addition, SBA points out that
Congress authorized the contracting assistance procedures for WOSBs
contained in the final rule as a result of the Federal government's
inability to reach the government-wide WOSB contracting goal of 5% of
the value of all contract awards. Congress enacted Section 8(m) to
authorize creation of a targeted procurement mechanism for WOSBs and it
charged SBA with the responsibility for establishing and implementing
the governing standards and regulations for these Procedures. The
Procedures in the final rule will not only benefit WOSBs, but should
help Federal agencies achieve their WOSB participation goals under
Section 15(g) of the Small Business Act, 15 U.S.C. 644(g). For all of
these reasons, SBA will not withdraw the proposed rule, but instead has
decided to move forward with this final rule based on the authority in
Section 8(m).
Eligible Industries in Which WOSBs Are Underrepresented or
Substantially Underrepresented
The SBA received approximately 104 comments expressing concern that
the proposed rule limited WOSB eligibility for restricted-competition
contracts to only four industry sectors. These comments stated that SBA
should have used a broader methodology in the RAND study to identify
the industries in which WOSBs are underrepresented or substantially
underrepresented. The comments also state that SBA, without substantive
justification, declined to adopt the approach in the RAND study that
would have classified 87% of industries as underrepresented, and
instead promulgated a rule based on the most restrictive approach
proposed by the report. In addition, SBA received comments stating that
it was the intent of Congress to increase federal contracts going to
WOSBs and that the proposed rule will not accomplish increased
participation by WOSBs. Lastly, SBA received a comment stating that the
RAND report and therefore the proposed rule based its conclusions on
the erroneous assumptions that the past contract opportunities analyzed
by the RAND study are and will remain constant across all of the
potentially affected industries.
In response to these comments, SBA notes that Section 8(m) requires
SBA to conduct a study to identify the industries in which WOSBs are
underrepresented and substantially underrepresented in Federal
procurement. SBA initially completed the legislatively mandated study
in September 2001. However, in March 2005, the National Academy of
Sciences (NAS) issued an independent evaluation determining that SBA's
original study was ``fatally flawed.'' In response to the NAS findings,
SBA issued a solicitation
[[Page 56942]]
in October 2005 seeking a contractor to perform a revised study in
accordance with the NAS report. In February 2006, SBA awarded a
contract to RAND to complete a revised study of the underrepresentation
of WOSBs in Federal procurement in accordance with the NAS findings.
The RAND report was published in April 2007. The report, along with the
supporting back-up datasets used to identify underrepresentation, are
available to the public at http://www.rand.org/pubs/technical_reports/TR442/.
The RAND study outlines twenty-eight different approaches for
measuring the underrepresentation of WOSBs by using a disparity ratio.
Each approach uses a different data source or a different version of
the same data source, and each of the data sources was recommended by
the NAS findings. Depending on the approach used, the RAND study
yielded different levels of WOSB representation in Federal procurement.
For the reasons set forth in the proposed rule, SBA eliminated various
non-justifiable approaches and selected the approach that it believed
most appropriately conformed to the applicable statutory requirements,
most accurately reflected the measure employed, and was legally
justifiable. The selected approach compared the percentage of Federal
contract dollars going to WOSBs to the percentage of total revenue from
all sources going to WOSBs in 4-digit NAICS codes (``disparity
ratio''). Using this approach, SBA issued a proposed rule that
identified four industries in which WOSBs were underrepresented or
substantially underrepresented. The comments that SBA received were
opposed to the determination that WOSBs were eligible for contracts in
only four industries.
Although SBA did not receive any comments on the reliability of the
data sources used for the selected approach, as indicated above, SBA
did receive a large number of comments opposing the selected approach.
As a result, SBA engaged in a further review and examination of the
RAND study, including the data sources and in particular the CCR data
set, which was relied upon to arrive at the four industries in which
WOSBs were found to be underrepresented and substantially
underrepresented. As a result of this further examination, SBA has now
identified a limitation inherent in the CCR data set. Specifically,
when RAND computed the disparity ratio to determine
underrepresentation, each firm's total revenue was counted in every
NAICS code associated with the firm. This has resulted in firms' total
revenue being counted for multiple NAICS codes, overstating the
aggregate revenue figures. Although the CCR data set was publicly
available along with the RAND report at http://www.rand.org/pubs/technical_reports/TR442/, this CCR data set limitation was not
specifically disclosed in the RAND study or to the public in the
proposed rule.
Therefore, concurrently with the issuance of this final rule, SBA
is issuing a Proposed Rule; Request for Comment that seeks input from
the public on what effect, if any, the CCR data has on the disparity
ratio, and ultimately, the determination that WOSBs are
underrepresented or substantially underrepresented in the various
industries. This CCR data limitation is fully explained in the Proposed
Rule; Request for Comment. The Proposed Rule; Request for Comment also
seeks comment on an alternative data set not analyzed by RAND or
included in the proposed rule.
In light of the foregoing, this final rule does not identify the
industries in which WOSBs are underrepresented or substantially
underrepresented in Federal procurement. Therefore, SBA has determined
that it is premature to address the public comments opposing SBA's
identification of the eligible industries. Once SBA has received and
evaluated the public's comments on the data limitation in response to
the Proposed Rule; Request for Comments, SBA will publish a Notice in
the Federal Register that contains the rationale for its final
determination and a list of eligible industries. SBA will also post on
its Internet Web site a list of 4-digit NAICS Industry Subsector
industries it designates under Sec. 127.501(a).
Use of Dollars as the Measure of WOSB Underrepresentation
As indicated above, SBA determined that the most justifiable
approach to determining WOSB representation compared the percentage of
contract dollars going to WOSBs to the percentage of revenue dollars
going to WOSBs. SBA received several comments on the decision to use
contract dollars as the measure of underrepresentation. These comments
stated that the use of the number of contracts as the measure of
underrepresentation will more likely help to achieve the 5% goal and is
therefore consistent with Congressional intent.
SBA disagrees with these comments and believes that the use of
contract dollars as the measure is more consistent with the relevant
statutory requirements and Congressional intent. When considering
whether to use the dollar value of contract awards or the number of
contract awards as the measure of underrepresentation, SBA evaluated
the benefits and limitations of either choice. As indicated in the
proposed rule, after careful analysis, SBA decided to adopt an approach
consistent with statutory measures, which use dollars. Most
importantly, Congress, through the Small Business Act, has given
relevant direction only in dollars. Section 15(g)(1) is the section in
the Act that provides direction on counting small business goals. All
of those goals are aimed at achieving a dollar amount (total value)
relative to all dollars expended in Federal procurement. In particular,
the goal for small business concerns owned and controlled by women
states that: ``The Government-wide goal for participation by small
business concerns owned and controlled by women shall be established at
not less than 5 percent of the total value of all prime contract and
subcontract awards for each fiscal year.'' 15 U.S.C. 644(g)(1)
(emphasis added). Congress authorized the contracting assistance
procedures in Section 8(m) to assist Federal agencies in achieving this
goal.
In addition, Congress appropriates Federal funding in dollars, the
Federal budget is divided in dollars, all Federal government contracts
are awarded in dollars, and the accounting and auditing processes focus
on how these dollars are spent. Dollar amounts can easily be compared
across agencies, programs and NAICS codes. Tracking dollar amounts also
avoids problems that arise from the contracting nuances of the
individual agencies. Contract actions do not allow for an accurate
accounting of the financial benefits and business development that
occur when small businesses receive a Federal contract.
Based on the above, a measure that determines underrepresentation
based on the number of contract awards going to WOSBs would not align
with the purpose behind Congress's passage of the Section 8(m)
legislation or with the other Congressional measures. On the other
hand, a measure based on contract dollars is consistent with the 5%
goal, which is also based on contract dollars, and therefore conforms
more closely to the Congressional intent and purpose of Section 8(m).
Based on this determination, the proposed rule defined ``substantial
underrepresentation'' and ``underrepresentation'' as a ratio
representing the WOSB share of Federal prime contract dollars divided
by the WOSB share of total business receipts.
[[Page 56943]]
For the reasons stated above, the final rule adopts the definitions of
underrepresentation and substantial underrepresentation without
modification.
Agency-by-Agency Determination
Commenters also voiced concerns over the requirement in proposed
Sec. 127.501(b) that the procuring agency conduct its own, additional
analysis of its procurement history, and make a determination whether
the agency itself had discriminated against WOSBs in the relevant
industry. The comments state that this requirement frustrates
Congressional intent by applying a strict-scrutiny standard when
gender-based preferences need only satisfy the standard of intermediate
scrutiny. The comments also state that the disparity study analysis
conducted by RAND is sufficient to satisfy the intermediate scrutiny
standard and that the agency determination of discrimination
requirement has no basis in law. The comments further state that the
requirement would unduly limit the industries in which WOSBs were
underrepresented or substantially underrepresented. Lastly, the
comments state that this requirement would substantially burden the
procuring agencies and that the procuring agencies will avoid set-
asides to avoid self-incrimination and litigation.
As reflected in both the proposed rule and in this final rule, SBA
agrees that the intermediate scrutiny standard applies to gender-based
set-asides. The equal protection requirements of the Fifth Amendment
prohibit Federal agencies from discriminating on the basis of sex in
awarding contracts unless the preference furthers important
governmental objectives and the means employed are substantially
related to the achievement of those objectives. See United States v.
Virginia, 518 U.S. 515, 533 (1996). This standard, which requires an
``exceedingly persuasive justification,'' id., is commonly referred to
as ``intermediate scrutiny'' and sometimes as ``heightened scrutiny.''
See id. at 555. The RAND study and the final rule acknowledge the
application of the intermediate scrutiny standard to gender-based
preferences.
In applying this standard, Federal courts have generally required
that the government establish probative evidence of discrimination in
the relevant economic sphere in order to justify sex-based contracting
preferences. See, e.g., Engineering Contractors Ass'n of South Florida
v. Metropolitan Dade County, 122 F.3d 895, 910 (11th Cir. 1998);
Contractors Ass'n of Eastern Penna. v. City of Philadelphia, 6 F.3d
990, 1010-11 (3d Cir. 1993); Hershell Gill Consulting Engineers, Inc.
v. Miami-Dade County, 333 F.Supp.2d 1305, 1317 (S.D. Fla. 2004). Based
on the Federal Court precedents, the U.S. Department of Justice has
advised SBA that before a contracting officer may restrict competition
to WOSBs under section 8(m), it must be determined through appropriate
analysis (which analysis may include examination of the concerned
agency's procurement history) that the set-aside will be consistent
with the foregoing constitutional standards. In particular, it must be
determined whether the set-aside is substantially related to remedying
sex discrimination in the affected industry. For the foregoing reasons,
SBA cannot agree with the comments that section 127.501(b) of the
proposed rule has no basis in the law and is inconsistent with
intermediate scrutiny. As the cases above illustrate, intermediate
scrutiny has been held to require evidence of discrimination in the
relevant economic sphere in order to justify gender-based set asides in
that sphere. The standard in section 127.501(b) is fully consistent
with this judicially recognized discrimination requirement, and in fact
represents one of the soundest, most reliable means of ensuring
compliance with it. In addition, because the RAND study correctly
acknowledges that the unrefined disparity ratios it found are not in
and of themselves measures of discrimination, SBA disagrees with the
comments that contend the RAND study alone is sufficient to satisfy the
intermediate scrutiny.
