[Federal Register Volume 73, Number 191 (Wednesday, October 1, 2008)]
[Proposed Rules]
[Pages 57014-57017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23139]
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SMALL BUSINESS ADMINISTRATION
13 CFR Parts 121, 125, 127, and 134
The Women-Owned Small Business Federal Contract Assistance
Procedures
AGENCY: Small Business Administration.
ACTION: Proposed rule; request for comments.
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SUMMARY: The U.S. Small Business Administration (SBA) is seeking
comments on a data issue involving the Women-Owned Small Business
(WOSB) Federal Contract Assistance Procedures authorized under Section
8(m) of the Small Business Act. Specifically, SBA is seeking comments
on two data sets: the Central Contractor Registration (CCR) data set
which was used in the RAND report and the proposed rule for the WOSB
Federal Contract Assistance Procedures to determine the representation
of WOSBs in Federal procurement in the various industries and a non-
public Survey of Business Owners (SBO) data set from the Economic
Census, which was not previously used in the RAND report or the
proposed rule to determine the representation of WOSBs in Federal
procurement in the various industries. This request for comments is
intended to stimulate dialogue on available data sets and the comments
will be evaluated to determine which data set will provide the soundest
basis to identify industries in which WOSBs are underrepresented in
Federal procurement.
DATES: The SBA must receive comments on or before October 31, 2008.
ADDRESSES: You may submit comments by any of the following methods:
[[Page 57015]]
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail, Hand Delivery/Courier: Linda Korbol, Assistant
Administrator for Women's Procurement, Office of Government
Contracting, Small Business Administration, 409 Third Street, SW.,
Washington, DC 20416.
All comments will be posted on http://www.regulations.gov. If you
wish to submit confidential business information (CBI) as defined in
the User Notice at http://www.regulations.gov, please submit the
comments to Linda Korbol and highlight the information that you
consider to be CBI and explain why you believe this information should
be held confidential. SBA will make a final determination as to whether
the comments will be published.
FOR FURTHER INFORMATION CONTACT: Linda Korbol, Assistant Administrator
for Women's Procurement, Office of Government Contracting, (202) 205-
7341.
SUPPLEMENTARY INFORMATION:
Background
On December 27, 2007, the U.S. Small Business Administration (SBA
or Agency) issued a proposed rule, in the Federal Register (72 FR
73285), that would implement procedures to increase procurement
opportunities for Women-Owned Small Businesses (WOSBs), as authorized
under Section 8(m) of the Small Business Act (Act). Today, the SBA has
published the Final Rule setting forth these procedures. According to
the Final Rule, however, the SBA must designate the industries to be
included in the WOSB Procedures by publishing a Notice in the Federal
Register and posting a list of the designated industries on its
Internet Web site. The SBA has determined that additional comment is
needed in order to ensure that the most accurate available data is
utilized to determine underrepresentation by WOSBs in Federal
procurement and designate the industries that will be included in the
WOSB Procedures.
Section 8(m) of the Act (15 U.S.C. 637(m)) authorizes contracting
officers to restrict competition to eligible WOSBs for certain Federal
contracts in certain industries. The Final Rule authorizes set-asides
for industries in which WOSBs are determined to be underrepresented or
substantially underrepresented in Federal procurement when the
procuring agency has determined that the set-aside would satisfy
constitutional requirements. Section 8(m) of the Act required SBA to
conduct a study to identify the industries in which WOSBs are
underrepresented and substantially underrepresented in Federal
procurement and requires the head of any department or agency to
provide SBA with any information that SBA deems necessary to conduct
the study. SBA initially completed the required 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's findings, SBA issued a
solicitation 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 the Kauffman-RAND Institute for Entrepreneurship Public
Policy (RAND) to complete a revised study of the availability and
utilization of WOSBs in prime contracts. The RAND report was published
in April 2007 and is available to the public at http://www.rand.org/pubs/technical_reports/TR442/.
As the study explains, WOSB representation in the industries is
generally described by a ``disparity ratio,'' which is a measure
comparing the utilization of WOSBs to their availability in Federal
contracting. Utilization is measured by comparing the presence of WOSBs
in Federal contracting to an overall measure of Federal contracting.
Availability is measured by comparing the presence of WOSBs among firms
available for Federal contracting to an overall measure of available
firms.
In the study, RAND computed disparity ratios in twenty-eight
different ways (for further information about these approaches see 72
FR 73285, Dec. 27, 2007). All of these approaches used procurement data
from the Federal Procurement Data System--Next Generation (FPDS/NG) to
compute the utilization component of the disparity ratio. FPDS/NG,
which is publicly available at http://www.fpds.gov, is a Federal
government database that provides information about the overall Federal
acquisition process and the contracts awarded by the many Federal
agencies. FPDS/NG contains information on individual contract actions
on prime contracts valued above a certain dollar amount. In the
proposed rule, SBA determined the best measure of underrepresentation
was using a disparity ratio that measures utilization by computing the
contract dollars awarded to WOSBs relative to the total contract
dollars awarded.\1\ That determination was the subject of comments on
the proposed rule, and additional comment is not sought in this notice.
