[Federal Register Volume 75, Number 194 (Thursday, October 7, 2010)]
[Rules and Regulations]
[Pages 62258-62293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25179]
[[Page 62257]]
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Part III
Small Business Administration
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13 CFR Parts 121, 124, 125, et al.
Women-Owned Small Business Federal Contract Program; Final Rule
Federal Register / Vol. 75 , No. 194 / Thursday, October 7, 2010 /
Rules and Regulations
[[Page 62258]]
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SMALL BUSINESS ADMINISTRATION
13 CFR Parts 121, 124, 125, 126, 127, and 134
RIN 3245-AG06
Women-Owned Small Business Federal Contract Program
AGENCY: Small Business Administration.
ACTION: Final rule.
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SUMMARY: The U.S. Small Business Administration (SBA) is issuing this
Final Rule to amend its regulations governing small business
contracting procedures. This Final Rule amends part 127, entitled ``The
Women-Owned Small Business Federal Contract Assistance Procedures,''
and implements procedures authorized by the Small Business Act (Pub. L.
85-536, as amended) to help ensure a level playing field on which
Women-Owned Small Businesses can compete for Federal contracting
opportunities.
DATES: This rule is effective February 4, 2011.
FOR FURTHER INFORMATION CONTACT: Dean Koppel, Assistant Director,
Office of Policy and Research, Office of Government Contracting, U.S.
Small Business Administration, 409 Third Street, SW., Washington, DC
20416.
SUPPLEMENTARY INFORMATION:
I. Background
On December 21, 2000, Congress enacted the Small Business
Reauthorization Act of 2000, Public Law 106-554. Section 811 of that
Act added a new section 8(m), 15 U.S.C. 637(m), authorizing Federal
contracting officers to restrict competition to eligible Women-Owned
Small Businesses (WOSBs) or Economically Disadvantaged Women-Owned
Small Business (EDWOSBs) for Federal contracts in certain industries.
The purpose of this authority, referred to as the WOSB Program, is to
enable contracting officers to identify and establish a sheltered
market for competition among WOSBs or EDWOSBs for the provision of
goods and services to the Federal Government. H.R. Rep. No. 106-879, at
2 (2000) (publicly available at http://thomas.loc.gov/cgi-bin/cpquery/T?&report=hr879&dbname=106&).
Section 8(m) of the Small Business Act (Act) sets forth certain
criteria for the WOSB Program. Specifically, the Act provides the
following requirements in order for a contracting officer to restrict
competition for EDWOSBs or WOSBS under this program:
An eligible concern must be not less than 51 percent owned
by one or more women who are ``economically disadvantaged'' (i.e. an
EDWOSB). However, SBA may waive this requirement of economic
disadvantage for procurements in industries in which WOSBs are
``substantially underrepresented.''
A WOSB is a small business concern owned and controlled by
women, as defined in section 3(n) of the Act. Section 3(n) of the Act
defines a women owned business as one that is at least 51 percent owned
by one or more women and the management and daily business operations
of the concern is controlled by one or more women. 15 U.S.C. 632(n).
The contracting officer must have a reasonable expectation
that, in industries in which WOSBs are underrepresented, two or more
EDWOSBs will submit offers for the contract or, in industries where
WOSBs are substantially underrepresented, two or more WOSBs will submit
offers for the contract.
The anticipated award price of the contract must not
exceed $5 million in the case of manufacturing contracts and $3 million
in the case of all other contracts.
In the estimation of the contracting officer, the contract
can be awarded at a fair and reasonable price.
Each competing concern must be duly certified by a Federal
agency, a State government, or a national certifying entity approved by
SBA, as an EDWOSB or WOSB, or must certify to the contracting officer
and provide adequate documentation that it is an EDWOSB or WOSB. The
statute imposes penalties for a concern's misrepresentation of its
status.
The contract must be for the procurement of goods or
services with respect to an industry identified by SBA pursuant to a
statutorily mandated study as one in which EDWOSBs are underrepresented
or substantially underrepresented or WOSBs are substantially
underrepresented with respect to Federal procurement contracting.
The SBA has issued several rulemakings concerning this program.
Most recently, SBA issued a proposed rule on March 4, 2010 (75 FR
10029) that proposed amending 13 CFR part 127, which had been
promulgated in a Final Rule on October 1, 2008 (entitled ``The Women-
Owned Small Business Federal Contract Assistance Procedures,'' RIN
3245-AF40). In particular, the proposed rule: Identified 83 industries
by four digit North American Industry Classification System (NAICS)
codes in which WOSBs are underrepresented or substantially
underrepresented; removed the requirement that each Federal agency must
certify that it had engaged in discrimination against WOSBs in order
for the program to apply to that agency; allowed WOSBs and EDWOSBs to
self-certify their status as long as adequate documents were provided
to support the certification; allowed WOSBs or EDWOSBs to be certified
by approved third-party certifiers, including Federal agencies; and
expanded the eligibility examination process to ensure the eligibility
of WOSBs or EDWOSBs for the program. The proposed rule also set forth
the eligibility criteria for the program, as well as the protest and
appeal process for WOSB and EDWOSB status protests.
In the proposed rule, SBA stated several times that it was seeking
comments on any and all aspects of the rule. In particular, though, SBA
sought comments on the data used to identify the 83 industries, as well
as the proposed new certification procedures. SBA stated that comments
were due on May 3, 2010, which provided interested parties 60 days to
submit these comments. SBA received a total of 998 comments on the
rule. Many of these comments contained the same or similar remarks and
virtually all of the comments supported the rule, commended SBA for its
efforts, and urged the agency to expeditiously promulgate final
regulations since WOSBs have been waiting eleven years for the program.
Many of the comments supported the proposed rule on the grounds
that: Women are underrepresented in Federal contracting; the new
program will level the playing field for WOSBs; the new program will
help businesses to grow; and it will be beneficial to the economy. Few
comments did not support the proposed rule on the grounds that the
scope was too restrictive in its application to WOSBs, and that they
opposed gender based set asides, believed that the program creates an
artificial advantage for a certain group, or that the program was
merely a token to WOSBs. All comments can be viewed on the Federal
rulemaking portal at http://www.regulations.gov.
The comments relating to specific sections of the rule are
discussed in further detail below.
In addition, the SBA notes that although this is a final rule, it
is not effectively immediately. The SBA is in the process of working
with the Federal Acquisition Regulatory Council to implement this
program in the Federal Acquisition Regulations (FAR). In addition, the
SBA is working with the Integrated Acquisition Environment to
[[Page 62259]]
make changes to the various Federal procurement data systems, which
will be affected by this rule. As a result, the SBA believed it was
necessary to publish the rule as final, but to also acknowledge that
there are additional measures that need to be taken to fully implement
the program.
II. Summary of Comments and Agency Response to Comments
A. Eligible industries
a. General Comments on the Eligible Industries
SBA's proposed rule identified 83 NAICS codes that would be
eligible for Federal contract assistance under the WOSB Program. Most
comments received on the proposed rule's identification of the 83 NAICS
codes were overwhelmingly supportive. In fact, SBA received hundreds of
comments which supported the identification of 83 NAICS categories. For
example, many comments stated they are ``extremely pleased'' that all
83 NAICS categories have been selected. Other comments applauded SBA's
``efforts to increase women-owned business participation in federal
contracting.'' Additional comments stated that the ``rule is a
significant improvement over the rule proposed in 2007.''
SBA also received dozens of comments that, while supporting the 83
eligible NAICS codes, sought the inclusion of additional NAICS
categories. Some of the comments stated that all NAICS categories
should be eligible, while other comments identified specific additional
NAICS categories for eligibility.
The comments which requested eligibility of all NAICS codes
asserted that SBA's other programs are not limited to certain NAICS
codes. In addition, some of these comments stated that no court has
required a study prior to establishing a program that provided
contracting assistance on the basis of gender and SBA's requirement of
such a study limits the eligibility of NAICS categories.
The comments which requested the addition of specific NAICS
categories based their requests on various viewpoints, including the
belief that WOSBs in a NAICS code received few contracts or a small
dollar amount of contracts, or that only a few WOSBs participate in a
NAICS code, or that WOSBs sought contracts in a NAICS code, but did not
receive the contract.
While SBA acknowledges the concerns expressed in these comments
relating to the need to increase WOSB participation in Federal
contracting, section 8(m) of the Act sets forth certain statutory
requirements for this program that specify the manner in which SBA is
to identify included NAICS categories. In particular, section 8(m)
instructs SBA to conduct a study to identify industries in which WOSBs
are underrepresented with respect to Federal procurement contracting.
See 15 U.S.C. 637(m)(4). Therefore, SBA must identify the program's
eligible industries based on a study which analyzes WOSBs'
underrepresentation in a specific industry.
Shortly after section 8(m) was enacted, and pursuant to the
requirement of paragraph (4) of the law, SBA, using its own internal
resources, conducted a study to identify the industries in which WOSBs
are underrepresented with respect to Federal procurement contracting.
SBA initially completed its study in September 2001, and contracted
with the National Academy of Sciences (NAS) to review the study before
publication. In March of 2005, the National Research Council, which
functions under the auspices of the NAS and other National Academies,
issued an independent evaluation concluding that SBA's study was flawed
and offering various recommendations for a revised study.