As to the comments that the requirement of agency-specific findings
of discrimination would be too burdensome for agencies, the SBA
believes that individual contracting agencies are in a better position
than the SBA to evaluate the connection between disparity and
discrimination in certain contracting sectors because SBA does not have
access to details of procurement history within other agencies.
Accordingly, although requiring contracting agencies to identify
evidence of discrimination in relevant contracting spheres would no
doubt impose some burden, this allocation is less costly and burdensome
than having SBA try to make discrimination findings based upon private
sector or agency procurement data to which the agency does not have
access. Furthermore, these additional agency findings will further
augment the data upon which the RAND study is based and, in this way,
more than compensate for any burden the procuring authorities might
encounter.
The SBA further disagrees with the concern that an agency finding
of discrimination could be perceived as an admission of unlawful
conduct. An agency-specific finding of past discrimination would not
necessarily constitute an admission of liability for past unlawful
conduct because courts have noted that agency discrimination may in
some instances result from an agency's passive participation in a
discriminatory market.
For the foregoing reasons, the final rule adopts Sec. 127.501
without any change.
Substantially Underrepresented Industries
SBA received at least one comment that was concerned with SBA's
statement in the proposed rule that the provisions of Section 8(m)
appear literally to authorize set-asides for Federal contracts only in
industries in which WOSBs are determined to be substantially
underrepresented. See 15 U.S.C. 637(m)(2)(C), (3). The comment states
that this provision is unclear and conflicting, resulting in a
disingenuous partial implementation of the statute that is not aligned
with Congressional intent. The comment recommends SBA to recognize
that, in industries where women are substantially underrepresented, the
requirement of being economically and socially disadvantaged should not
apply at all because of the disparity between utilization and
availability.
As SBA accurately stated in the proposed rule, due to an apparent
drafting error in the cross-reference and the inter-relationships
between subparagraphs (2)(C), (3) and (4) of 15 U.S.C. 637(m),
subparagraph (2)(C)--by its express cross-reference to subparagraph (3)
rather than to subparagraph (4)--literally appears to authorize set-
asides for Federal contracts only in industries in which WOSBs are
determined to be substantially underrepresented. However, if the
statute were construed by SBA not to authorize set-asides in industries
in which WOSBs were merely underrepresented, the provision in the
statute requiring SBA to conduct a study to determine industries in
which WOSBs are underrepresented, as well as the section's waiver
provision, would arguably be rendered inoperative or contradictory.
Accordingly, based on the above reasoning, and as already stated in
the proposed rule, SBA believes that the legislation is properly
interpreted to authorize set-asides industries in which
[[Page 56944]]
WOSBs are determined to be underrepresented or substantially
underrepresented.
Effect of Status Protest
SBA received two comments regarding the proposed protest procedures
in Sec. 127.600, et seq. These comments were concerned that the
proposed rule did not address what would happen to a pending or already
issued WOSB contract award when a status protest was filed with the
contracting officer.
SBA agrees that proposed Sec. 127.604 fails to provide any
direction to contracting officers as to whether they are required to
suspend the contract award or performance on the award until the status
protest has been resolved. Therefore, SBA has amended Sec. 127.604(f)
to allow a contracting officer to award a contract or begin performance
after receipt of a protest, but only if the contracting officer has
determined that the award must be made to protect the public interest.
The proposed rule's preamble did give some guidance for this decision,
stating generally that a status protest ``halts the procurement until
SBA investigates the allegations and reaches a decision.'' For the
foregoing reasons, the following provision to Sec. 127.604(d) will be
added: The contracting officer may award the contract or begin
performance after receipt of a protest if the contracting officer
determines in writing that an award must be made to protect the public
interest.
Self-Certification Process
SBA received several comments on the self-certification process.
These comments criticize SBA for creating a new certification process
for these Procedures by requiring WOSBs to self-certify. The comments
urge SBA to instead accept WOSB certifications from other organizations
as the sole method for certification. In addition, a comment
recommended that the certification rules be rewritten to prevent large
corporate influence over the certification process. This comment fails
to include any suggestion on how the recommendation can be
accomplished.
SBA believes that the self-certification process set forth in this
final rule is consistent with the statutory framework of Section 8(m)
and with prevailing Supreme Court precedent. Section 127.300 requires
WOSBs to be registered in the Central Contractor Registration (CCR) and
have a current self-certification posted on Online Representations and
Certifications Application (ORCA) that it qualifies as an EDWOSB or
WOSB. Specifically, Sec. 127.300 provides that at the time a concern
submits an offer on a specific contract reserved for competition under
these procedures, it must be registered in the CCR and have a current
self-certification posted on the ORCA affirming that it qualifies as an
EDWOSB or WOSB. That section further details the specific
representations that concerns must include as part of their self-
certification, including that: (1) The firm is a small business concern
under the size standard assigned to the particular procurement; (2) it
is at least 51 percent owned and controlled by one or more women who
are United States citizens or it is at least 51 percent owned and
controlled by one or more women who are United States citizens and are
economically disadvantaged; and (3) neither SBA nor an SBA-approved
certifier has determined that the concern does not currently qualify as
an EDWOSB or WOSB.
Because ORCA is the Federal Government's generally accepted
representations and certifications process that concerns currently
utilize to self-certify other forms of small business status in Federal
procurements, using that system for the WOSB self-certification process
for Federal procurement would be the logical choice and would minimize
interference with the procurement process and the burden on contracting
officers and WOSBs. In addition, because certifying entities may not
all use the same eligibility criteria applicable to EDWOSBs and WOSBs
as provided under this rule, SBA does not intend automatically to
accept additional third-party certifications for purposes of these
Procedures. Rather, once SBA has determined that a certifier uses the
same criteria and follows appropriate procedures and standards, SBA may
designate that entity as an approved certifier. The SBA will maintain a
list of all approved certifiers on its Web site.
SBA also believes the self-certification process in this rule will
minimize delays and disruption to the contracting process by utilizing
the existing system of representations and certifications in Federal
procurement and by not requiring contracting officers to review
voluminous documents supporting a concern's self-certification. It also
puts a minimum burden on the EDWOSB and WOSB desiring to do business
with the Federal government. At the same time, the self-certification
in the CCR and ORCA will help minimize the likelihood of fraud and
misrepresentation of WOSB and EDWOSB status through the use of robust
protest procedures coupled with the provisions for appropriate
examinations to monitor the eligibility of firms that self-certify
their status and existing fraud statutes and procedures. These
procedures are also consistent with other contracting preferences
procedures.
Other SBA Contracting Preferences
SBA received one comment stating that the proposed rule wrongly
creates procedures that must compete with other set-aside incentives,
such as the 8(a) Business Development Program, for the attention of
agency contracting officers.
In response to this comment, SBA assumes that the commenter was
referring to Sec. 127.503(c) of the proposed rule, which made clear
that a contracting officer may not restrict competition to eligible
EDWOSBs or WOSBs if an 8(a) BD Participant is currently performing the
requirement under the 8(a) BD Program or SBA has accepted the
requirement for performance under the authority of the 8(a) BD Program,
unless SBA consented to release the requirement from the 8(a) BD
Program. Because this limitation on the restriction of competition
serves to reconcile the goal requirements of 15 U.S.C. 644(g) with the
requirements of section 8(m), it is authorized by the Administrator's
general authority to ''make such rules and regulations as he deems
necessary to carry out the authority vested in him by or pursuant to
this chapter.'' 15 U.S.C. 634(b)(6). This final rule does not create an
order of preference among SBA's contracting programs and is intended to
be consistent with SBA's policy of parity among its contracting
programs.
In addition, SBA notes that the Federal government spends billions
of dollars each year in Federal procurement. Lastly, Sec. 127.502 is
necessary to ensure the integrity of the business development aspects
of the 8(a) BD Program. Generally, the requirement will be retained for
8(a) participation, but may be released by SBA as indicated in the
regulation. Thus, SBA has not amended the final rule to adopt this
comment.
Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork
Reduction Act (44 U.S.C. Ch. 35), and the Regulatory Flexibility Act (5
U.S.C. 601-612) Executive Order 12866
Regulatory Impact Analysis
The Office of Management and Budget (OMB) has determined that this
rule constitutes a ``significant regulatory action'' under Executive
Order 12866,
[[Page 56945]]
thereby necessitating a regulatory impact analysis. OMB has also
determined that this rule is not a major rule as defined by the
Congressional Review Act.
The SBA received one comment on the regulatory impact analysis.
That comment questioned SBA's rationale that the Procedures will result
in increased costs to the taxpayer. The comment cites a Department of
Defense study which showed that price preference did not increase costs
in contracts won by small disadvantaged businesses.
Although SBA did state in its regulatory impact analysis that the
rule directs benefits to EDWOSBs and WOSBs at some cost to the taxpayer
through restrictions on competition, the SBA also noted that,
generally, the cost of transferring a contract from one business to
another has minimal cost to society as a whole. In addition, the
analysis stated that the loss of efficiency through restrictions in
contracting has broader impacts that depend highly on the use of these
Procedures by contracting officers and the availability of competition
among EDWOSBs and WOSBs. SBA further analyzed that the most significant
effect of this rule will be the transfer of contract dollars to EDWOSBs
and WOSBs through the contracting officers' ability to restrict
competition to EDWOSBs or WOSBs in industries in which SBA has
determined that WOSBs are underrepresented and substantially
underrepresented and where certain threshold determinations are made by
an agency.
As to the remainder of SBA's Regulatory Impact Analysis, SBA did
not receive any comments and is not aware of any additional information
that would require revision of its initial conclusions. Therefore, SBA
continues to believe that the initial analysis was accurate.
Executive Order 12988
This action meets applicable standards set forth in Sec. Sec. 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. The action does not
have retroactive or preemptive effect.
Executive Order 13132
This rule does not have federalism implications as defined in
Executive Order 13132. It will not have substantial direct effects on
the States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government, as specified in Executive Order 13132.
In the event of a protest, this final rule will allow a WOSB
concern to substantiate its self-certifications by submitting an
existing certification from an SBA approved State Government certifier.