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\1\ The statutory procurement 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(a). Congress authorized the
contracting assistance procedures in Section 8(m) as a result of the
Federal Government's persistent deficiencies in achieving this goal.
Thus, the disparity measure based on contract dollars is consistent
with the five percent goal, which is also based on contract dollars.
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For the availability component of the disparity ratio, in twenty of
the twenty-eight calculations, RAND utilized the Central Contractor
Registration (CCR) database to measure availability (gross receipts for
WOSBs relative to gross receipts for all firms) and to define a group
of firms that are ready, willing, and able to compete for Federal
contracts. CCR is the primary registrant database for the Federal
government. Thus, both current and potential Federal government
registrants are required to register in CCR, which can be found at
http://www.ccr.gov, in order to be awarded contracts by the Federal
agencies. Vendors reporting in CCR must provide information concerning
its type of business, relevant North American Industry Classification
System (NAICS) codes in which it does business, business address,
annual employment, three year average annual business revenue and
socio-economic status.
For the remaining eight of the twenty-eight calculations of the
availability component of the disparity ratio, RAND utilized data from
the publicly available 2002 Survey of Business Owners (SBO) from the
five-year Economic Census. The public-use Economic Census data includes
aggregate information about business owners' demographic
characteristics, type of business, and gross receipts. In the proposed
rule, the SBA rejected the disparity measures based on SBO data for
three reasons: (1) Publicly-available SBO data does not distinguish
between WOSBs and women-owned businesses of all sizes, (2) SBO data is
gathered every five years and is generally not available for two years
after the survey, which impacts its timeliness, and (3) the publicly
available SBO cannot identify industry grouping in more detail than the
two-digit NAICS level (the NAS recommended using the most detailed
measure possible, specifying either 3- or 4-digit NAICS codes).
Finally, the SBO
[[Page 57016]]
data provide a broader perspective on availability. Because the SBO
data set generally considers all firms in the economy, it may
overestimate the amount of firms that are clearly ``ready, willing, and
able'' to perform Federal contracts. CCR and SBO were the only data
sources identified in the NAS report and the RAND study with respect to
the availability component of the disparity ratio.
As noted above, RAND measured utilization to availability to
determine a disparity ratio, where utilization is the contract dollars
awarded to WOSBs divided by the contract dollars awarded to all firms
in a specific industry, and availability is the revenue of WOSBs
divided by the revenue of all firms in that industry. Using the FY05
FPDS/NG data for the utilization component and the October 2006 CCR
data for the availability component, RAND identified four industries
where WOSBs are underrepresented or substantially underrepresented:
NAICS codes 9281--National Security and International Affairs, 3328--
Coating, Engraving, Heat Treating, and Allied Activities, 3371--
Household and Institutional Furniture and Kitchen Cabinet
Manufacturing, and 4412--Other Motor Vehicle Dealers. These were the
eligible industries identified in the proposed rule.
During its review of comments on the proposed rule, SBA reviewed
again the CCR data utilized by RAND in its study. Specifically, SBA
reviewed the CCR data. As noted above, vendors input information into
CCR relating to the firm's revenues and NAICS codes, which are a method
for classifying business establishments. Vendors must supply at least
one NAICS code for registration into CCR to be complete, but can supply
more than one. Vendors do not input the business's revenues for each
NAICS code listed, or for each NAICS code in which it does business;
rather, vendors input total revenues for the firm. Thus, CCR does not
provide information concerning the revenue of a firm in each of the
NAICS codes, or industries, it sets forth in its CCR registration.
When RAND computed the disparity ratio, however, the total revenues
set forth by WOSBs in CCR were used to calculate the total receipts of
WOSBs in each NAICS code listed in the CCR profile. Likewise, the
revenues set forth by all firms in CCR were used to calculate the total
revenue of all firms in each NAICS code listed in CCR. For a firm
reporting more than one NAICS code, the reported revenue was counted in
full for each NAICS code reported by the firm in the CCR. This has
resulted in firms' total revenue being counted for multiple NAICS
codes, overstating the aggregate revenue figures. However, because the
disparity ratio defined availability of WOSBs in Federal contracting by
measuring the revenue of WOSBs divided by the revenue of all firms in
that industry using this CCR data, and because both the WOSB and total
revenue figures in a given industry may or may not be equally impacted
by this limitation in the CCR data, SBA currently has no evidence
whether or not the revenue overstatement affects the availability and
disparity ratios in any specific industry.
Although the CCR dataset was publicly available along with the RAND
report at http://www.rand.org/pubs/technical_reports/TR442/ during the
public comment period on the proposed rule, this CCR dataset limitation
was not specifically discussed in the RAND study and SBA did not
receive public comments on this issue during the public comment period
for the proposed rule.