In response to this evaluation, SBA issued a solicitation in
October 2005 seeking a contractor to perform a revised study in
accordance with the NAS recommendations. In February 2006, SBA awarded
a contract to the Kauffman-RAND Institute for Entrepreneurship Public
Policy (RAND) to complete a revised study of the underrepresentation of
WOSBs in Federal prime contracts by industry code. The resulting
study--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 RAND Report explains more fully, underrepresentation is
typically referred to as a disparity ratio. A ``disparity ratio'' is a
measure comparing the utilization of WOSBs in Federal contracting in a
particular NAICS code to their availability for such contracts in a
particular NAICS code. A disparity ratio of 1.0 suggests that firms of
a particular type are awarded contracts in the same proportion as their
representation in the industry--that is, there is no disparity. A
disparity ratio of less than 1.0 suggests that the firms are
underrepresented in Federal contracting, and a ratio greater than 1.0
suggests that they are overrepresented. This disparity ratio provides
an estimate of the extent to which WOSBs that are available for Federal
contracts in specific industries are actually being utilized to perform
such contracts. One of the recommendations made by the NAS Review was
to create four disparity ratios of underrepresentation using a
combination of different databases and different measures. The four
disparity ratios recommended by the NAS Review were the following: (1)
Use contract dollars with the Survey of Business Owners (SBO) database;
(2) use contract dollars with the Central Contractor Registry (CCR)
database; (3) use number of contracts with the SBO database; and (4)
use the number of contracts with the CCR database.
The RAND Report, in accordance with the NAS recommendations,
created various disparity ratios to identify the NAICS codes which
showed underrepresentation based on a disparity ratio. Using the RAND
Report, SBA identified a viable and appropriate methodology of
identifying industries in which WOSBs are underrepresented or
substantially underrepresented. SBA did this in accordance with the
statute.
Accordingly, in view of the statute's explicit requirements, SBA
cannot simply deem a NAICS code eligible under the WOSB Program based
solely on a request set forth in the public comments.
b. Methodology: Dollars and Numbers
In the proposed rule, SBA identified 83 NAICS categories as
eligible under the WOSB Program. The RAND Report found these 83 NAICS
categories to be underrepresented or substantially underrepresented
using the numbers and dollars approaches. That is, the industry was
identified as eligible if the industry was underrepresented or
substantially underrepresented using either the numbers or the dollars
approach. SBA explained in the proposed rule that, for purposes of
section 8(m), both the dollars and numbers approaches are viable and
appropriate means of identifying industries in which WOSBs are
underrepresented or substantially underrepresented. A previous version
of the proposed regulations identified only 4 NAICS as eligible because
it used only the dollars approach and not the number approach to
identify eligible industries.
SBA received hundreds of comments which expressed general support
for the identification of 83 NAICS codes, which relied upon the use of
both the numbers and dollars approaches. In addition, SBA received
hundreds of comments which agreed specifically with the use of both the
dollars and numbers approaches identifying the eligible
[[Page 62260]]
industries under the WOSB Program. For example, one comment stated that
the use of both the numbers and dollars approaches is a better
mechanism ``to measure underrepresentation and performance of WOSBs.''
As explained in the proposed rule, the dollars approach compares
the proportion of the dollar value of contracts in a particular NAICS
code awarded to WOSBs with the proportion of gross receipts (revenues)
in that NAICS code earned by WOSBs. The numbers approach compares the
proportion of contracts (calculated in terms of number of contracts)
awarded to WOSBs in a particular NAICS code with the number of WOSBs in
that particular NAICS code.
SBA determined that both approaches represent legitimate and
complementary interpretations of the statutory term
``underrepresentation.'' Specifically, underrepresentation can occur
when WOSBs are not being awarded Federal contracting dollars in
proportion to their economic representation (measured by their gross
receipts) in an industry. But underrepresentation can also occur where
there is disparity in the number of contracts being awarded to WOSBs,
even if there is no measured disparity in contract dollars, due to a
handful of WOSBs winning large-dollar contracts. SBA also stated in the
proposed rule that applying the section 8(m) program in these
industries would reduce the effects of the discrimination affecting
women-owned small businesses, consistent with Congress's goals, and
that both numbers and dollars approaches are substantially related to
the purpose of the WOSB Program.
Based on the reasons set forth herein and in the proposed rule, as
well as the support SBA received from the public comments on this
issue, SBA has promulgated the proposed rule as final and will apply
both the numbers and dollars approach to identify eligible industries.
c. Methodology: Central Contractor Registry (CCR) and Survey of
Business Owners (SBO) Databases
For the availability component of the disparity ratio, RAND used
two different databases: The 2002 Survey of Business Owners (SBO) from
the five-year Economic Census, and the FY 2006 Central Contractor
Registration (CCR) registration database. The proposed rule used the
CCR database rather than the SBO database to identify the 83 eligible
industries under the WOSB Program. The proposed rule explained that SBA
selected the CCR database for various reasons, including the fact that
the CCR database, as compared with the SBO database as currently
constituted, is more likely to capture those firms ready, willing and
able to compete for Federal contracts.
SBA received hundreds of comments which addressed the CCR and SBO
databases used in the RAND Report. The overwhelming majority of these
comments supported the proposed methodology used to identify eligible
industries under the WOSB Program. Specifically, SBA received dozens of
comments which supported the use of the CCR database to identify the
eligible industries. Several of these comments supported the use of CCR
because it is a more comprehensive and complete database.
SBA also received several comments that not only supported the use
of the CCR database, but urged SBA to use the SBO database from the
RAND Report in addition to the CCR database to identify eligible
industries. Specifically, these comments stated that SBA should deem as
underrepresented those industries that appear underrepresented in two
or more of the four approaches identified in the report issued by the
National Academy of Sciences (NAS) recommendations.
Additional comments received by SBA supported the use of only the
SBO database (and not the CCR) from the RAND Report to identify the
eligible industries. Some of these comments stated that the use of CCR
undercuts utilization and perpetuates discrimination because not all
WOSBs register in CCR due to their belief that there is no meaningful
competition in Federal procurement for women-owned businesses.
As explained in the proposed rule, SBA decided not to use the SBO
database used in the RAND Report and concluded that the CCR database
used in the RAND report is currently the best available database to use
to determine the availability component of the disparity ratios because
of certain limitations in the existing SBO dataset. SBA proposed not to
use the 2002 SBO database used in the RAND Report for the following
reasons:
The SBO data in the RAND Report do not disaggregate
industry groupings beyond the two-digit NAICS level. In the NAS 2005
report examining SBA's 2002 internal study, NAS criticized SBA's use of
the two-digit Major Group Standard Industrial Classification (SIC)
industry codes as inadequate. The two-digit Major Group SIC designation
corresponds to the current three-digit Subsector NAICS designation.
Thus, while NAS criticized SBA's use of two-digit SIC information, the
SBO two-digit NAICS data are even less precise than the two-digit SIC
data. Both the CCR and the FPDS/NG, in contrast, provide the capability
to use four-digit NAICS classifications.
The SBO database in the RAND Report generally considers
all firms in the economy, and not simply the number of firms that have
explicitly indicated that they are ready, willing, and able to perform
Federal contracts. In contrast, because firms are generally required to
register on the CCR database prior to bidding on a Federal contract, a
firm's presence in the CCR specifically reflects its willingness to bid
on a Federal contract. SBA recognized, however, that its reliance on
the CCR database could understate the availability of women-owned
firms, since a firm's inability to bid on Federal contracts, and
therefore its reluctance to register on the CCR could itself result
from gender discrimination.
The SBO database in the RAND Report does not distinguish
between WOSBs and women-owned businesses in general, large and small.
The CCR, in contrast, contains self-reported information on whether a
business is small. And the procedures authorized by section 8(m) are
specifically targeted towards only small businesses owned by women.
The SBO database in the RAND Report is generally not
available for two years after the survey is completed. CCR data, in
contrast, are updated continuously and made available immediately.
Thus, in this instance, the SBO data available to RAND at the time of
the study was less recent than the CCR data. SBA recognized, however,
that the degree to which data regarding business ownership and economic
size change from year to year is unclear, and therefore that it was not
clear how much weight this distinction should carry.
As detailed in the proposed rule, SBA notes that the Census Bureau
provided SBA with a data set for the availability component of the
disparity ratio which came from the 2002 Survey of Business Owners
(SBO) collected through the 5-year Economic Census for firms with
employees (hereinafter referred to as ``Census SBO data''). SBA elected
not to use this dataset because that data addresses all firms across
the economy as a whole, and does not select for firms which are ready,
willing and able to engage in federal procurement contracting. For this
reason, SBA is of the view that it is not a viable alternative data set
for accurately measuring disparity.
After a review of the comments, for these reasons, SBA continues to
support the use of the CCR for the availability component of the
disparity ratio to
[[Page 62261]]
identify the eligible industries. In so doing, however, SBA does not
suggest that use of SBO data would never be appropriate to calculate
availability.
While the comments correctly stated that the NAS recommended in
their report the designation of an industry as eligible under the WOSB
Program if the industry appears underrepresented in two or more of the
four approaches, the NAS also recommended estimating disparity ratios
at a disaggregated level. In other words, the SBO database used in the
RAND Report provides data only at the two-digit level. In contrast,
both the CCR and the FPDS/NG provide the capability to use four-digit
NAICS classifications. Thus, SBA had to reconcile these recommendations
and, based on the above limitations of the SBO data set from the RAND
Report, SBA elected to use the four-digit CCR dataset for the
availability component.