In order for SBA to accept a State's certification, the State must show
that its certification process meets certain standards, including a
showing that its process is based on the same criteria for WOSB or
EDWOSB eligibility, as set forth in this regulation. However, this
final rule will not mandate how the States conduct their certification
processes, and as such the rule will not have a direct effect on the
States. Therefore, for the purposes of Executive Order 13132, SBA
determines that this final rule has no federalism implications
warranting preparation of a federalism assessment.
Paperwork Reduction Act (PRA)
For purposes of the Paperwork Reduction Act, 44 U.S.C. chapter 35,
SBA has determined that this proposed rule does not impose any new
reporting or recordkeeping requirements. The certification process
described in Subpart C, Sec. Sec. 127.300 to 127.305, is not an
information collection. In general, certifications are not subject to
the PRA notice and review requirements unless such certifications are
used as a substitute for collecting information. The proposed self-
certification process does not require any concern seeking to benefit
from Federal contracting opportunities designated for WOSBs or EDWOSBs
to submit or maintain any information. Rather, the concern will use the
existing electronic contracting system (i.e., ORCA) to confirm the
following statements, under penalty of perjury:
(1) The concern is certified as a EDWOSB or WOSB by a certifying
entity approved by SBA and there have been no changes in its
circumstances affecting its eligibility since certification; or
(2) The concern meets each of the applicable individual eligibility
requirements described in subpart B, including that:
(i) It is a small business concern under the size standard assigned
to the particular procurement;
(ii) It is at least 51 percent owned and controlled by one or more
women who are United States citizens, or it is at least 51 percent
owned and controlled by one or more women who are United States
citizens and are economically disadvantaged; and
(iii) Neither SBA, in connection with an examination or protest,
nor an SBA-approved certifier has issued a decision currently in effect
finding that it does not qualify as a EDWOSB or WOSB. The process for
the annual recertification is similar in nature and as such also does
not require any reporting or recordkeeping.
The only occasion on which concerns would have to submit
information to SBA would be in the context of a protest or examination,
when SBA might request that a particular WOSB submit documentation to
substantiate its claim; however, this rule does not require the WOSBs
to maintain any specific information for this purpose. Further, any
request for substantiation would not be standardized but rather would
be specific to a WOSB's particular status, and as such are also not
subject to the PRA.
Regulatory Flexibility Act
SBA has determined that this rule establishing a set-aside
mechanism for WOSBs may have a significant economic impact on a
substantial number of small entities within the meaning of the
Regulatory Flexibility Act (RFA), 5 U.S.C. 601, et seq. Accordingly,
SBA prepared an Initial Regulatory Flexibility Analysis (IRFA)
addressing the impact of the proposed rule in accordance with section
603, title 5, of the United States Code. The IRFA examined the
objectives and legal basis for the proposed rule; the kind and number
of small entities that may be affected; the projected recordkeeping,
reporting, and other requirements; whether there were any Federal rules
that may duplicate, overlap, or conflict with the proposed rule; and
whether there were any significant alternatives to the proposed rule.
The Agency's final regulatory flexibility analysis (FRFA) is set forth
below.
1.What are the reasons for, and objectives of, this final rule?
SBA is establishing procedures pursuant to the SBA Reauthorization
Act, Public Law 106-554, enacted December 21, 2000, codified at Section
8(m) of the Small Business Act, which authorizes the creation and
implementation of a new mechanism for Federal contracting with WOSBs.
The purpose of the final rule is to create a framework and
infrastructure for implementing these Procedures, thereby providing a
tool for Federal agencies to increase Federal procurement opportunities
to WOSBs. SBA is finalizing this regulation pursuant to section 8(m) of
the Small Business Act, 15 U.S.C. 637(m).
These Procedures will assist Federal agencies in achieving the
Federal
[[Page 56946]]
Government's goal of awarding five percent of Federal contract dollars
to WOSBs, as provided in the Federal Acquisition Streamlining Act of
1994. Federal procurement was just over $340 billion in FY 2006, the
most recent fiscal year for which procurement data are available, and
only $11.6 billion, or barely more than 3.4 percent, was awarded to
WOSBs.
2. Summary of the Significant Issues Raised by the Public Comments in
Response to the Initial Regulatory Flexibility Analysis, a Summary of
the Assessment of the Agency of Such Issues, and a Statement of any
Changes Made as a Result of Such Comments
SBA has set forth an analysis of the public comments on the
Proposed Rule near the beginning of this final rule. However, the
Agency did not receive any comments in response to the IRFA and is not
aware of any additional information that would require revision of its
initial conclusions. Therefore, SBA continues to believe that the
initial analysis was accurate.
3. What is SBA's description and estimate of the number of small
entities to which the rule will apply?
The RFA directs agencies to provide a description, and where
feasible, an estimate of the number of small business concerns that may
be affected by the rule. This final rule will ultimately establish in
the Federal Acquisition Regulation (FAR) a new procurement mechanism to
benefit WOSBs. Therefore, WOSBs that compete for Federal contracts are
the specific group of small business concerns most directly affected by
this rule. More specifically, when the required procuring agency
determination is made, this rule may affect EDWOSBs that participate in
Federal procurement in industries where SBA determines that WOSBs are
underrepresented or substantially underrepresented and may affect WOSBs
that participate in Federal procurement in industries where SBA
determines that WOSBs are substantially underrepresented. In addition,
the rule may affect other small businesses, as described below, to the
extent that small businesses not owned and controlled by women or non-
eligible WOSBs may be excluded from competing for certain Federal
contracting opportunities.
The 2002 Survey of Business Owners published by the U.S. Bureau of
the Census reported 6,489,493 women-owned businesses in the United
States. More than 900,000 of these businesses have one or more paid
employees. Most women-owned businesses, however, do not participate in
the Federal contracting market. In addition, the SBO number represents
all women-owned business (large and small) and only WOSBs are eligible
under the regulations. As of January 21, 2007, approximately 93,000
businesses represented themselves as WOSBs in the Federal Government's
CCR as actual or potential Federal contractors. The study conducted by
the RAND Corporation for SBA narrowed the pool of WOSBs in the CCR to
approximately 56,000 to more closely approximate the universe of firms
who are ready, willing, and able to do business with the Government.\1\
However, far fewer than 56,000 WOSBs are likely to be affected by this
final rule because the number of entities to which the rule will apply
will greatly depend on SBA's determination of the industries in which
WOSBs are underrepresented or substantially underrepresented.
---------------------------------------------------------------------------
\1\ RAND eliminated firms with less than $1,000 in annual
revenue; counted a firm only once if they were registered more than
once for multiple locations; eliminated other apparent duplications;
and eliminated vendors that were only interested in competing for
grants (as opposed to contracts).
---------------------------------------------------------------------------
In addition, WOSBs who are not economically disadvantaged could be
affected only to the extent that they compete for Federal contracts in
industries in which WOSBs are determined to be substantially
underrepresented. For industries in which WOSBs are determined to be
substantially underrepresented, the potential number of WOSBs that
could be direct beneficiaries of these Procedures restricting certain
Federal contracts to WOSBs is also likely to be much fewer than the
number of WOSBs registered in CCR, since not all WOSBs will satisfy the
eligibility requirements for EDWOSB status. The CCR currently lists
only 4,210 SDBs owned and controlled by one or more women. This is a
useful statistic because the $750,000 net worth requirement is the same
for SDBs and for WOSBs. While SBA acknowledges that there may be other
WOSBs in existence besides those listed in the CCR as being certified
by SBA as SDBs, it is difficult to envision more than 6,000 WOSBs that
could meet SBA's eligibility criteria and that are also ready, willing,
and able to bid on Government contracts.
Moreover, the anticipated benefits of these Procedures may be less
attractive to many WOSBs than a number of other preferences designed to
assist small businesses, such as HUBZone, 8(a)BD, and others. Not all
areas of Federal procurement are likely to be designated as
underrepresented or substantially underrepresented, and opportunities
in some of the qualified industries may be limited. Consequently, many
otherwise-qualified EDWOSBs and WOSBs may not find it advantageous to
pursue contract opportunities under these Procedures.
This final rule will also affect non-WOSBs (small businesses not 51
percent owned and controlled by women) seeking Federal contracts for
which competition has been restricted to participants in these
Procedures. This would be particularly harmful for those businesses
that derive a significant portion of their business from Federal
contracting. As of January 2007, the CCR lists approximately 376,000
small businesses that are not WOSBs. To the extent that contracting
officers use these Procedures, non-WOSBs may be excluded from competing
for certain Federal contracting opportunities. However, this would
occur only in industries in which WOSBs have been found to be
underrepresented or substantially underrepresented and where the
anticipated dollar value of the procurement does not exceed $3 million
or $5 million, in the case of manufacturing contracts. The number of
small businesses that would be excluded from eligibility for a set-
aside under these procurements or from future such determinations is
not known at this time, but it could be a substantial number.
Additional contracting opportunities identified by Federal agencies
as candidates to be set aside for WOSBs will come from new contracting
requirements and contracts currently performed by small and large
businesses. At this time, SBA cannot accurately predict how the
existing distribution of contracts by business type may change with
this rule. However, SBA does not expect a great many of the contracts
awarded through the 8(a), HUBZone, or SDVOSB Programs ($22.6 billion in
FY 2006) to be re-competed as WOSB or EDWOSB set-aside contracts
because those programs also support other socioeconomic goals that
agencies strive to achieve through their contracting activities. It is
acknowledged, however, that some redistribution of contracts among the
various socioeconomic groups is likely to occur as a result of these
Procedures.
4. What Are the Projected Reporting, Recordkeeping, Paperwork Reduction
Act and Other Compliance Requirements?
As explained above, WOSBs and EDWOSBs will not be required to
undergo any formal certification process
[[Page 56947]]
to participate in these Procedures. Accordingly, there are no reporting
or recordkeeping requirements on the affected industry. There will be
some recordkeeping requirements for the Government; but since the
Government already tracks procurement awards to WOSBs, the additional
reporting requirements will require minimal changes to existing
systems. SBA is working with the Integrated Acquisition Environment,
which is managed by GSA, to ensure that CCR, ORCA, and the Federal
Procurement Data System-Next Generation (FPDS-NG) contain the fields
needed to capture the new socio-economic data. EDWOSB will be a new
classification that the Government has not previously used.
5. Description of the Steps the Agency Has Taken To Minimize the
Significant Economic Impact on Small Entities Consistent With the
Stated Objectives of Applicable Statutes, Including a Statement of the
Factual, Policy, and Legal Reasons for Selecting the Alternative
Adopted in the Final Rule and Why Each One of the Other Significant
Alternatives to the Rule Considered by the Agency Which Affect the
Impact on Small Entities Was Rejected
SBA has minimized the significant economic impact on small
entities. As discussed in the previous section, WOSBs and EDWOSBs will
not be required to undergo any formal certification process to
participate in these Procedures. Section 8(m) of the Small Business
Act, which is the authorizing statutory provision for these Procedures,
allows SBA to decide on the type of certification needed to implement
these Procedures. Specifically, a WOSB may be certified by a Federal
agency, a State government, or a national certifying entity approved by
the Administrator; or a WOSB may self-certify to the contracting
officer that it is a small business concern owned and controlled by
women, along with adequate documentation in accordance with standards
established by the Administration. As discussed earlier, SBA will allow
EDWOSBs and WOSBs to self-certify their status in the existing CCR and
ORCA databases.