After this issue was discovered, SBA contacted the Census Bureau to
determine the availability of an alternative data set that did not
include the revenue overstatements identified in CCR. The Census Bureau
provided SBA with a non-public data set for the availability component
of the disparity ratio. The data consists of non-public data from the
2002 Survey of Business Owners collected through the 5-year Economic
Census for firms with employees. Although this data set was not used in
the RAND report results, it was mentioned in the RAND report as
restricted data which would be available to the SBA at a more
disaggregated NAICS code level than the public data. This non-public
SBO data set does distinguish between WOSBs, as defined by the final
rule, and women-owned businesses of all sizes. In addition, the data
set is disaggregated to the 4-digit NAICS code level. However, the new
SBO data is not without its own limitation. The Census Bureau collected
the non-public SBO data on an establishment basis, such that each
firm's location is a separate establishment for data collection
purposes. Each establishment is assigned to a single 6-digit NAICS
code, and establishments with more than one NAICS code are classified
into their principal NAICS code. Therefore, for establishments that
reported revenue in multiple sectors, this could result in an
overstatement of the revenue in some NAICS code industries and an
understatement in others. SBA currently has no evidence whether or not
the revenue overstatement or understatement affects the availability
and disparity ratios in any specific industry. As noted earlier, these
data also have the limitation that they are from 2002. However, changes
to the underlying economy occur relatively gradually, so it is possible
to conclude that this data provides an adequate picture of the
ownership and relative sizes of firms over the next few years. Also, as
noted earlier, the SBO data provide a very broad perspective on
availability. SBA limited the analysis to firms with employees to
improve the reliability of the estimate of firms that would be
genuinely ready, willing and able to perform Federal contracts.
However, the availability of both WOSBs and all firms in a sector to
perform Federal contracts may still be overstated by these data.
Using the non-public SBO data for the availability component of the
disparity ratio and the FY05 FPDS/NG data from RAND study results for
the utilization component, thirty-one of the 140 NAICS codes analyzed
in the RAND study were identified as underrepresented or substantially
underrepresented: 2361--Residential Building Construction, 3149--Other
Textile Product Mills, 3152--Cut and Sew Apparel Manufacturing, 3231--
Printing and Related Support Activities, 3259--Other Chemical Product
and Preparation Manufacturing, 3323--Architectural and Structural
Metals Manufacturing, 3324--Boiler, Tank and Shipping Container
Manufacturing, 3328--Coating, Engraving, Heat Treating, and Allied
Activities, 3369--Other Transportation Equipment Manufacturing, 3371--
Household and Institutional Furniture and Kitchen Cabinet
Manufacturing, 4412--Other Motor Vehicle Dealers, 4461--Health and
Personal Care Stores; 4543--Direct Selling Establishments, 4841--
General Freight Trucking, 4931--Warehousing and Storage, 5179--Other
Telecommunications, 5312--Offices of Real Estate Agents and Brokers,
5413--Architectural, Engineering, and Related Services; 5414--
Specialized Design Services, 5417--Scientific Research and Development
Services, 5419--Other Professional, Scientific, and Technical Services,
5614--Business Support Services, 5615--Travel Arrangement and
Reservation Services, 5619--Other Support Services; 5622--Waste
Treatment and Disposal, 5629--Remediation and Other Waste Management
Services, 6114--Business Schools and Computer and Management Training,
6115--Technical and Trade Schools, 6116--Other Schools and Instruction;
6214--Outpatient Care Centers, 8112--Electronic and Precision
[[Page 57017]]
Equipment Repair and Maintenance, 8129--Other Personal Services. The
Census Bureau report and associated data are available at http://www.sba.gov/tools/resourcelibrary/lawsandregulations/index.html. In
order to protect firm confidentiality, revenues at the 4-digit NAICS
level are disclosed only in ranges.
Request for Comments
In light of the foregoing, input from the public is required prior
to using a data set to identify the eligible industries. In providing
comments, please specify which of the following issues you are
addressing (e.g., ``Response to issue 1.''). Please be industry
specific. Comments should be as precise as possible. SBA is
specifically requesting comments addressing the following: (1) The
impact, if any, the limitation in the CCR data has on the disparity
ratio in specific industries; (2) the impact, if any, the limitation in
the non-public SBO data has on the disparity ratio in specific
industries; (3) other data that can be utilized to measure the
availability of WOSBs (i.e., gross receipts for WOSBs relative to gross
receipts for all firms) in the various NAICS codes at the 4-digit
level; (4) the availability of this other data, advantages and
disadvantages of the use of such data, and the reliability of such data
(responses should be as specific as possible about the improvements
other data sets could offer over the CCR or SBO data, judging by the
standards laid out in the RAND report and NAS study); (5) reasons, for
the purpose of calculating WOSB revenue and all firms' revenue in a
given industry, the limitation in the CCR data may outweigh the
limitation in the non-public SBO data that is described in this Notice;
and (6) whether, for the availability component of the disparity ratio,
SBA should use the CCR data from the RAND report, the public SBO data
from the RAND report, the non-public SBO data described in this Notice,
or some other specified data set.
Authority: 15 U.S.C. 637(m).
Dated: September 26, 2008.
Calvin Jenkins,
Deputy Associate Administrator for Government Contracting and Business
Development.
[FR Doc. E8-23139 Filed 9-26-08; 4:15 pm]
BILLING CODE 8025-01-P