In response to the comments which stated that not all WOSBs
register in CCR thus resulting in an undercounting of underutilization,
SBA notes that courts have looked at the appropriateness of the
``availability'' component, also known as the ``ready, willing, and
able'' component, in evaluating the accuracy of disparity studies. See
e.g., Eng'g Contractors Ass'n of S. Fla., Inc. v. Metro. Dade County,
122 F.3d 895, 907 (11th Cir. 1997); Concrete Works of Colorado, Inc. v.
City and County of Denver, 321 F.3d 950, 980 (10th Cir. 2003). The CCR
and SBO databases are different means of measuring the ``availability''
component.
Although not all firms or WOSBs have registered in CCR, the firms
in the CCR database have at least indicated by registering to submit an
offer on Federal prime contracts that they are ``willing'' to perform
work on such contracts and have self-identified as firms that are ready
and able to perform such work. Further, the SBO database used in the
RAND Report generally considers all firms in the economy so it is
possible that it may actually overestimate the number of firms that are
ready, willing and able to perform Federal contracts, thus potentially
overestimating underrepresentation. SBA recognizes that this is a
conservative approach to calculating availability, but believes its use
is appropriate in this instance, particularly in light of the other
advantages of the CCR database.
Other comments which SBA received supported the SBO database and
addressed the fact that the CCR does not allow the disparity ratio to
include specific amounts earned by that business in that NAICS code and
thus may lead to over counting of earnings.
As stated in the proposed rule, this concern does not render
unreliable the disparity ratios calculated using the dollars component
of the CCR database. The dollars-based disparity ratios are themselves
based on a comparison between two different ratios: The value of the
government contracts awarded to WOSBs in a particular industry compared
to the value of all government contracts awarded in that industry, on
the one hand; and the gross receipts (in the economy at large) of WOSBs
registered in the CCR database for that industry compared to the gross
receipts for all businesses registered for that industry, on the other
hand. The numerator of this ratio-the value of government contracts
awarded to WOSBs and to industries in general within a given industry
code-is not calculated using the CCR database.
In addition, with respect to the denominator, SBA believes that it
is reasonable to assume that WOSBs and non-WOSBs register in the CCR
database and identify industries for which they are available in a
similar manner. Thus, if a WOSB in a particular kind of business
registers in (and effectively restates its total revenues in) three
distinct NAICS codes, a non-WOSB in the same kind of business is likely
to register in (and restate its total revenues in) each of the same
three NAICS codes. And because the denominator of the dollars-based
disparity ratio is calculated based on a comparison between gross
receipts earned by WOSBs and non-WOSBs, rather than the absolute values
of those receipts, the potential duplicative re-reporting of revenue in
each NAICS code does not raise serious concerns in SBA's view, about
the reliability of the dollars analysis of the RAND study. For these
reasons, SBA disagrees with the comments that are concerned with the
viability of the CCR data because the CCR does not allow the disparity
ratio to include specific amounts earned by a business in a particular
NAICS code.
Lastly, SBA received comments which argued that since only 1.8
percent of women-owned businesses have receipts larger than $1 million
the fact that SBO doesn't distinguish between large and small WOSBs
should not be a determining factor. SBA notes that SBO's failure to
distinguish between large and small businesses is only one factor SBA
considered in deciding to use the CCR data. In addition, the existence
of a few large WOSBs or other businesses would potentially skew the SBO
data, resulting in an unreliable disparity ratio using the SBO data.
The effect is unknown but outliers on both the large and small ends of
the spectrum may affect the reliability of the SBO data used in the
RAND Report.
Accordingly, for the reasons stated in the proposed rule, SBA will
use the CCR database to identify eligible industries.
d. Methodology: FPDS Database
In the proposed rule, SBA explained that the RAND Report used the
Fiscal Year (FY) 2005 Federal Procurement Data System/Next Generation
(FPDS/NG) for the utilization component of the disparity ratio that
resulted in the identification of 83 eligible NAICS categories.
SBA received hundreds of comments which supported the use of the
FPDS database to identify the eligible industries; however, one comment
expressed concern with this database, stating that contract revenues in
the database (presumably FPDS) may not reflect actual money earned
(e.g., multi award contracts) and contract award values do not equate
to company revenues.
SBA agrees with the comment that stated a company's revenues do not
equal contract award values. In the RAND Report, company revenues are
obtained from the CCR database, while contract award values are
obtained from the FPDS.
In addition, while SBA understands the concern with the accuracy of
the FPDS procurement database, SBA maintains that this database is a
viable and appropriate means of identifying eligible industries. In
addition, the FPDS is the best source of information on Federal
contracts. See RAND Report at 7. Lastly, in some instances where
relevant data was available, RAND made adjustments to deal with the
limitations in the FPDS. See id. at 7-9.
For example, RAND considered the fact that, in some cases,
individual actions refer to multi-year contracts or are revisions to
earlier contracts. RAND stated in the Report that this could lead to
errors in summing to the contract level, such as negative dollar
amounts or very large contract values. In order to examine the
sensitivity of the disparity ratios to these outliers, RAND calculated
``trimmed'' results. The trimmed results reflect calculations where
RAND trimmed the top and bottom 0.5 percent of contract awards after
rolling up the data to the contract level. However, RAND found that
their ``comparisons from FY02 through FY05 also indicate that very
large contracts and larger negative values are awarded each year,
suggesting that they are not outliers'' and ``without a compelling
reason to delete these contracts, we are inclined to put more weight on
the full-sample
[[Page 62262]]
results'' as opposed to the trimmed results See id. at 8.
For the reasons stated above, SBA's Final Rule will use the FPDS
database as proposed.
e. The Eligible Industry Codes
For the reasons stated here and in the proposed rule, this Final
Rule designates 83 NAICS codes as eligible for Federal contracting
under the WOSB Program. There are forty-five NAICS codes in which WOSBs
are underrepresented and thirty-eight NAICS codes in which WOSBs are
substantially underrepresented.
The forty-five NAICS codes in which WOSBs are underrepresented are:
1. 2213--Water, Sewage and Other systems;
2. 2361--Residential Building Construction;
3. 2371--Utility System Construction;
4. 2381--Foundation, Structure, and Building Exterior Contractors;
5. 2382--Building Equipment Contractors;
6. 2383--Building Finishing Contractors;
7. 2389--Other Specialty Trade Contractors;
8. 3149--Other Textile Product Mills;
9. 3159--Apparel Accessories and Other Apparel Manufacturing;
10. 3219--Other Wood Product Manufacturing;
11. 3222--Converted Paper Product Manufacturing;
12. 3321;--Forging and Stamping;
13. 3323--Architectural and Structural Metals Manufacturing;
14. 3324--Boiler, Tank, and Shipping Container Manufacturing;
15. 3333--Commercial and Service Industry Machinery Manufacturing;
16. 3342--Communications Equipment Manufacturing;
17. 3345--Navigational, Measuring, Electromedical, and Control
Instruments Manufacturing;
18. 3346--Manufacturing and Reproducing Magnetic and Optical Media;
19. 3353--Electrical Equipment Manufacturing;
20. 3359--Other Electrical Equipment and Component Manufacturing;
21. 3369--Other Transportation Equipment Manufacturing;
22. 4842--Specialized Freight Trucking;
23. 4881--Support Activities for Air Transportation;
24. 4884--Support Activities for Road Transportation;
25. 4885--Freight Transportation Arrangement;
26. 5121--Motion Picture and Video Industries;
27. 5311--Lessors of Real Estate;
28. 5413--Architectural, Engineering, and Related Services;
29. 5414--Specialized Design Services;
30. 5415--Computer Systems Design and Related Services;
31. 5416--Management, Scientific, and Technical Consulting
Services;
32. 5419--Other Professional, Scientific, and Technical Services;
33. 5611--Office Administrative Services;
34. 5612--Facilities Support Services;
35. 5614--Business Support Services;
36. 5616--Investigation and Security Services;
37. 5617--Services to Buildings and Dwellings;
38. 6116--Other Schools and Instruction;
39. 6214--Outpatient Care Centers;
40. 6219--Other Ambulatory Health Care Services;
41. 7115--Independent Artists, Writers, and Performers;
42. 7223--Special Food Services;
43. 8111--Automotive Repair and Maintenance;
44. 8113--Commercial and Industrial Machinery and Equipment (except
Automotive and Electronic) Repair and Maintenance; and
45. 8114--Personal and Household Goods Repair and Maintenance.