An alternative approach would have been to require EDWOSBs and
WOSBs to apply to SBA for formal certification. SBA has ruled out this
approach as unnecessary and too costly. The SBA believes that
eligibility examinations and protest procedures incorporated into the
final rule will minimize the likelihood of fraud and misrepresentation
of WOSB and EDWOSB status. SBA has decided that allowing self-
certification and the option for firms to apply for certification from
SBA-approved certifiers, when combined with random eligibility
examinations and a formal protest procedure, is a more viable approach
than formal certification by SBA and greatly reduces the burden on
small entities.
In addition, SBA estimates that implementation of this regulation
will require no additional proposal costs for WOSBs, as compared to
submitting proposals under any other small business set-aside
preferences. Moreover, WOSBs currently represent their status for
purposes of data collection that is needed to implement 15 U.S.C.
644(g); therefore, the self-certification process of this final rule
imposes no additional requirement on WOSBs.
Pursuant to Executive Order 13272 dated August 16, 2002, agencies
issuing final rules are required to discuss any comments received from
SBA's Office of Advocacy in response to the proposed rule. In this
case, SBA's Office of Advocacy submitted formal comments on February
20, 2008, which recommended that the Final Regulatory Flexibility
Analysis provide cost data on the effort required by WOSBs and EDWOSBs
to play a role in compelling agencies to make a finding of
discrimination prior to using a set-aside process for WOSB contract.
With respect to this recommendation, SBA notes that each agency is
responsible for conducting an analysis and making a determination of
whether there has been past discrimination in a particular industry by
that agency. Advocacy's position rests on the assumption that there is
an expectation that WOSBs should play a role in the determination
process. WOSBs are not required, nor are they expected, to participate
in this process. The Small Business Act has set the Government-wide
goals for contracts awarded to WOSBs at not less than 5% of the total
value of all prime contract and subcontract awards for each fiscal
year. SBA believes that the procuring agencies which have not achieved
their agency goals for WOSB awards are likely to move forward to
determine if there is discrimination in order to achieve the agency's
individual goals for WOSB awards. Thus, SBA does not anticipate any
cost to WOSBs and EDWOSBs to compel an agency to make a determination
of discrimination.
Furthermore, the procuring agencies are best-suited to make a
determination of whether there is discrimination within a certain
industry because they have the necessary agency procurement data and
history more readily available than the SBA. Therefore, while the SBA
can conduct government-wide disparity studies identifying the
industries that have been underrepresented by women, the individual
procuring agencies have the necessary information to justify individual
WOSB awards. This does not translate into an additional cost for WOSBs
or EDWOSBs as they are not required or expected to participate in the
process of determining evidence of discrimination.
List of Subjects
13 CFR Part 121
Government procurement, Government property, Grant programs-
business, Individuals with disabilities, Loan programs--business, Small
businesses.
13 CFR Part 125
Government contracts, Government procurement, Reporting and
recordkeeping requirements, Small businesses, Technical assistance.
13 CFR Part 127
Government procurement, Reporting and recordkeeping requirements,
Small businesses.
13 CFR Part 134
Administrative practice and procedure, Claims, Equal access to
justice, Lawyers, Organization and functions, Rules of practice for
appeals, Appeals of size determinations, Appeals of NAICS code
designations, Appeals under the 8(a) Program, Appeals from service-
disabled veteran-owned small business concerns protests.
0
For the reasons stated in the preamble, SBA amends 13 CFR parts 121,
125, 127 and 134 as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
0
1. The authority citation for 13 CFR part 121 is revised to read as
follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637, 644, and
662(5); and Public Law 105-135, sec. 401 et seq., 111 Stat. 2592.
Sec. 121.401 [Amended]
0
2. Amend Sec. 121.401 by adding the phrase ``the Women-Owned Small
Business (WOSB) Federal Contract Assistance Procedures,'' after the
phrase ``SBA's HUBZone Program''.
0
3. Amend Sec. 121.1001 by adding a new paragraph (a)(9) to read as
follows:
Sec. 121.1001 Who may initiate a size protest or request a formal
size determination?
(a) * * *
[[Page 56948]]
(9) For SBA's WOSB Federal Contracting Assistance Procedures, the
following entities may protest:
(i) Any concern that submits an offer for a specific requirement
set aside for WOSBs or WOSBs owned by one or more women who are
economically disadvantaged (EDWOSB) pursuant to part 127;
(ii) The contracting officer;
(iii) The SBA Government Contracting Area Director; and
(iv) The Director for Government Contracting, or designee.
* * * * *
0
4. Amend Sec. 121.1008 (a) by adding a new sentence after the second
sentence to read as follows:
Sec. 121.1008 What occurs after SBA receives a size protest or a
request for a formal size determination?
(a) * * * If the protest pertains to a requirement set aside for
WOSBs or EDWOSBs, the Area Director will also notify SBA's Director for
Government Contracting of the protest. * * *
PART 125--GOVERNMENT CONTRACTING PROGRAMS
0
5. The authority citation for 13 CFR part 125 continues to read as
follows:
Authority: 15 U.S.C. 632(p), (q), 634(b)(6), 637, 644, and 657f.
0
6. Amend Sec. 125.6 by revising paragraph (a) introductory text to
read as follows:
Sec. 125.6 Prime contractor performance requirements (limitations on
subcontracting).
(a) In order to be awarded a full or partial small business set-
aside contract, an 8(a) contract, a WOSB or EDWOSB contract pursuant to
part 127 of this chapter, or an unrestricted procurement where a
concern has claimed a 10 percent small disadvantaged business (SDB)
price evaluation preference, a small business concern must agree that:
* * * * *
0
7. Add a new part 127 to read as follows:
PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT ASSISTANCE
PROCEDURES
Subpart A--General Provisions
Sec.
127.100 What is the purpose of this part?
127.101 What type of assistance is available under this part?
127.102 What are the definitions of the terms used in this part?
Subpart B--Eligibility Requirements To Qualify as an EDWOSB or WOSB
127.200 What are the requirements a concern must meet to qualify as
an EDWOSB or WOSB?
127.201 What are the requirements for ownership of an EDWOSB and
WOSB?
127.202 What are the requirements for control of an EDWOSB or WOSB?
127.203 What are the rules governing the requirement that
economically disadvantaged women must own EDWOSBs?
Subpart C--Certification of EDWOSB or WOSB Status
127.300 How is a concern certified as an EDWOSB or WOSB?
127.301 When may a contracting officer accept a concern's self-
certification?
127.302 What third-party certifications may a concern use as
evidence of its status as a qualified EDWOSB or WOSB?
127.303 How will SBA select and identify approved certifiers?
127.304 How does a concern obtain certification from an approved
certifier?
127.305 May a concern determined not to qualify as an EDWOSB or WOSB
submit a self-certification for a particular EDWOSB or WOSB
requirement?
Subpart D--Eligibility Examinations
127.400 What is an eligibility examination?
127.401 What is the difference between an eligibility examination
and an EDOWSB or WOSB status protest pursuant to subpart F of this
part?
127.402 How will SBA conduct an eligibility examination?
127.403 What happens if SBA verifies the concern's eligibility?
127.404 What happens if SBA is unable to verify a concern's
eligibility?
127.405 What is the process for requesting an eligibility
examination?
Subpart E--Federal Contract Assistance
127.500 In what industries is a contracting officer authorized to
restrict competition under this part?
127.501 How will SBA and the agencies determine the industries that
are eligible for EDWOSB or WOSB requirements.
127.502 How will SBA identify and provide notice of the designated
industries?
127.503 When is a contracting officer authorized to restrict
competition under this part?
127.504 What additional requirements must a concern satisfy to
submit an offer on an EDWOSB or WOSB requirement?
127.505 May a non-manufacturer submit an offer on an EDWOSB or WOSB
requirement for supplies?
127.506 May a joint venture submit an offer on an EDWOSB or WOSB
requirement?
Subpart F--Protests
127.600 Who may protest the status of a concern as an EDWOSB or
WOSB?
127.601 May a protest challenging the size and status of a concern
as an EDWOSB or WOSB be filed together?
127.602 What are the grounds for filing an EDWOSB or WOSB status
protest?
127.603 What are the requirements for filing an EDWOSB or WOSB
protest?
127.604 How will SBA process an EDWOSB or WOSB status protest?
127.605 What are the procedures for appealing an EDWOSB or WOSB
status protest decision?
Subpart G--Penalties
127.700 What penalties may be imposed under this part?
Authority: 15 U.S.C. 632, 634(b)(6), 637(m), and 644.
Subpart A--General Provisions
Sec. 127.100 What is the purpose of this part?
Section 8(m) of the Small Business Act authorizes certain
procurement mechanisms to increase Federal contracting opportunities
for women-owned small businesses (WOSBs) and to assist agencies in
achieving their WOSB participation goals established under Section
15(g) of the Small Business Act.
Sec. 127.101 What type of assistance is available under this part?
This part authorizes contracting officers to restrict competition
to eligible WOSBs for certain Federal contracts in industries in which
the Small Business Administration (SBA) determines that WOSBs are
underrepresented or substantially underrepresented in Federal
procurement and in which the procuring agency has satisfied itself
through appropriate analysis (including analysis of its own procurement
history), that the set-aside would meet all applicable legal
requirements, including the equal protection requirements of the Due
Process Clause of the Fifth Amendment of the Constitution.
Sec. 127.102 What are the definitions of the terms used in this part?
For purposes of this part:
8(a) Business Development (8(a) BD) concern means a concern that
SBA has certified as an 8(a) BD program participant.
AA/GC&BD means SBA's Associate Administrator for Government
Contracting and Business Development.
Central Contractor Registration (CCR) means the system that
functions as the central registration and repository of contractor data
for the Federal government. CCR also serves as the single portal for
conducting searches of small business contractors. Prospective Federal
contractors must be registered in CCR prior to award of a contract or
purchase agreement, unless the award results from a solicitation issued
on or before May 31, 1998.
Citizen means a person born or naturalized in the United States.
[[Page 56949]]
Resident aliens and holders of permanent visas are not considered to be
citizens.
Concern means a firm that satisfies the requirements in Sec.
121.105 this chapter.
Contracting officer has the meaning given to that term in Section
27(f)(5) of the Office of Federal Procurement Policy Act (codified at
41 U.S.C. 423(f)(5)).
D/GC means SBA's Director for Government Contracting.