The thirty-eight NAICS codes in which WOSBs are substantially
underrepresented are:
1. 2372--Land Subdivision;
2. 3152--Cut and Sew Apparel Manufacturing;
3. 3231--Printing and Related Support Activities;
4. 3259--Other Chemical Product and Preparation Manufacturing;
5. 3328--Coating, Engraving, Heat Treating, and Allied Activities;
6. 3329--Other Fabricated Metal Product Manufacturing;
7. 3371--Household and Institutional Furniture and Kitchen Cabinet
Manufacturing;
8. 3372--Office Furniture (including Fixtures) Manufacturing;
9. 3391--Medical Equipment and Supplies Manufacturing;
10. 4841--General Freight Trucking;
11. 4889--Other Support Activities for Transportation;
12. 4931--Warehousing and Storage;
13. 5111--Newspaper, Periodical, Book, and Directory Publishers;
14. 5112--Software Publishers;
15. 5171--Wired Telecommunications Carriers;
16. 5172--Wireless Telecommunications Carriers (except Satellite);
17. 5179--Other Telecommunications;
18. 5182--Data Processing, Hosting, and Related Services;
19. 5191--Other Information Services;
20. 5312--Offices of Real Estate Agents and Brokers;
21. 5324--Commercial and Industrial Machinery and Equipment Rental
and Leasing;
22. 5411--Legal Services;
23. 5412--Accounting, Tax Preparation, Bookkeeping, and Payroll
Services;
24. 5417--Scientific Research and Development Services;
25. 5418--Advertising, Public Relations, and Related Services;
26. 5615--Travel Arrangement and Reservation Services;
27. 5619--Other Support Services;
28. 5621--Waste Collection;
29. 5622--Waste Treatment and Disposal;
30. 6114--Business Schools and Computer and Management Training;
31. 6115--Technical and Trade Schools;
32. 6117--Educational Support Services;
33. 6242--Community Food and Housing, and Emergency and Other
Relief Services;
34. 6243--Vocational Rehabilitation Services;
35. 7211--Traveler Accommodation;
36. 8112--Electronic and Precision Equipment Repair and
Maintenance;
37. 8129--Other Personal Services; and
38. 8139--Business, Professional, Labor, Political, and Similar
Organizations.
f. Examples of When Contracting Officers Can Use WOSB Program
SBA received one comment which urged SBA to provide examples of
when a contracting officer can apply the WOSB Program to a contract. In
response to this request, SBA provides the following examples.
If the requirement is assigned a six digit NAICS code
under NAICS 5313--Activities Related to Real Estate, the contracting
officer may not set aside the procurement under the WOSB Program
because the contract is not for the procurement of goods or services
with respect to an industry as one in which EDWOSBs are
underrepresented or substantially underrepresented or WOSBs are
substantially underrepresented with respect to Federal procurement
contracting.
If the requirement is assigned a six digit NAICS code
under NAICS 8129--Other Personal Services, then, assuming all other
requirements are met, the contracting officer may set aside the
procurement under the WOSB Program
[[Page 62263]]
to all eligible WOSBs because the industry is one in which WOSBs are
substantially underrepresented.
If the requirement is assigned a six digit NAICS code
under NAICS 5614--Business Support Services, then, assuming all other
requirements are met, the contracting officer may set aside the
procurement under the WOSB Program to all eligible EDWOSBs because the
industry is one in which WOSBs are underrepresented.
Furthermore, as required by the Small Business Regulatory
Enforcement Act (SBREFA) (Pub. L. 110-28, section 212), SBA will
publish a small entity compliance guide to assist small businesses with
the WOSB Contract Program. The guide will be posted, at the time the
rule is published, on the SBA Web site (http://www.sba.gov) and
distributed to known industry contacts. The guide will be in easily
understood language as to what is required to participate in the new
program.
g. Updates to the RAND Report
Hundreds of the comments SBA received that supported the
identification of the 83 eligible NAICS categories also stated that the
RAND Report data is outdated and should be updated. In particular, the
comments suggested the creation of a regular timeline for updates to
the RAND Report, with some comments specifically recommending updating
the RAND Report every five years.
Most of these comments also suggested that SBA find additional data
sources for the disparity ratios calculated in the RAND Report and
perform additional data analysis to the data. In particular, one
comment stated that it ``generally supports the methodology but SBA has
not sufficiently examined the market where several large companies are
dominant and controlling over 95 percent of the market share in NAICS
codes 3119, 3121 and 325412.'' The comments also suggested that SBA
gather bid data, all data on WOSBs in Federal contracting, data from
state governments and third-party certifiers, as well as any other data
sources that allow for a more complete picture of availability.
Another comment suggested that SBA include in its calculation the
potential availability of WOSBs had there been no discrimination. The
comments also stated that additional data will provide a ```gold
standard' by which to judge whether our companies or programs are
successful.'' Another comment suggested that a ``special committee''
should be appointed to review government purchases on an objective
basis, without having knowledge of the demographics of the bidding
companies' ownership.
The CCR data used in the RAND Report are from October 2006. One of
the cited benefits of the CCR database is that it is updated
continuously and made available promptly. Therefore, it provides SBA
the flexibility needed to access this data and readily update the
eligible industries. The SBO data from the five-year Economic Census is
from 2002. The next SBO was taken in 2007, and the results are not yet
available.
SBA understands the concerns presented in these comments. The data
relied upon in the RAND Report is determinative of the resulting
disparity ratios. Obtaining the most accurate and timely data possible
is of paramount importance to SBA. SBA is committed to making an on-
going effort to obtain accurate and timely data to use in the
anticipated updates to the list of eligible industries. In addition,
SBA is considering available options in obtaining new and better data
sources that are viable and appropriate means of measuring disparity of
WOSBs in Federal contracting. Rather than limiting itself to a
particular timetable for updating the eligible industries, SBA believes
it is more prudent to update the study and list of eligible industries
as accurate and timely data become available to SBA for analysis and
the analysis is completed.
SBA also received comments which stated that, in examining data
about underrepresentation, ``fronts'' may be skewing calculations, and
therefore, SBA should dedicate resources to site visits to ensure
accurate calculations.
The SBA believes that its regulations, which permit protests and
robust eligibility examinations, will not only aid in preventing fraud,
waste and abuse in the WOSB program, but as ``fronts'' are weeded out
of the WOSB Program and denied contract opportunities under the program
through the protests and eligibility examinations, the accuracy of the
WOSB data in CCR and FPDS will improve. In addition, under SBA's
eligibility examinations, SBA reserves the right to conduct a site
visit without prior notification to the concern. SBA will conduct such
examinations of WOSBs as a way to combat fraud and abuse of the WOSB
Program.
h. Appeal Right
SBA received several comments which suggested that businesses
should have the right to appeal if their NAICS code was not identified
as an eligible industry for Federal contracting under the WOSB Program.
Section 8(m) of the Act sets forth certain criteria for the WOSB
Program. Specifically, the Act provides that the contract being set
aside must be for the procurement of goods or services with respect to
an industry identified by SBA pursuant to a study. Therefore, Congress
expressly limited application of the WOSB Program to the industries
identified by SBA pursuant to a study.
SBA contracted with RAND to complete a study in order to fulfill
this statutory obligation. As explained in the proposed rule, the RAND
Report, using various combinations of data sources and methods,
identified twenty-eight possible approaches to measuring the
underrepresentation and substantial underrepresentation of WOSBs in
Federal procurement contracting. SBA had to identify a reasonable means
for evaluating, reconciling and applying these methodologies. As
detailed in the proposed rule, SBA determined that the methodology
using the CCR and FPDS databases, along with both the dollars and
numbers approaches, is a viable and appropriate means of identifying
industries in which WOSBs are underrepresented or substantially
underrepresented.
Because SBA is required to identify the industries pursuant to a
study, SBA disagrees with the comments received on this issue and will
not implement an appeal process for the NAICS categories found
ineligible for Federal contracting under the WOSB Program. However, SBA
is committed to reevaluating the list of eligible industries as viable
and appropriate data become available to analyze and SBA will provide
for the eligibility of additional or fewer industries in accordance
with the requirements of the congressional mandate and where indicated
by analysis of the viable and appropriate data.
i. Agency-by-Agency Requirement
In the proposed rule, SBA explained it was eliminating the
requirement for an agency-by-agency determination of discrimination.
SBA received dozens of comments which supported this proposal. SBA did
receive a few comments that disagreed with the removal of this
requirement because the commentators believed the RAND Report is flawed
and therefore the agency-by-agency requirement is necessary.
As stated in the proposed rule, SBA believes the methodology used
to identify the 83 eligible industries is a viable and appropriate
means of identifying industries in which WOSBs are underrepresented or
substantially underrepresented. Based on this assessment, SBA believes
that the RAND Report is sufficient to satisfy the
[[Page 62264]]
intermediate scrutiny standard that applies to the WOSB Program.
The equal protection requirements of the Fifth Amendment to the
United States Constitution establish that programs that use gender as a
factor in distributing benefits to individuals must meet the
intermediate scrutiny standard. This standard requires the program to
further important governmental objectives and employ means that are
substantially related to the achievement of those objectives. See
United States v. Virginia, 518 U.S. 515, 533 (1996). In applying this
standard to the WOSB Program, the government has a sufficiently
important objective: To redress the effects of past discrimination
against women in contracting and to ensure that the effects of that
discrimination do not serve to limit WOSBs' opportunities to
participate in Federal contracting opportunities. See City of Richmond
v. Croson Co., 488 U.S. at 492; Califano v. Webster, 430 U.S. 313, 318
(1977). More specifically, the Court has repeatedly upheld as an
important government objective the reduction of disparities in
condition or treatment between men and women caused by the long history
of discrimination against women. See Califano, 430 U.S. at 317; Miss.
Univ. for Women v. Hogan, 458 U.S. 718, 728 (1982); Schlesinger v.
Ballard, 419 U.S. 498 (1975); Kahn v. Shevin, 416 U.S. 351 (1974).