Economically disadvantaged WOSB (EDWOSB) means a concern that is
small pursuant to part 121 of this title and that is at least 51% owned
and controlled by one or more women who are U.S. citizens and who are
economically disadvantaged in accordance with Sec. Sec. 127.200,
127.201, 127.202 and 127.203. An EDWOSB automatically qualifies as a
WOSB.
EDWOSB requirement means a Federal requirement for services or
supplies for which a contracting officer has restricted competition to
EDWOSBs.
Immediate family member means father, mother, husband, wife, son,
daughter, brother, sister, grandfather, grandmother, grandson,
granddaughter, father-in-law, mother-in-law, son-in-law, and daughter-
in-law.
Interested party means any concern that submits an offer for a
specific EDWOSB or WOSB requirement, the contracting activity's
contracting officer, or SBA.
ORCA means the Online Representations and Certifications
Application at https://orca.bpn.gov, a required registration for
contractors interested in bidding on most Federal contracts.
Primary industry classification means the six-digit North American
Industry Classification System (NAICS) code designation that best
describes the primary business activity of the concern. The NAICS code
designations are described in the NAICS manual available via the
Internet at http://www.census.gov/NAICS. In determining the primary
industry in which a concern is engaged, SBA will consider the factors
set forth in Sec. 121.107 of this chapter.
Small disadvantaged business (SDB) means a concern that SBA has
certified in accordance with subpart B of part 124 of this chapter, and
is designated on CCR as an SDB.
Substantial underrepresentation means a disparity ratio between 0.0
and 0.5; i.e., the ratio representing the WOSB share of Federal prime
contract dollars divided by the WOSB share of total business receipts.
Underrepresentation means a disparity ratio between 0.5 and 0.8;
i.e., the ratio representing the WOSB share of Federal prime contract
dollars divided by the WOSB share of total business receipts.
WOSB means a concern that is small pursuant to part 121 of this
chapter, and that is at least 51% owned and controlled by one or more
women in accordance with Sec. Sec. 127.200, 127.201 and 127.202.
WOSB requirement means a Federal requirement for services or
supplies for which a contracting officer has restricted competition to
eligible WOSBs.
Subpart B--Eligibility Requirements To Qualify as an EDWOSB or WOSB
Sec. 127.200 What are the requirements a concern must meet to qualify
as an EDWOSB or WOSB?
(a) Qualification as an EDWOSB. To qualify as an EDWOSB, a concern
must be:
(1) A small business as defined in part 121 of this chapter; and
(2) Not less than 51 percent unconditionally and directly owned and
controlled by one or more women who are United States citizens and are
economically disadvantaged.
(b) Qualification as a WOSB. To qualify as a WOSB, a concern must
be:
(1) A small business as defined in part 121 of this chapter; and
(2) Not less than 51 percent unconditionally and directly owned and
controlled by one or more women who are United States citizens.
Sec. 127.201 What are the requirements for ownership of an EDWOSB and
WOSB?
(a) General. To qualify as an EDWOSB or WOSB, one or more women
must unconditionally and directly own at least 51 percent of the
concern. Ownership will be determined without regard to community
property laws.
(b) Requirement for unconditional 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 benefits to go to another. The pledge or
encumbrance of stock or other ownership interest as collateral,
including seller-financed transactions, does not affect the
unconditional nature of ownership if the terms follow normal commercial
practices and the owner retains control absent violations of the terms.
(c) Requirement for direct ownership. To be considered direct, the
qualifying women must own 51 percent of the concern directly. The 51
percent ownership may not be through another business entity or a trust
(including employee stock ownership trusts) that is, in turn, owned and
controlled by one or more women or economically disadvantaged women.
However, ownership by a trust, such as a living trust, may be treated
as the functional equivalent of ownership by a woman or economically
disadvantaged woman where the trust is revocable, and the woman is the
grantor, a trustee, and the sole current beneficiary of the trust.
(d) Ownership of a partnership. In the case of a concern that is a
partnership, at least 51 percent of each class of partnership interest
must be unconditionally owned by one or more women. The ownership must
be reflected in the concern's partnership agreement. For purposes of
this requirement, general and limited partnership interests are
considered different classes of partnership interest.
(e) Ownership of a limited liability company. In the case of a
concern that is a limited liability company, at least 51 percent of
each class of member interest must be unconditionally owned by one or
more women.
(f) Ownership of a corporation. In the case of a concern that is a
corporation, at least 51 percent of each class of voting stock
outstanding and 51 percent of the aggregate of all stock outstanding
must be unconditionally owned by one or more women. In determining
unconditional ownership of the concern, any unexercised stock options
or similar agreements held by a woman will be disregarded. However, any
unexercised stock option or other agreement, including the right to
convert non-voting stock or debentures into voting stock, held by any
other individual or entity will be treated as having been exercised.
Sec. 127.202 What are the requirements for control of an EDWOSB or
WOSB?
(a) General. To qualify as an EDWOSB or WOSB, the management and
daily business operations of the concern must be controlled by one or
more women. Control by one or more women means that both the long-term
decision making and the day-to-day management and administration of the
business operations must be conducted by one or more women.
(b) Managerial position and experience. A woman must hold the
highest officer position in the concern (usually President or Chief
Executive Officer) and must have managerial experience of the extent
and complexity needed to run the concern. The woman manager need not
have the technical expertise or possess the required license
[[Page 56950]]
to be found to control the concern if she can demonstrate that she has
ultimate managerial and supervisory control over those who possess the
required licenses or technical expertise. However, if a man possesses
the required license and has an equity interest in the concern, he may
be found to control the concern.
(c) Limitation on outside employment. The woman who holds the
highest officer position of the concern may not engage in outside
employment that prevents her from devoting sufficient time and
attention to the daily affairs of the concern to control its management
and daily business operations.
(d) Control over a partnership. In the case of a partnership, one
or more women must serve as general partners, with control over all
partnership decisions.
(e) Control over a limited liability company. In the case of a
limited liability company, one or more women must serve as management
members, with control over all decisions of the limited liability
company.
(f) Control over a corporation. One or more women must control the
Board of Directors of the concern. Women are considered to control the
Board of Directors when either:
(1) One or more women own at least 51 percent of all voting stock
of the concern, are on the Board of Directors and have the percentage
of voting stock necessary to overcome any super majority voting
requirements; or
(2) Women comprise the majority of voting directors through actual
numbers or, where permitted by state law, through weighted voting.
(g) Involvement in the concern by other individuals or entities.
Men or other entities may be involved in the management of the concern
and may be stockholders, partners or limited liability members of the
concern. However, no males or other entity may exercise actual control
or have the power to control the concern.
Sec. 127.203 What are the rules governing the requirement that
economically disadvantaged women must own EDWOSBs?
(a) General. To qualify as an EDWOSB, the concern must be at least
51% owned by one or more women who are economically disadvantaged. A
woman is economically disadvantaged if she can demonstrate that her
ability to compete in the free enterprise system has been impaired due
to diminished capital and credit opportunities as compared to others in
the same or similar line of business.
(b) Limitation on personal net worth. In order to be considered
economically disadvantaged, the woman's personal net worth must be less
than $750,000, excluding her ownership interest in the concern and
equity in her primary personal residence.
(c) Factors that may be considered. The personal financial
condition of the woman claiming economic disadvantage, including her
personal income for the past two years (including bonuses, and the
value of company stock given in lieu of cash), her personal net worth
and the fair market value of all of her assets, whether encumbered or
not, may be considered in determining whether she is economically
disadvantaged.
(d) Transfers within two years. Assets that a woman claiming
economic disadvantage transferred within two years of the date of the
concern's certification will be attributed to the woman claiming
economic disadvantage if the assets were transferred to an immediate
family member, or to a trust that has as a beneficiary an immediate
family member. The transferred assets within the two-year period will
not be attributed to the woman if the transfer was:
(1) To or on behalf of an immediate family member for that
individual's education, medical expenses, or some other form of
essential support; or
(2) To an immediate family member in recognition of a special
occasion, such as a birthday, graduation, anniversary, or retirement.
Subpart C--Certification of EDWOSB or WOSB Status
Sec. 127.300 How is a concern certified as an EDWOSB or WOSB?
(a) General. At the time a concern submits an offer on a specific
contract reserved for competition under this Part, it must be
registered in the Central Contractor Registration (CCR) and have a
current self-certification posted on the Online Representations and
Certifications Application (ORCA) that it qualifies as an EDWOSB or
WOSB.
(b) Form of certification. In conjunction with its required
registration in the CCR database, the concern must submit a self-
certification to the electronic annual representations and
certifications at http://orca.bpn.gov, that it is a qualified EDWOSB or
WOSB. The self-certification must include a representation, subject to
penalties for mispresentation, that:
(1) The concern is certified as a EDWOSB or WOSB by a certifying
entity approved by SBA and there have been no changes in its
circumstances affecting its eligibility since certification; or
(2) The concern meets each of the applicable individual eligibility
requirements described in subpart B of this part, including that:
(i) It is a small business concern under the size standard assigned
to the particular procurement;
(ii) It is at least 51 percent owned and controlled by one or more
women who are United States citizens, or it is at least 51 percent
owned and controlled by one or more women who are United States
citizens and are economically disadvantaged; and
(iii) Neither SBA, in connection with an examination or protest,
nor an SBA-approved certifier has issued a decision currently in effect
finding that it does not qualify as a EDWOSB or WOSB.
(c) Update of certification. The concern must update its EDWOSB and
WOSB representations and self-certification on ORCA as necessary, but
at least annually, to ensure they are kept current, accurate, and
complete. The representations and self-certification are effective for
a period of one year from the date of submission or update to ORCA.
Sec. 127.301 When may a contracting officer accept a concern's self-
certification?
(a) General. A contracting officer may accept a concern's self-
certification on ORCA as accurate for a specific procurement reserved
for award under this Part in the absence of a protest or other credible
information that calls into question the concern's eligibility as a
EDWOSB or WOSB. An example of such credible evidence includes
information that the concern was determined by SBA or an SBA-approved
certifier not to qualify as an EDWOSB or WOSB.
(b) Referral to SBA. When the contracting officer has information
that calls into question the eligibility of a concern as an EDWOSB or
WOSB, the contracting officer must refer the concern's self-
certification to SBA for verification of the concern's eligibility by
filing an EDWOSB or WOSB status protest pursuant to subpart F of this
Part.
Sec. 127.302 What third-party certifications may a concern use as
evidence of its status as a qualified EDWOSB or WOSB?