Moreover, the means chosen by Congress to implement the WOSB
Program ensure that the Program is substantially related to its goals.
Congress expressly limited application of the WOSB Program only to
industries in which women are substantially underrepresented or
underrepresented in contracting. The RAND Report is a detailed analysis
of WOSBs which identifies the disparity ratio of WOSBs in Federal prime
contracting by 4-digit NAICS code and is a sufficient basis for
implementing the rule. The Supreme Court has rejected the contention
that government may adopt a race-conscious contracting program only
``to eradicate the effects of its own prior discrimination,'' and this
conclusion also applies to gender-conscious contracting programs.
Croson, 488 U.S. at 486.
Accordingly, based on the comments that supported the proposed rule
and for the reasons set forth in the proposed rule, SBA will not
require the procuring agency to make a finding of discrimination prior
to setting aside a contract in one of the eligible NAICS categories as
currently required in 13 CFR 127.501(b).
B. Ownership and Control
The SBA received several comments which were concerned with the
ownership and control of an EDWOSB or WOSB. In the proposed rule, Sec.
127.201 addressed ownership and states that the EDWOSB/WOSB must be
unconditionally and directly owned at least 51 percent by women. The
ownership could not be subject to any conditions, executory agreements,
voting trusts, or other arrangements that cause or potentially cause
ownership benefits to go to another. Several comments supported the
regulation, and one comment specifically agreed that a WOSB should not
be 51 percent owned and controlled by another business entity even if
that business entity is owned and controlled by women. However, one
comment recommended that SBA increase ownership by women to 67 percent,
or at least something higher than 51 percent, because this commenter
has witnessed husbands running companies that are 51 percent owned by
the wife. SBA notes that the 51 percent ownership and control
requirement is statutory and cannot be changed in the regulations. In
addition, SBA believes that the regulations set forth sufficient
requirements that the woman control the business, and also sufficient
checks to ensure that only truly eligible businesses receive the
benefits of the WOSB Program.
Another comment agreed that there should be unconditional and
direct ownership that is unencumbered by conditions or agreements and
believed that if there are instances of a pledge or encumbrance of
stock, SBA should ensure such pledges or encumbrances follow normal
commercial practices. The final regulation specifically explains that
the ownership must be direct (13 CFR 127.201). Further, the final
regulation explains that the pledge or encumbrance of stock or other
ownership interest as collateral does not affect the unconditional
nature of the ownership if the terms of the agreement follow normal
commercial practices and the owner retains control absent violations of
the terms. SBA believes this Final Rule provides flexibility to the
WOSB while at the same time ensuring that the business is owned and
controlled by women.
The proposed regulation also addressed unexercised stock options
with respect to ownership of a corporation. One comment agreed with the
proposed regulation that any unexercised stock options held by a woman
will be disregarded while the unexercised stock options held by any
other individual or entity will be treated as having been exercised.
SBA notes that this final regulation is consistent with SBA's other
contracting program regulations addressing the treatment of unexercised
stock options.
One comment recommended that SBA establish a minimum amount of time
that the business has to be owned by women in order to be eligible for
the WOSB Program and another comment questioned why SBA does not
require the WOSB to have a minimum amount of experience. SBA does not
believe these requirements are necessary in light of the fact they are
not required by statute and could be detrimental to start[dash]up
companies. In addition, imposing these requirements may only perpetuate
discriminatory barriers. Further, there are many industries and
contracts in which age and size are irrelevant to ability to perform.
The SBA also received several comments which supported the portion
of the proposed rule which addressed control of the EDWOSB/WOSB.
Specifically, Sec. 127.202 of the Final Rule explains that the
management and daily business operations of the concern must be
controlled by one or more women. At least two comments supported the
requirement that one or more women must make the long term decisions
and have the day-to-day management of the company to ensure that the
spouse or another person is not really running the company.
One comment also supported the proposed rule that the women owners
cannot have outside employment if it prevents them from devoting
sufficient time and attention to the daily operations and management of
the company. However, one comment believed that the rule was too
stringent concerning the limitation on outside employment. According to
this comment, many small business owners have two jobs in the first few
years of starting a company and it may take years for the business to
grow. The comment stated that this requirement is not consistent with
the Service-Disabled Veteran-Owned Small Business, HUBZone or 8(a)
Business Development (BD) Programs.
The final regulation states that the woman who holds the highest
officer position of the concern must manage it on a full-time basis and
devote full-time to the business concern during the normal working
hours of business concerns in the same or similar line of business. The
final regulation also states that the woman who holds the highest
officer position may not engage in outside employment that prevents her
from devoting sufficient time and attention to the daily affairs of the
[[Page 62265]]
concern to control its management and daily business operations.
Therefore, the final regulation does not necessarily limit outside
employment. It permits outside employment as long as it does not
prevent the business owner from managing the EDWOSB or WOSB. Although
such limitations may not be expressly set forth in the SDVO or 8(a) BD
regulations, the same policy is applied to those programs because
essentially, if an individual upon whom eligibility is based is
devoting full-time to one business, it is difficult to prove that same
individual is devoting full-time to the SDVO or 8(a) business and
meeting the eligibility criteria for those programs.
One comment noted that it supported the rule that the women
business owners do not necessarily have to have the technical expertise
or possess the required license while another comment requested that
SBA reconsider this regulation and preclude ``nonprofessionals'' or
unlicensed individuals from owning professional businesses. Another
comment believed that SBA should have more stringent rules to ensure
WOSBs are actually 51 percent owned by women that are active in the
daily management of the business.
The Final Rule provides that although the women manager need not
have the technical expertise or license required, she must nonetheless
demonstrate that she has the ultimate managerial and supervisory
control over those possessing the required licenses or technical
expertise. This is consistent with the 8(a) BD regulations concerning
control and SBA believes it provides flexibility to the company while
still ensuring that the woman controls the company. In addition, SBA
will be monitoring EDWOSBs and WOSBs via eligibility examinations and
protests and appeals to ensure that the women owners are actively
engaged in the daily management of the business.
C. Economic Disadvantage
As discussed above, the statute states that a contracting officer
may set aside a requirement for EDWOSBs in industries that are
underrepresented or substantially underrepresented. SBA may waive the
requirement that the WOSB be economically disadvantaged and permit a
contracting officer to set aside a requirement for WOSBs in industries
that are substantially underrepresented. The Final Rule implements
these statutory provisions and sets forth the criteria for determining
economic disadvantage.
One comment specifically supported the waiver of the economic
disadvantage requirement if the industry is substantially
underrepresented. However, SBA received several comments which opposed
any economic disadvantage component to the WOSB Program and one comment
specifically opposed any preference provided to EDWOSBs. Some comments
noted that there were no similar economic disadvantage requirements for
the HUBZone or SDVO Programs and one comment stated that if there are
economic disadvantage requirements, then those meeting the requirements
should receive the same benefits afforded to 8(a) BD Program
Participants. SBA also received some comments which requested the
removal of the distinction between substantially underrepresented and
underrepresented industries.
Although SBA understands the concerns expressed by these comments,
the agency is bound by the requirements set forth in the statute for
the WOSB Program. As such, SBA cannot eliminate the economic
disadvantage component of the WOSB Program or afford WOSBs or EDWOSBs
the same benefits afforded 8(a) BD Program Participants since the
statute provides different benefits for each program. For the same
reason, it cannot eliminate the distinction between substantially
underrepresented and underrepresented industries.
However, upon further review, SBA agrees that there should not be a
priority for EDWOSBs for contracts assigned a NAICS code in an industry
that has SBA determined is substantially underrepresented. The Small
Business Act provides the Administrator authority to waive the economic
disadvantage requirement in industries where women are substantially
underrepresented. 15 U.S.C. 637(m)(3). With these regulations, the
Administrator is waiving this requirement in those industries.
Therefore, in industries where WOSBs are substantially
underrepresented, as identified in this rule, the contracting officer
may set aside the requirement for WOSBs without first determining
whether the rule of two for EDWOSBs can be met. The regulation has been
amended accordingly. We note that because an EDWOSB is by definition a
WOSB, EDWOSBs can obviously submit offers for a procurement set-aside
for WOSBs.
The SBA also received over 160 comments addressing the specific
economic disadvantage criteria set forth in the proposed rule in Sec.
127.203. One comment believed that the proposed rule was inconsistent
with the regulations concerning economic disadvantage in the 8(a) BD
Program while another comment expressed concern with using the 8(a) BD
criteria because they are two different programs and it is not clear
there are sufficient WOSBs in the 8(a) BD Program to support use of the
same economic disadvantage criteria.
Along those same lines, one comment supported SBA's efforts to
simplify the economic disadvantage analysis while another comment
recommended that SBA simplify the economic disadvantage criteria
further by simply stating that a woman is economically disadvantaged if
the fair market value of all her assets is less than $6 million,
excluding her retirement, any loans to her company and any inheritance.
Some comments opposed any requirements concerning total assets when
determining economic disadvantage.
In the proposed rule, SBA explained that when drafting the WOSB
Program rule, it relied on certain interpretations and policies that
have been followed by SBA with respect to the 8(a) BD Program that SBA
believes should be applied to the WOSB Program as well. This included
certain interpretations and policies SBA had set forth in a rule
proposing to amend the 8(a) BD regulations, 74 FR 55694 (Oct. 28,
2009), that SBA withdrew on March 4, 2010. SBA believes that the 8(a)
BD Program has decades of experience in reviewing cases based on
economic disadvantage and has created a body of law and policy that
encompasses this experience. SBA believes it would be fair and prudent
to use this experience and body of law when determining economic
disadvantage for the WOSB Program.