(a) General. In order for a concern to use a certification by
another entity as evidence of its status as a qualified EDWOSB or WOSB
in support of its representations in ORCA pursuant to Sec. 127.300(b),
the concern must have a current, valid certification from:
(1) SBA as an 8(a) BD or SDB women-owned concern in good standing;
(2) The Department of Transportation as a disadvantaged business
enterprise
[[Page 56951]]
(DBE) that is at least 51 percent owned and controlled by one or more
women; or
(3) An entity designated as an SBA-approved certifier on SBA's Web
site located at http://www.sba.gov/GC.
(b) [Reserved]
Sec. 127.303 How will SBA select and identify approved certifiers?
(a) General. SBA may enter into written agreements to accept the
EDWOSB or WOSB certification of a Federal agency or national certifying
entity if SBA determines that the entity's certification process
complies with SBA-approved certification standards and is based upon
the same EDWOSB or WOSB eligibility requirements set forth in subpart B
of this part. The written agreement will include a provision
authorizing SBA to terminate the agreement if SBA subsequently
determines that the entity's certification process does not comply with
SBA-approved certification standards or is not based on the same EDWOSB
or WOSB eligibility requirements as set forth in subpart B of this
part.
(b) Required certification standards. In order for SBA to enter
into an agreement to accept the EDWOSB or WOSB certification of a
Federal agency, state government, or national certifying entity, the
entity must establish the following:
(1) It will render fair and impartial EDWOSB or WOSB eligibility
determinations.
(2) Its certification process will require applicant concerns to
pre-register on CCR and submit sufficient information to enable it to
determine whether the concern qualifies as an EDWOSB or WOSB. This
information must include documentation demonstrating whether the
concern is:
(i) A small business concern under SBA's size standards for its
primary industry classification;
(ii) At least 51 percent owned and controlled by one or more women
who are United States citizens; and
(iii) In the case of a concern applying for EDWOSB certification,
at least 51 percent owned and controlled by one or more women who are
United States citizens and economically disadvantaged.
(3) It will not decline to accept a concern's application for
EDWOSB or WOSB certification on the basis of race, color, national
origin, religion, age, disability, sexual orientation, or marital or
family status.
(c) List of SBA-approved certifiers. SBA will maintain a list of
approved certifiers on SBA's Internet Web site at http://www.sba.gov/GC. Any interested person may also obtain a copy of the list from the
local SBA district office.
Sec. 127.304 How does a concern obtain certification from an approved
certifier?
A concern that seeks EDWOSB or WOSB certification from an SBA-
approved certifier must submit its application directly to the approved
certifier in accordance with the specific application procedures of the
particular certifier. Any interested party may obtain such
certification information and application by contacting the approved
certifier at the address provided on SBA's list of approved certifiers.
Sec. 127.305 May a concern determined not to qualify as an EDWOSB or
WOSB submit a self-certification for a particular EDWOSB or WOSB
requirement?
A concern that SBA or an SBA-approved certifier determines does not
qualify as an EDWOSB or WOSB may not represent itself to be an EDWOSB
or WOSB, as applicable, unless SBA subsequently determines that it is
an eligible EDWOSB or WOSB pursuant to the examination procedures under
Sec. 127.405 of subpart D, and there have been no material changes in
its circumstances affecting its eligibility since SBA's eligibility
determination. Any concern determined not to be a qualified EDWOSB or
WOSB may request that SBA conduct an examination to determine its
EDWOSB or WOSB eligibility at any time once it believes in good faith
that it satisfies all of the eligibility requirements to qualify as an
EDWOSB or WOSB.
Subpart D--Eligibility Examinations
Sec. 127.400 What is an eligibility examination?
An eligibility examination is an investigation by SBA to verify
that a concern meets the EDWOSB or WOSB eligibility requirements at the
time of the examination. SBA may, in its sole discretion, perform an
examination at any time after a concern self-certifies in CCR or ORCA
that it is an EDWOSB or WOSB.
Sec. 127.401 What is the difference between an eligibility
examination and an EDWOSB or WOSB status protest pursuant to subpart F
of this part?
(a) Eligibility examination. An eligibility examination is the
formal process through which SBA verifies and monitors the continuing
eligibility of a concern that is designated on CCR or ORCA as an EDWOSB
or WOSB. For purposes of an examination, the D/GC will determine the
eligibility of a concern as of the date SBA notifies the concern that
it will conduct the examination. The D/GC's eligibility decision
constitutes the final agency decision and will be effective and apply
to all solicitations issued on or after the date of the decision issued
pursuant to Sec. Sec. 127.403, 127.404(b), or 127.405(e). If SBA is
conducting an eligibility examination on a concern that has submitted
an offer on a pending EDWOSB or WOSB procurement and SBA has credible
information that the concern may not qualify as an EDWOSB or WOSB, then
SBA may initiate a protest pursuant to Sec. 127.600, to suspend award
of the contract for 15 business days pending SBA's determination of the
concern's eligibility.
(b) EDWOSB or WOSB protests. An EDWOSB or WOSB status protest
provides a mechanism for challenging or verifying the EDWOSB or WOSB
eligibility of a concern in connection with a specific EDWOSB or WOSB
requirement. SBA will process EDWOSB or WOSB protests in accordance
with the procedures and timeframe set forth in subpart F, and will
determine the EDWOSB or WOSB eligibility of the protested concern as of
the date the concern represented its EDWOSB or WOSB status as part of
its initial offer including price. SBA's protest determination will
apply to the specific procurement to which the protest relates and to
future procurements.
Sec. 127.402 How will SBA conduct an examination?
(a) Notification. No less than 5 business days before commencing an
examination, SBA will notify the concern in writing that it will
conduct an examination to determine the status of the concern as an
EDWOSB or WOSB. The notification also will advise the concern that its
EDWOSB or WOSB eligibility will be determined based on the status of
the concern on the date of the notification.
(b) Request for information. SBA may request that the concern
provide documentation and information related to the concern's EDWOSB
or WOSB eligibility. SBA may draw an adverse inference where a concern
fails to cooperate in providing the requested information.
Sec. 127.403 What happens if SBA verifies the concern's eligibility?
If SBA verifies that the concern satisfies the applicable EDWOSB or
WOSB eligibility requirements at the time of the eligibility
examination, then the D/GC will send the concern a
[[Page 56952]]
written decision to that effect and will allow the concern's EDWOSB or
WOSB designation in CCR and ORCA to stand.
Sec. 127.404 What happens if SBA is unable to verify a concern's
eligibility?
(a) Notice of proposed determination of ineligibility. If SBA is
unable to verify that the concern qualifies as an EDWOSB or WOSB at the
time of the examination, then the D/GC will send the concern a written
notice explaining the reasons SBA believes the concern does not qualify
as an EDWOSB or WOSB. The notice will advise the concern that it has 15
calendar days from the date it receives the notice to respond.
(b) SBA determination. Following the 15-day response period, the D/
GC or designee will consider the reasons of proposed ineligibility and
any information the concern submitted in response, and will send the
concern a written decision finding that it either qualifies or does not
qualify as an EDWOSB or WOSB.
(1) If SBA verifies that the concern qualifies as an EDWOSB or WOSB
at the time of the examination, then the D/GC will send the concern a
decision to that effect and will allow the concern to continue to self-
certify its EDWOSB or WOSB status.
(2) If SBA determines that the concern does not qualify as an
EDWOSB or WOSB, then the D/GC will send the concern a written decision
explaining the basis of ineligibility, and will require that the
concern remove its EDWOSB or WOSB designation in the CCR and ORCA
within five business days after the date of the decision.
Sec. 127.405 What is the process for requesting an eligibility
examination?
(a) General. A concern may request that SBA conduct an examination
to verify its eligibility as an EDWOSB or WOSB at any time after it is
determined by SBA or an SBA-approved certifier not to qualify as an
EDWOSB or WOSB, if the concern believes in good faith that it satisfies
all of the EDWOSB or WOSB eligibility requirements under subpart B of
this part.
(b) Format. The request for an examination must be in writing and
must specify the particular reasons the concern was determined not to
qualify as an EDWOSB or WOSB.
(c) Submission of request. The concern must submit its request
directly to the Director for Government Contracting, U.S. Small
Business Administration, 409 Third Street, SW., Washington, DC 20416,
or by fax to (202) 205-6390, marked ``Attn: Request for Women-Owned
Small Business Procedures Examination.''
(d) Notice of receipt of request. SBA will immediately notify the
concern in writing once SBA receives its request for an examination.
The notification will advise the concern that its eligibility will be
determined based on the status of the concern on the date of the
notification. SBA may request that the concern provide documentation
and information related to the concern's EDWOSB or WOSB eligibility and
may draw an adverse inference if the concern fails to cooperate in
providing the requested information.
(e) Determination of eligibility. The D/GC will send the concern a
written decision finding that it either qualifies or does not qualify
as an EDWOSB or WOSB.
(1) If the D/GC determines that the concern does not qualify as an
EDWOSB or WOSB, the decision will explain the specific reasons for the
adverse determination and advise the concern that it is prohibited from
self-certifying as an EDWOSB or WOSB. If the concern self-certifies as
an EDWOSB or WOSB notwithstanding SBA's adverse determination, the
concern will be subject to the penalties under subpart F of this part.
(2) If the D/GC determines that the concern qualifies as an EDWOSB
or WOSB, then the D/GC will send the concern a written decision to that
effect and will advise the concern that it may self-certify as an
EDWOSB or WOSB, as applicable.
(f) Effect of decision. The D/GC's decision is effective as of the
date of the decision and applies to all solicitations issued on or
after the effective date.
Subpart E--Federal Contract Assistance
Sec. 127.500 In what industries is a contracting officer authorized
to restrict competition under this part?
A contracting officer may restrict competition under this part only
in those industries in which SBA has determined that WOSBs are
underrepresented or substantially underrepresented in Federal
procurement, as specified in Sec. 127.501(a), and the procuring agency
finds, pursuant to the method specified in Sec. 127.501(b), that a
set-aside in that industry would be consistent with the equal
protection requirements of the Due Process Clause of the Fifth
Amendment of the Constitution.
Sec. 127.501 How will SBA and the agencies determine the industries
that are eligible for EDWOSB or WOSB requirements?
(a) SBA determination of underrepresented or substantially
underrepresented industries.
(1) Approximately every five years, SBA will conduct a study to
identify the industries in which WOSBs are underrepresented or
substantially underrepresented in Federal contracting. The study will
include an analysis of the extent of disparity of WOSBs in Federal
contracting.
(2) Data collection. In determining the extent of disparity of
WOSBs in Federal contracting, SBA may request that the head of any
Federal department or agency provide SBA, or other designated entity,
data or information necessary to analyze the extent of disparity of
WOSBs in Federal contracting.
(3) Based upon its analysis, SBA will designate by 4-digit NAICS
Industry Subsector industries in which WOSBs are underrepresented or
substantially underrepresented.
(b) Agency determination of discrimination. Each agency that is
considering restricting competition with respect to a contract in an
industry pursuant to this rule is responsible for carrying out a
relevant analysis that would justify a restriction on competition under
the equal protection requirements of the Due Process Clause of the
Fifth Amendment of the Constitution. Where an agency seeks to reserve a
procurement for competition exclusively among WOSBs or EDWOSBs within
an industry designated by SBA in paragraph (a)(3) of this section, the
agency must conduct an appropriate analysis of the agency's procurement
history and make a determination of whether there is evidence of
relevant discrimination in that industry by that agency.
Sec. 127.502 How will SBA identify and provide notice of the
designated industries?
SBA will post on its Internet Web site a list of 4-digit NAICS
Industry Subsector industries it designates under Sec. 127.501(a). The
list of designated industries also may be obtained from the local SBA
district office and may be posted on the General Services
Administration Internet Web site.
Sec. 127.503 When is a contracting officer authorized to restrict
competition under this part?
(a) EDWOSB requirements. For requirements in industries designated
by SBA pursuant to Sec. 127.501, a contracting officer may restrict
competition to EDWOSBs if the
[[Page 56953]]
contracting officer has a reasonable expectation based on market
research that:
(1) Two or more EDWOSBs will submit offers for the contract;
(2) The anticipated award price of the contract (including options)
does not exceed $5,000,000, in the case of a contract assigned an NAICS
code for manufacturing; or $3,000,000, in the case of all other
contracts; and
(3) Contract award may be made at a fair and reasonable price.
(b) WOSB requirements. If market research indicates that the
criteria in paragraph (a) are not met for restricting competition to
EDWOSBs, then the contracting officer may restrict competition to WOSBs
if:
(1) The requirement is in an industry that SBA has designated as
substantially underrepresented with respect to WOSBs; and
(2) The contracting officer has a reasonable expectation based on
market research that--
(i) Two or more WOSBs will submit offers;
(ii) The anticipated award price of the contract (including
options) will not exceed $5,000,000, in the case of a contract assigned
an NAICS code for manufacturing, or $3,000,000 in the case of all other
contracts; and
(iii) Contract award may be made at a fair and reasonable price.
(c) 8(a) BD requirements. A contracting officer may not restrict
competition to eligible EDWOSBs or WOSBs if an 8(a) BD Participant is
currently performing the requirement under the 8(a) BD Program or SBA
has accepted the requirement for performance under the authority of the
8(a) BD program, unless SBA consented to release the requirement from
the 8(a) BD program.
(d) Contract file. When restricting competition to WOSBs in
accordance with Sec. 127.503(b), the contracting officer must document
the contract file accordingly, including the type and extent of market
research and the fact that the NAICS code assigned to the contract is
for an industry that SBA has designated as a substantially
underrepresented industry with respect to WOSBs.
Sec. 127.504 What additional requirements must a concern satisfy to
submit an offer on an EDWOSB or WOSB requirement?
In order for a concern to submit an offer on a specific EDWOSB or
WOSB requirement, the concern must ensure that the appropriate
representations and certifications on ORCA are accurate and complete at
the time it submits its offer to the contracting officer, including,
but not limited to, the fact that:
(a) It is small under the size standard corresponding to the NAICS
code assigned to the contract;
(b) It is listed on CCR and ORCA as an EDWOSB or WOSB;
(c) There has been no material change in any of its circumstances
affecting its EDWOSB or WOSB eligibility; and
(d) It will meet the applicable percentages of work requirement as
set forth in Sec. 125.6 of this chapter (limitations on subcontracting
rule).
Sec. 127.505 May a non-manufacturer submit an offer on an EDWOSB or
WOSB requirement for supplies?
An EDWOSB or WOSB that is a non-manufacturer, as defined in Sec.
121.406(b) of this chapter, may submit an offer on an EDWOSB or WOSB
contract for supplies, if it meets the requirements under the non-
manufacturer rule set forth in Sec. 121.406(b).
Sec. 127.506 May a joint venture submit an offer on an EDWOSB or WOSB
requirement?
A joint venture may submit an offer on an EDWOSB or WOSB contract
if the joint venture meets all of the following requirements:
(a) Except as provided in Sec. 121.103(h)(3) of this chapter, the
combined annual receipts or employees of the concerns entering into the
joint venture must meet the applicable size standard corresponding to
the NAICS code assigned to the contract;
(b) The EDWOSB or WOSB participant of the joint venture must be
designated on the CCR and the ORCA as an EDWOSB or WOSB;
(c) The EDWOSB or WOSB must be the managing venturer of the joint
venture, and an employee of the managing venturer must be the project
manager responsible for the performance of the contract;
(d) The joint venture must perform the applicable percentage of
work required of the EDWOSB or WOSB offerors in accordance with Sec.
125.6 of this chapter (limitations on subcontracting rule); and
(e) The EDWOSB or WOSB venturer must perform a significant portion
of the contract.
Subpart F--Protests
Sec. 127.600 Who may protest the status of a concern as an EDWOSB or
WOSB?
An interested party may protest the EDWOSB or WOSB status of an
apparent successful offeror on an EDWOSB or WOSB contract. Any other
party or individual may submit information to the contracting officer
or SBA in an effort to persuade them to initiate a protest or to
persuade SBA to conduct an examination pursuant to subpart D of this
part.
Sec. 127.601 May a protest challenging the size and status of a
concern as an EDWOSB or WOSB be filed together?
An interested party seeking to protest both the size and the EDWOSB
or WOSB status of an apparent successful offeror on an EDWOSB or WOSB
requirement must file two separate protests, one size protest pursuant
to part 121 of this chapter and one EDWOSB or WOSB status protest
pursuant to this subpart. An interested party seeking to protest only
the size of an apparent successful EDWOSB or WOSB offeror must file a
size protest to the contracting officer pursuant to part 121 of this
chapter.
Sec. 127.602 What are the grounds for filing an EDWOSB or WOSB status
protest?
SBA will consider a protest challenging the status of a concern as
an EDWOSB or WOSB if the protest presents credible evidence that the
concern is not owned and controlled by one or more women who are United
States citizens and, if the protest is in connection with an EDWOSB
contract, that the concern is not at least 51% owned and controlled by
one or more women who are economically disadvantaged.
Sec. 127.603 What are the requirements for filing an EDWOSB or WOSB
protest?
(a) Format. Protests must be in writing and must specify all the
grounds upon which the protest is based. A protest merely asserting
that the protested concern is not an eligible EDWOSB or WOSB, without
setting forth specific facts or allegations, is insufficient.
(b) Filing. Protestors may deliver their written protests in
person, by facsimile, by express delivery service, or by U.S. mail
(postmarked within the applicable time period) to the following:
(1) To the contracting officer, if the protestor is an offeror for
the specific contract; or
(2) To the D/GC, if the protest is initiated by the contracting
officer or SBA.
(c) Timeliness. (1) For negotiated acquisitions, an interested
party must submit its protest by the close of business on the fifth
business day after notification by the contracting officer of the
apparent successful offeror or notification of award.
(2) For sealed bid acquisitions, an interested party must submit
its protest by close of business on the fifth business day after bid
opening.
(3) Any protest submitted after the time limits is untimely, unless
it is from SBA or the contracting officer. A
[[Page 56954]]
contracting officer or SBA may file an EDWOSB or WOSB protest at any
time after bid opening or notification of intended awardee, whichever
applies.
(4) Any protest received prior to bid opening or notification of
intended awardee, whichever applies, is premature.
(5) A timely filed protest applies to the procurement in question
even if filed after award.
(d) Referral to SBA. The contracting officer must forward to SBA
any protest received, notwithstanding whether he or she believes it is
premature, sufficiently specific, or timely. The contracting officer
must send all protests, along with a referral letter, directly to the
Director for Government Contracting, U.S. Small Business
Administration, 409 Third Street, SW., Washington, DC 20416, or by fax
to (202) 205-6390, Attn: Women-Owned Small Business Status Protest. The
contracting officer's referral letter must include information
pertaining to the solicitation that may be necessary for SBA to
determine timeliness and standing, including: The solicitation number;
the name, address, telephone number and facsimile number of the
contracting officer; whether the protestor submitted an offer; whether
the protested concern was the apparent successful offeror; when the
protested concern submitted its offer; whether the procurement was
conducted using sealed bid or negotiated procedures; the bid opening
date, if applicable; when the protest was submitted to the contracting
officer; when the protestor received notification about the apparent
successful offeror, if applicable; and whether a contract has been
awarded. The D/GC or designee will decide the merits of EDWOSB or WOSB
status protests.
Sec. 127.604 How will SBA process an EDWOSB or WOSB status protest?
(a) Notice of receipt of protest. Upon receipt of the protest, SBA
will notify the contracting officer and the protestor of the date SBA
received the protest and whether SBA will process the protest or
dismiss it under paragraph (b) of this section.
(b) Dismissal of protest. If SBA determines that the protest is
premature, untimely, nonspecific, or is based on nonprotestable
allegations, SBA will dismiss the protest and will send the contracting
officer and the protestor a notice of dismissal, citing the reason(s)
for the dismissal. Notwithstanding SBA's dismissal of the protest, SBA
may, in its sole discretion, consider the protest allegations in
determining whether to conduct an examination of the protested concern
pursuant to subpart D of this part.
(c) Notice to protested concern. If SBA determines that the protest
is timely, sufficiently specific and is based upon protestable
allegations, SBA will:
(1) Notify the protested concern of the protest and of its right to
submit information responding to the protest within five business days
from the date of the notice; and
(2) Forward a copy of the protest to the protested concern.
(d) Time period for determination. SBA will determine the EDWOSB or
WOSB status of the protested concern within 15 business days after
receipt of the protest, or within any extension of that time that the
contracting officer may grant SBA. If SBA does not issue its
determination within the 15-day period, the contracting officer may
award the contract, unless the contracting officer has granted SBA an
extension. The contracting officer may award the contract or begin
performance after receipt of a protest if the contracting officer
determines in writing that an award must be made to protect the public
interest.
(e) Notification of determination. SBA will notify the contracting
officer, the protestor, and the protested concern in writing of its
determination. If SBA sustains the protest, SBA will issue a decision
explaining the basis of its determination and requiring that the
concern remove its designation on the CCR and ORCA as an EDWOSB or
WOSB, as appropriate.
(f) Effect of determination. SBA's determination is effective
immediately and is final unless overturned by OHA on appeal pursuant to
Sec. 127.605 of this part.
(1) The purpose of the protest process is to ensure that contracts
are awarded to, and performed by, eligible WOSB and EDWOSB concerns. A
contracting officer shall not award a contract to an ineligible
concern, and shall not authorize an ineligible concern to begin
performance.
(2) Where award was made and performance commenced before receipt
of a negative final agency decision, the contracting officer may
terminate the contract, not exercise any option, or not award further
task or delivery orders.