The SBA's experience with the 8(a) BD Program is that it must
review income, personal net worth and the fair market value of the
total assets of the woman because any other test would not demonstrate
economic disadvantage. For example, it could be that a woman with low
net worth has a large income or large assets, which should be pertinent
to a claim of economic disadvantage. Therefore, SBA has not changed the
proposed rule in this respect and continues to follow the policy and
regulations for economic disadvantage for the 8(a) BD Program.
One comment stated that failure to get a line of credit should be
an indicator of economic disadvantage. SBA agrees and believes that the
objective criteria set forth in the rule are indicators of economic
disadvantage and demonstrate that a woman's 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
[[Page 62266]]
business. This means that failure to get a line of credit because the
business is owned by a woman, while male owned businesses can readily
obtain such credit, is encompassed in the objective criteria set forth
in the rule.
Numerous comments stated that the overall economic disadvantage
figures are too low and should be updated for inflation, adjusted per
the Consumer Price Index, or adjusted for geographical reasons. Other
comments noted that business owners must have a certain amount of
assets to obtain bonding and show stability of the company. For these
reasons, the comments stated that it would be difficult to meet the
personal net worth or income requirements set forth in the proposed
rule.
SBA also received a few comments which stated that it should use
specific guidelines based on median regional incomes like Internal
Revenue Service Publication 1542 (publicly available at http://www.irs.gov/formspubs), which details per diem rates based on local
expense averages, peg location and inflation. SBA received numerous
comments which argued that it should not use a two year adjusted gross
income when determining economic disadvantage because it is unfair to S
corporations, sole proprietorships, and partnerships which are
corporate structures used by a vast majority of small businesses and it
would be more reliable to use the personal net worth guidelines set by
the U.S. Department of Transportation, (publicly available at http://osdbuweb.dot.gov/DBEProgram), as long as the threshold was increased,
and personal residences, retained earnings, and retirement assets are
excluded.
Similarly, several comments opposed the $200,000 income cap because
it limits a woman's ability to secure financing (line of credit) and
bonding. Several comments believed that the salary should vary
depending on the type of business and location of the firm. One comment
noted that SBA should consider specifically what $200,000 means to
other industries and consider other factors. Another comment
recommended the income be raised to $400,000.
SBA notes that when determining what dollar thresholds to propose,
it sought to create an objective standard by which a woman may or may
not qualify as economically disadvantaged and reviewed information
available as it relates to the 8(a) BD Program. The SBA believed that a
straight line numerical figure would be more understandable, easier to
implement, and avoid any appearance of unfair treatment.
When determining the threshold for fair market value of total
assets, SBA reviewed SBA Office of Hearings and Appeals (OHA) decisions
on the matter. For example, OHA upheld as reasonable a determination
that an individual was not economically disadvantaged with total asset
levels of $4.1 million and $4.6 million. See Matter of Pride
Technologies, SBA No. 557 (1996), and SRS Technologies v. U.S., 843 F.
Supp. 740 (D.D.C. 1994). Alternatively, and again with respect to the
8(a) BD Program, SBA's finding that an individual was not economically
disadvantaged with total assets of $1.26 million was overturned. See
Matter of Tower Communications, SBA No. 587 (1997).
Upon further review, however, SBA agrees that the thresholds for
fair market value of the total assets are too low and therefore in the
Final Rule, states that an individual will not be considered
economically disadvantaged if the fair market value of all her assets
(with no reduction for the dollar amount of any liens or mortgages that
may exist against such assets) exceeds $6 million. Unlike the net worth
analysis, SBA does not exclude the value of the business concern in
determining economic disadvantage in the total asset analysis, nor does
SBA exclude the fair market value of the primary residence. Therefore,
SBA believes it would be reasonable to increase that threshold.
In addition, SBA agrees with the comments and believes that the
threshold set forth in the proposed rule for income should be
increased. SBA had proposed to provide that it would presume that a
woman is not economically disadvantaged if her yearly income averaged
over the past three years exceeds $200,000. SBA proposed an income
level of $200,000 because that figure closely approximates the income
level corresponding to the top two percent of all wage earners, which
has been upheld as a reasonable indicator of a lack of economic
disadvantage. SBA believed that to some, the $200,000 income would seem
unduly high as a benchmark, but noted that exceeding this amount is
being used only to presume, without more information, that the woman is
not economically disadvantaged.
In all cases, SBA's determination of economic disadvantage is based
on the totality of the circumstances, not merely income. Nonetheless,
income is a relevant factor, and those whose income is above a certain
threshold should not, in most circumstances, be considered to be
economically disadvantaged.
Since the time SBA issued the proposed rule, the IRS has issued
statistical data on U.S. wage earners that show that the vast majority
of individuals have an adjusted gross income of less than $350,000 and
that the top 2% of wage earners had an adjusted gross income of
$261,000 or more. SBA believes it would be reasonable to raise the
threshold to this $350,000 amount to align it with the new IRS
statistical data. Further, increasing the personal income threshold to
$350,000 will accomplish two important goals. First, it will allow the
EDWOSB to attract and retain higher skilled employees, since the woman
owners/manager must be the highest compensated individual in the
business concern. Second, many EDWOSBs will be actual or potential
participants in the SBA's 8(a) Business Development Program as well as
Department of Transportation's Disadvantaged Business Entity Program;
and SBA will accept the certification of economic disadvantage
applicable to all 8(a) program participants as conclusive evidence of
economic disadvantage for the WOSB program.
Under this approach, income in excess of $350,000 would generally
be used to presume that the individual is not economically
disadvantaged. It would not, however, be presumed that those with
income below $350,000 are economically disadvantaged. SBA will consider
income in connection with other factors (such as overall assets, net
worth, changes in income, and other indicia of access to credit and
capital) when determining economic disadvantage.
In addition, the Final Rule permits applicants to rebut the
presumption of lack of economic disadvantage upon a showing that the
income attributed to the individual that is in excess of the threshold
amount is not indicative of lack of economic disadvantage. For example,
the presumption could be rebutted by a showing that the income was
unusual (inheritance) and is unlikely to occur again. At least one
comment supported the ability of a business to be able to rebut the
presumption of lack of economic disadvantage if the income was unusual
or unlikely to occur again. Another comment thought it was confusing as
to when inheritance is counted as income and when it is not. Yet
another comment believed that if someone inherits over $5 million, that
person should not be considered economically disadvantaged even if it
is a one-time only event.
The proposed and Final Rule explain that when considering a woman's
personal income, a presumption of a lack of economic disadvantage can
be
[[Page 62267]]
rebutted by a showing that a certain income level was unusual and
unlikely to occur again. However, that same money could be counted as
part of an individual's total assets. Thus, an inheritance of $6
million, for example, may be atypical income and excluded from SBA's
determination of economic disadvantage based on income, but it would
not be excluded from SBA's determination of economic disadvantage based
on total assets. In such a case, a $6 million inheritance would render
the woman not economically disadvantaged based on total assets.
We note that although SBA has raised the thresholds for fair market
value of total assets and income, it does not agree that the thresholds
for personal net worth should be raised. The Final Rule specifically
excludes the following from the personal net worth calculation: (1) The
woman's ownership interest in the business concern; (2) equity interest
in her primary residence; (3) income received from an S corporation,
limited liability company or partnership where the income was
reinvested in the business or used to pay taxes arising in the normal
course of operations of the business concern; and (4) funds invested in
IRAs and retirement accounts that are unavailable until retirement age
without a significant penalty for early withdrawal. As a result of
these exclusions, SBA believes the personal net worth threshold of
$750,000 should remain as proposed.
SBA received numerous comments that supported the proposed
regulation to exclude community property interests of the spouse when
looking at personal net worth. In the preamble to the proposed rule,
SBA explained that it proposed not taking community property laws into
account when determining economic disadvantage if the woman has no
ownership interest. This means that property that is legally in the
name of the one spouse would be considered wholly that spouse's,
whether or not the couple lived in a community property state. Since
community property laws are usually applied when a couple separates,
and since spouses in community property states generally have the
freedom to keep their property separate while they are married, SBA
proposed to treat property owned solely by one spouse as that spouse's
property for economic disadvantage determinations. However, if both
spouses own the property, SBA would attribute a half interest in such
property to the woman claiming economic disadvantage, unless there is
evidence to show that the interest in such property is greater or
lesser. SBA believes that this policy results in equal treatment for
applicants in community and non-community property states and therefore
has not changed the rule as proposed. By statute, community property
laws will also not be applied for purposes of determining ownership of
an EDWOSB or WOSB.
In addition, and along the same lines, SBA proposed to provide that
it may consider a spouse's financial situation in determining an
individual's access to capital and credit. One comment stated that it
was unclear as to how a spouse's salary and portfolio value would be
treated with respect to economic disadvantage. Two comments argued that
the spouse's income and access to capital should not be counted if the
spouse is not involved in the business.
After careful review, SBA agrees and has determined that a spouse's
financial condition should not be attributed to the individual claiming
disadvantaged status in every case. Instead, SBA will consider a
spouse's financial condition only when the spouse has a role in the
business (e.g., an officer, employee or director) or has lent money to,
provided credit support to, or guaranteed a loan of the business. In
those cases, SBA must consider a spouse's financial situation when
determining a woman's access to capital and credit because it is unfair
to consider a woman economically disadvantaged when she can rely on her
spouse to obtain capital and credit which other women business owners
cannot obtain. In addition, the Final Rule explains that SBA may also
consider the spouse's financial condition if the spouse's business is
in the same or similar line of business as the EDWOSB or WOSB. SBA has
seen instances in the past where the spouse and WOSB share similar
names, Web sites, or employees. In those instances, it would be
reasonable for SBA to look at the spouse's financial condition since it
is apparent that the spouse is providing support to the EDWOSB/WOSB.
The proposed rule also explained that SBA would exempt from the
calculation of personal net worth and fair market value of total assets
funds invested in an Individual Retirement Account (IRA) or other
official retirement account that are unavailable until retirement age
without a significant penalty. The basis for this proposal stems from
SBA's experience with the 8(a) BD Program, where it has found that
including IRAs and other retirement accounts in the calculation of an
individual's net worth does not serve to disqualify wealthy
individuals. Instead, such an exclusion has worked to make individuals
ineligible to the extent they have invested prudently in accounts to
ensure income at a time in their lives when they are no longer working.
Several comments supported these exemptions; however, two comments
opposed the provision that the retirement accounts be included once the
woman can withdraw at retirement age because this prevents mature women
who still want to work from being eligible for the WOSB Program. These
two comments recommended that SBA merely count the withdrawals as
income. SBA believes that retirement accounts are held for purposes of
ensuring future income when an individual is no longer working and
should not count the funds as current assets if they are not currently
being enjoyed. However, if the individual has reached retirement age
and has access to the retirement account, or has incurred a significant
penalty and acquired access to the account, the funds are current
assets and must be included as part of the individual's personal net
worth, total assets, and income. However, if the individual invests
funds from the retirement account into the EDWOSB or WOSB, those funds
would be excluded from the net worth analysis as part of the exclusion
of business equity. The EDWOSB or WOSB may be required to submit
evidence that the funds were invested into the business. SBA has issued
the Final Rule as it had proposed.
In addition, the proposed rule explained that in order for SBA to
determine whether funds invested in a specific account labeled a
``retirement account'' may be excluded from a woman's net worth
calculation, the woman must provide to SBA information about the terms
and conditions of the account. SBA asked for comments on what specific
information might be helpful. One comment stated that SBA should use
Internal Revenue Service (IRS) Form 5498 to identify yearly
contributions to such retirement accounts. SBA has determined that in
order for it to determine whether funds invested in a specific account
labeled a ``retirement account'' may be excluded from an individual's
net worth calculation, the individual must provide to SBA information
about the terms and conditions of the account and certify in writing
that the ``retirement account'' is legitimate. SBA notes that as part
of its document collection to verify eligibility, it will obtain income
tax information that can also be used to verify whether an account is a
retirement account.
SBA has also proposed exempting income from a corporation taxed
under Subchapter S of Chapter 1 of the Internal Revenue Code (S
corporation)
[[Page 62268]]
from the calculation of both income and net worth to the extent such
income is reinvested in the firm or used to pay taxes arising from the
normal course of operations of an S corporation. Although the income of
an S corporation flows through and is taxed to individual shareholders
in accordance with their interest in the S corporation for Federal tax
purposes, SBA will take such income into account for economic
disadvantage purposes only if it is not reinvested in the business or
used to pay the taxes. This proposal would result in equal treatment of
corporate income for corporations taxed under Subchapter C of Chapter 1
of the Internal Revenue Code (C corporations) and S corporations. In
cases where that income is reinvested in the firm or used to pay taxes
arising from the normal course of operations of the S corporation and
not retained by the woman, SBA believes it should be treated the same
as C corporation income for purposes of determining economic
disadvantage. In order to be excluded, the owner of the S corporation
would be required to clearly demonstrate that the S corporation
distribution was used to pay taxes or was reinvested back into the S
corporation within 12 months of the distribution of income.
Three comments supported SBA's proposal to exempt income received
from an S corporation from the calculation of personal net worth and
income and strongly agree that S corporations and C corporations should
be treated similarly in this respect. One comment, however, stated that
the requirement that the owner demonstrate that money was received and
reinvested in the business is burdensome. SBA notes that the small
business bears the burden to prove its eligibility for the WOSB Program
and therefore, must be able to demonstrate in these cases that the S
corporation distribution was used to pay taxes or was reinvested back
into the S corporation within 12 months of the distribution of income.
One comment agreed with this provision but recommended that SBA
treat limited liability companies the same. SBA agrees and believes
limited liability companies and partnerships are taxed similar to S
corporations. With all of these entities, the income flows through and
is taxed to individual partners, members, or shareholders in accordance
with their interest in the company for Federal tax purposes. Therefore,
SBA has amended the Final Rule from what it initially proposed.
In addition, SBA has decided it would be best to set forth the
clarification contained in the supplementary information--that
corporation/partnership/limited liability losses are losses only to the
company, and not losses to the individual--specifically in the
regulatory text to clear up any confusion on this issue. In addition,
the Final Rule has clarified that the treatment of corporation/
partnership/limited liability income applies to both determinations of
an individual's net worth and personal income.
One comment recommended that SBA eliminate any regulation
permitting the transfer of assets to an immediate family member while
another comment supported the careful examination of asset transfer to
immediate family members within 2 years of the transfer because the
women may be transferring the assets to family members for their
support. SBA agrees that there are valid reasons for transferring
assets to an immediate family member as identified in the rule (e.g.
medical expenses, education and birthdays) and a woman should not be
penalized for this when determining economic disadvantage. As such, SBA
has adopted the proposed provision in the Final Rule.
One comment expressed confusion as to when a personal residence
would be excluded and questioned if the residence could be excluded if
it were used to guarantee a company line of credit. The Final Rule
explain that when determining personal net worth, SBA will exclude the
woman's equity interest in the primary personal residence. In addition,
when determining the fair market value of the assets, SBA will include
the value of the primary residence in the calculation (without
deduction for any liens on the assets). SBA is not excluding the
residence as an asset even if it is used to guarantee the company line
of credit because the residence is still an asset to that individual,
as evidenced by the fact it can be used to secure a line of credit.
In sum, based upon the comments received, SBA has amended some of
the proposed regulations in this Final Rule. Specifically, SBA has
increased the dollar thresholds for income and fair market value of
assets for purposes of determining economic disadvantage, and has
clarified certain issues as they relate to S corporations, limited
liability companies and partnerships.
D. Certification
In the proposed rule, SBA proposed permitting EDWOSBs and WOSBs to
either self-certify their status or provide evidence of certification
from an approved third-party certifier. Of the almost 1,000 comments
received overall on the rule, most of them commented on the
certification procedures for a total of almost 1,900 specific comments
concerning the certification requirements.
We note that many of the comments confused the CCR and Online
Representations and Certifications Application (ORCA) databases and
believed that ORCA or CCR would serve as the document repository for
the WOSB Program or supported the use of the CCR ``questionnaire''.
Some comments stated that WOSBs should be required to register in CCR.
A few comments acknowledged some confusion and suggested clarification
or a guide on how this process would work. There seems to be some
public confusion concerning the different Federal databases and SBA
would like to provide some clarification on that as well as the WOSB
Program certification process.
CCR is an online government-maintained database of companies
wanting to do business with the Federal government available at
ccr.gov. The Federal Acquisition Regulation (FAR) at 48 CFR 4.1102(a)
requires that most prospective contractors be registered in the CCR
database prior to award of a contract or agreement, with certain
exceptions. Agencies search the database for prospective vendors. After
registering, you may enter your small business profile information on
the Dynamic Small Business Search page. Creating a profile in CCR and
the Dynamic Small Business Search, and keeping it current, helps
provide access to Federal contracting opportunities.
Thus, the EDWOSB or WOSB must register in CCR first. Next, it must
provide documents supporting its EDWOSB or WOSB status to an online
document repository, called that the WOSB Program Repository, that SBA
is planning to establish. The documents submitted would include those
verifying that the concern has received a third-party certification.
The business concern will be placing these documents in a secure, Web-
based environment that would be accessible to the individual WOSBs and
EDWOSBs, the contracting officer community and SBA. The contracting
officer would be able to access the documents prior to contract award
to review the submitted documents. SBA proposed this approach so that
the WOSBs and EDWOSBs would not have to submit documents each time they
receive a WOSB or EDWOSB contract.
In addition, the WOSB or EDWOSB will have to provide a
certification to the repository that will serve as a verification that
the concern meets the eligibility requirements and is signed by an
authorized officer of the WOSB. In
[[Page 62269]]
the proposed rule, SBA had proposed that this certification be part of
ORCA. However, upon further reflection, the SBA believes that it would
be best if this document were signed and submitted directly to the
repository. A copy of the certification is set forth in Tables 1 and 2.
Until the repository is completed, or if the system is otherwise
unavailable, then SBA explained that the WOSB or EDWOSBs must submit
the documents directly to the contracting officer prior to each WOSB or
EDWOSB award. Although one comment thought this was burdensome, SBA
notes that the statute requires the submission of supporting documents
to the contracting officer and until or unless the repository is
established, this appears to be the sole alternative that meets this
statutory requirement. The contracting officer must retain these
documents in the contract file so that SBA may later review the file
for purposes of a status protest or eligibility examination. However,
the WOSB or EDWOSB will also be required to post the documents to the
WOSB Program Repository within thirty (30) days of the repository
becoming available.