(3) Whether or not a contracting officer decides to not allow an
ineligible concern to fully perform a contract under paragraph (f)(2)
of this section or under Sec. 134.704 of this title, the contracting
officer cannot count the award as one to an EDWOSB or WOSB and must
update the Federal Procurement Data System-Next Generation (FPDS-NG)
and other databases from the date of award accordingly.
(4) A concern that has been found to be ineligible may not
represent itself as a WOSB or EDWOSB on another procurement until it
cures the reason for its ineligibility. A concern that believes in good
faith that it has cured the reason(s) for its ineligibility may request
an examination under the procedures set forth in Sec. 127.405.
Sec. 127.605 What are the procedures for appealing an EDWOSB or WOSB
status protest decision?
The protested concern, the protestor, or the contracting officer
may file an appeal of a WOSB or EDWOSB status protest determination
with the SBA's Office of Hearings and Appeals (OHA) in accordance with
part 134 of this chapter.
Subpart G--Penalties
Sec. 127.700 What penalties may be imposed under this part?
Persons or concerns that falsely self-certify or otherwise
misrepresent a concern's status as an EDWOSB or WOSB for purposes of
receiving Federal contract assistance under this part are subject to:
(a) Suspension and Debarment pursuant to the procedures set forth
in the Federal Acquisition Regulations, subpart 9.4 of title 48 of the
Code of Federal Regulations;
(b) Administrative and civil remedies prescribed by the False
Claims Act, 31 U.S.C. 3729-3733 and under the Program Fraud Civil
Remedies Act, 31 U.S.C. 3801-3812;
(c) Administrative and criminal remedies as described at Sections
16(a) and (d) of the Small Business Act, 15 U.S.C. 645(a) and (d), as
amended;
(d) Criminal penalties under 18 U.S.C. 1001; and
(e) Any other penalties as may be available under law.
PART 134--RULES OF PROCEDURE GOVERNING CASES BEFORE THE OFFICE OF
HEARINGS AND APPEALS
0
8. The Authority citation for 13 CFR continues to read as follows:
Authority: 5 U.S.C. 504, 15 U.S.C. 632, 634(b)(6), 637(a),
637(m), 648(l), 656(i) and 687(c); E.O. 12549, 51 FR 6370, 3 CFR,
1986 Comp., p. 189.
Subpart A--General Rules
0
9. Amend Sec. 134.102 by redesignating paragraph (s) as paragraph (t)
and adding new paragraph (s) to read as follows:
[[Page 56955]]
Sec. 134.102 Jurisdiction of OHA
* * * * *
(s) Appeals from Women-Owned Small Business or Economically-
Disadvantaged Women-Owned Small Business protest determinations under
Part 127 of this chapter;
* * * * *
Subpart E--Rules of Practice for Appeals from Service-Disabled
Veteran Owned Small Business Concern Protests
0
10. Amend Sec. 134.515 by revising paragraph (b) to read as follows:
Sec. 134.515 What are the effects of the Judge's decision?
* * * * *
(b) The Judge may reconsider an appeal decision within 20 calendar
days after issuance of the written decision. Any party who has appeared
in the proceeding, or SBA, may request reconsideration by filing with
the Judge and serving a petition for reconsideration on all the parties
to the appeal within 20 calendar days after service of the written
decision. The request for reconsideration must clearly show an error of
fact or law material to the decision. The Judge may also reconsider a
decision on his or her own initiative.
* * * * *
0
11. Add new subpart G to read as follows:
Subpart G--Rules of Practice for Appeals From Women-Owned Small
Business Concern (WOSB) and Economically Disadvantaged WOSB Concern
(EDWOSB) Protests
134.701 What is the scope of the rules in this subpart G?
134.702 Who may appeal?
134.703 When must a person file an appeal from an WOSB or EDWOSB
protest determination?
134.704 What are the effects of the appeal on the procurement at
issue?
134.705 What are the requirements for an appeal petition?
134.706 What are the service and filing requirements?
134.707 When does the D/GC transmit the protest file and to whom?
134.708 What is the standard of review?
134.709 When will a Judge dismiss an appeal?
134.710 Who can file a response to an appeal petition and when must
such a response be filed?
134.711 Will the Judge permit discovery and oral hearings?
134.712 What are the limitations on new evidence?
134.713 When is the record closed?
134.714 When must the Judge issue his or her decision?
134.715 Can a Judge reconsider his decision?
Subpart G--Rules of Practice for Appeals From Women-Owned Small
Business Concern (WOSB) and Economically Disadvantaged WOSB Concern
(EDWOSB) Protests
Sec. 134.701 What is the scope of the rules in this subpart G?
(a) The rules of practice in this subpart G apply to all appeals to
OHA from formal protest determinations made by the Director for
Government Contracting (D/GC) in connection with a Women-Owned Small
Business (WOSB) or Economically Disadvantaged WOSB (EDWOSB) status
protest issued pursuant to part 127 of this chapter. Appeals under this
subpart include issues related to whether the concern is owned and
controlled by one or more women who are United States citizens and, if
the appeal is in connection with an EDWOSB contract, that the concern
is at least 51% owned and controlled by one or more women who are
economically disadvantaged. This includes appeals from determinations
by the D/GC that the protest was premature, untimely, nonspecific, or
not based upon protestable allegations.
(b) Except where inconsistent with this subpart, the provisions of
Subpart A and B of this part apply to appeals listed in paragraph (a)
of this section.
(c) Appeals relating to formal size determinations and NAICS Code
designations are governed by subpart C of this part.
Sec. 134.702 Who may appeal?
Appeals from WOSB or EDWOSB protest determinations may be filed
with OHA by the protested concern, the protestor, or the contracting
officer responsible for the procurement affected by the protest
determination.
Sec. 134.703 When must a person file an appeal from an WOSB or EDWOSB
protest determination?
Appeals from a WOSB or EDWOSB protest determination must be
commenced by filing and serving an appeal petition within 10 business
days after the appellant receives the WOSB or EDWOSB protest
determination (see Sec. 134.204 for filing and service requirements).
An untimely appeal will be dismissed.
Sec. 134.704 What are the effects of the appeal on the procurement at
issue?
Appellate decisions apply to the procurement in question. If the
contracting officer awarded the contract to a concern that OHA finds to
be ineligible, then the contracting officer may terminate the contract,
not exercise any options, or not award further task or delivery orders.
Sec. 134.705 What are the requirements for an appeal petition?
(a) Format. There is no required format for an appeal petition.
However, it must include the following information:
(1) The solicitation or contract number, and the name, address, and
telephone number of the contracting officer;
(2) A statement that the petitioner is appealing a WOSB or EDWOSB
protest determination issued by the D/GC and the date that the
petitioner received it;
(3) A full and specific statement as to why the WOSB or EDWOSB
protest determination is alleged to be based on a clear error of fact
or law, together with an argument supporting such allegation; and
(4) The name, address, telephone number, facsimile number, and
signature of the appellant or its attorney.
(b) Service of appeal. The appellant must serve the appeal petition
upon each of the following:
(1) The D/GC at U.S. Small Business Administration, 409 3rd Street,
SW., Washington, DC 20416, facsimile (202) 205-6390;
(2) The contracting officer responsible for the procurement
affected by a WOSB or EDWOSB determination;
(3) The protested concern (the business concern whose WOSB or
EDWOSB status is at issue) or the protester; and
(4) SBA's Office of General Counsel, Associate General Counsel for
Procurement Law, U.S. Small Business Administration, 409 3rd Street,
SW., Washington, DC 20416, facsimile number (202) 205-6873.
(c) Certificate of Service. The appellant must attach to the appeal
petition a signed certificate of service meeting the requirements of
Sec. 134.204(d).
Sec. 134.706 What are the service and filing requirements?
The provisions of Sec. 134.204 apply to the service and filing of
all pleadings and other submissions permitted under this subpart unless
otherwise indicated in this subpart.
Sec. 134.707 When does the D/GC transmit the protest file and to
whom?
Upon receipt of an appeal petition, the D/GC will send to OHA a
copy of the protest file relating to that determination. The D/GC will
certify and authenticate that the protest file, to the best of his or
her knowledge, is a true and correct copy of the protest file.
Sec. 134.708 What is the standard of review?
The standard of review for an appeal of a WOSB or EDWOSB protest
[[Page 56956]]
determination is whether the D/GC's determination was based on clear
error of fact or law.
Sec. 134.709 When will a Judge dismiss an appeal?
(a) The presiding Judge will dismiss the appeal if the appeal is
untimely filed under Sec. 134.703.
(b) The matter has been decided or is the subject of adjudication
before a court of competent jurisdiction over such matters. However,
once an appeal has been filed, initiation of litigation of the matter
in a court of competent jurisdiction will not preclude the Judge from
rendering a final decision on the matter.
Sec. 134.710 Who can file a response to an appeal petition and when
must such a response be filed?
Although not required, any person served with an appeal petition
may file and serve a response supporting or opposing the appeal if he
or she wishes to do so. If a person decides to file a response, the
response must be filed within 7 business days after service of the
appeal petition. The response should present argument.
Sec. 134.711 Will the Judge permit discovery and oral hearings?
Discovery will not be permitted, and oral hearings will not be
held.
Sec. 134.712 What are the limitations on new evidence?
The Judge may not admit evidence beyond the written protest file
nor permit any form of discovery. All appeals under this subpart will
be decided solely on a review of the evidence in the written protest
file, arguments made in the appeal petition, and response(s) filed
thereto.
Sec. 134.713 When is the record closed?
The record will close when the time to file a response to an appeal
petition expires pursuant to 13 CFR 134.710.
Sec. 134.714 When must the Judge issue his or her decision?
The Judge shall issue a decision, insofar as practicable, within 15
business days after close of the record.
Sec. 134.715 Can a Judge reconsider his decision?
(a) The Judge may reconsider an appeal decision within 20 calendar
days after issuance of the written decision. Any party who has appeared
in the proceeding, or SBA, may request reconsideration by filing with
the Judge and serving a petition for reconsideration on all the parties
to the appeal within 20 calendar days after service of the written
decision. The request for reconsideration must clearly show an error of
fact or law material to the decision. The Judge may also reconsider a
decision on his or her own initiative.
(b) The Judge may remand a proceeding to the D/GC for a new WOSB or
EDWOSB determination if the D/GC fails to address issues of decisional
significance sufficiently, does not address all the relevant evidence,
or does not identify specifically the evidence upon which it relied.
Once remanded, OHA no longer has jurisdiction over the matter, unless a
new appeal is filed as a result of the new WOSB or EDWOSB
determination.
Sandy Baruah,
Acting Administrator.
[FR Doc. E8-23138 Filed 9-26-08; 4:15 pm]
BILLING CODE 8025-01-P