Finally, after registering in CCR and submitting the required
document to the repository, the EDWOSB or WOSB must represent its
status in the ORCA at https://orca.bpn.gov. The FAR at 48 CFR 2.101
explains that ORCA is the primary Government repository for contractor-
submitted representations and certifications required for the conduct
of business with the Government. This database does not collect
documents, but collects the representations and certifications required
for Federal contracts. As stated above, the SBA had proposed a specific
and detailed ORCA representation. That detailed representation will now
be a certification, signed by an officer of the company, which will be
submitted to the WOSB Program Repository. The representation contained
in ORCA, as drafted by the FAR Councils, will be set forth in the FAR.
Of the hundreds of comments received concerning this certification
process, several stated that SBA should not accept self-certifications
for the WOSB Program. The comments stated that this would increase the
risk of fraud. However, other comments stated that self-certification
would be reasonable as long as documents were provided to verify
eligibility and there were no protests or credible information calling
into question the eligibility of a business. At least one comment
stated that it was good that SBA recognized the cost of certification
and provided alternative compliance requirements, such as the self-
certification. Another comment stated that it supported the stringent
certification requirements to ensure the credibility of the WOSB
Program and its ultimate success. Some comments expressed concern with
the burden of the process and additional paperwork and forms required,
believing it will discourage WOSBs from using the WOSB Program and
required additional costs that are not minimal, while numerous comments
supported the innovative approach and believed the repository would
minimize paperwork burden and increase oversight and program monitoring
capabilities. One comment believed that self-certification would not be
fair to those that paid already for a third-party certification.
Many comments also stated that SBA should not have a certification
program, similar to 8(a) or HUBZone, but should use its resources
instead for enforcement and monitoring. Two comments recommended that
SBA create a stringent certification process or program similar to the
one it has for 8(a).
The SBA explained in the proposed rule that the Small Business Act
sets forth the certification criteria for the WOSB Program.
Specifically, the Act states that a WOSB or EDWOSB must: (1) Be
certified by a Federal agency, a State government, or a national
certifying entity approved by the Administrator, as a small business
concern owned and controlled by women; or, (2) certify to the
contracting officer that it is a small business concern owned and
controlled by women and provide adequate documentation, in accordance
with standards established by SBA, to support such certification. The
supporting legislative history stated that there was no intent that SBA
create a certification program similar to the one it has for the 8(a)
BD Program. As a result of the statutory provision, and the supporting
legislative history, the Final Rule permits both self-certification and
third-party certification and requires supporting documents to verify
eligibility. The supporting documents will be provided to a repository
(which is not necessarily part of ORCA) or, if the repository is
unavailable, to the contracting officer. In addition, SBA believes that
although the certification document and document requirement may seem
burdensome to some small businesses, this is required to meet the
statutory provisions, reduce fraud in the WOSB Program, and ensure that
only eligible concerns receive the benefits of the WOSB Program.
In addition to the comments on self-certification, SBA received
over 600 comments which supported the use of third-party
certifications, although many of these comments supported the use of
both third-party certifications and self-certification. In general, the
comments stated the following: SBA should accept all third-party
certifiers to ensure a wide range of options for WOSBs; SBA should
document the process for approving third-party certifiers; the
guidelines for third-party certifiers must comply with the regulations;
and the third-party certifications should require yearly
recertifications and site visits. In addition, a large number of
comments stated that there should be an abridged process or no
requirement for the representations for those with a third-party
certification because it is counterproductive and redundant and WOSBs
that have a third-party certification should not have to submit any
additional documents.
The SBA agrees that it should approve all qualified third-party
certifiers to ensure a wide range of options for EDWOSBs and WOSBs.
However, that does not necessarily mean that every entity interested in
being a third-party certifier will meet SBA's requirements. SBA also
agrees that it must document the process for approving third-party
certifiers. SBA plans to post online to the public the documented
process at http://www.sba.gov/. In addition, SBA agrees that the
guidelines for third-party certifiers must comply with the regulations.
The final regulations set forth the eligibility requirements for this
Federal program. There cannot be exceptions regarding the eligibility
for the WOSB Program to these regulations, and there is no reason to
create exceptions for third-party certifications as compared to self-
certifications. Because the final regulations do not require site
visits in every instance and yearly recertifications, it is not clear
at this time that SBA can make those requirements for third-party
certifiers, although we agree it would reduce fraud in the WOSB
Program.
We understand the concern expressed by the comments that support an
abridged process or no requirement for the representations for those
with a third-party certification. Many of these individuals believe
that because they have undergone a rigorous third-party certification,
it would be redundant and burdensome for the EDWOSB or WOSB to submit
additional documents or further represent its status.
However, the SBA believes that such a certification is necessary to
ensure the integrity of the WOSB Program and that
[[Page 62270]]
only those eligible small businesses receive the WOSB Program's
benefits. Therefore, all EDWOSBs and WOSBs will be required to complete
the certification and submit it to the WOSB Program Repository. In
addition, each EDWOSB and WOSB will be required to provide a
representation in ORCA. As noted above, ORCA is the primary Government
repository for contractor submitted representations and certifications
required for the conduct of business with the Government. Therefore, it
will be necessary for the EDWOSB or WOSB, even if they have a third-
party certification, to make ORCA representations to the Federal
Government.
We also disagree that EDWOSBs or WOSBs that have received a third-
party certification should not be required to submit documents to SBA
or the contracting to verify eligibility. The Final Rule requires that
those businesses with a third-party certification submit only a limited
number of documents--specifically, a copy of the third-party
certification, the certification, the joint venture agreement if
applicable, and in some cases, other documents to verify they meet the
requirements of the WOSB Program. If there is a status protest or
eligibility examination, then SBA will have to collect all documents
necessary to verify eligibility since it is SBA, and not a third-party
certifier, which would make this decision concerning eligibility.
The SBA also received several comments which were concerned with
identifying specific third-party certifiers. For example, we received
comments which stated that all certifications issued by the 50 States
should be accepted by SBA, as well as all current other third-party
certifications. As discussed above, SBA cannot accept all current
third-party certifications, including a certification issued by a
State, without first determining whether the third-party certifier's
eligibility criteria are the same as those of SBA's for the WOSB
program.
The SBA received one comment which recommended that we provide a
list of agencies whose certifications will be accepted and two comments
stating that we should immediately accept U.S. Department of
Transportation (DOT) certifications and not require that agency to
enter into a third-party agreement.
Under DOT's Disadvantage Business Enterprise (DBE) Program,
recipients, which are state or local entities as defined by DOT
regulations at 49 CFR 26.5, perform the certifications for DOT's DBE
Program. Recipients are the DOT's DBE Program certifiers. Pursuant to
DOT regulations, these certifiers must submit to DOT for approval an
agreement establishing a Unified Certification Program (UCP), which
identifies a plan for certification as a certifier for the DOT DBE
Program. Once the UCP is approved by DOT, the certifier can certify
participants for the DBE Program. In other words, the certification for
the DOT DBE Program is not done by a central office, but rather various
state and local certifiers perform the certifications.
DOT requires every UCP to meet all of the requirements of the DOT
DBE Program, but every UCP for the DOT DBE Program is not required to
have all of the same requirements. Therefore, without examining the
state or local entity's UCP, it is unknown if it will satisfy all the
requirements of the WOSB Program regulations. For example, SBA's WOSB
Program regulation at 13 CFR 127.201(f) states that in determining
unconditional ownership of the concern, any unexercised stock options
or similar agreements held by a woman will be disregarded. The
regulations also states that 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. DOT DBE regulations do not
discuss how unexercised stock options or similar agreements will be
treated under the DBE Program. As a result, state and local entities
that have an approved UCP for DOT DBE Program certification may or may
not be consistent with this requirement. There are additional areas in
which it is uncertain whether SBA requirements would be met with a DOT
DBE Program certification.
The Final Rule sets forth the eligibility requirements for this
Federal program. SBA has determined that there cannot be exceptions
regarding the eligibility for the WOSB Program to these regulations,
and there is no reason to create exceptions for DOT DBE certifications
as compared to self-certifications. Every WOSB or EDWOSB must satisfy
the regulatory requirements in 13 CFR part 127, whether through private
third party certification, 8(a) certification, DOT DBE certification,
or any other certification. As a result and as SBA does with all other
third party certifiers, SBA has determined that it will evaluate a DOT
DBE certifier on an individual basis. SBA will review the state and
local entity's UCP to determine if the WOSB Program requirements can be
met with the UCP.
Therefore, the Final Rule will not accept all DOT DBE
certifications for the WOSB Program at this time. Once SBA approves a
DOT DBE Program certifier, SBA will maintain a list of approved state
and local entities from which it will accept DOT DBE certifications on
SBA's Internet Web site at http://www.sba.gov. Any interested person
may also obtain a copy of the list from the local SBA district office
or SBA Area Office for Government Contracting.
Several comments recommended that SBA and DOT work together to
create a list of businesses indicating the woman owned status of all
certified businesses or requiring DOT to provide certifications showing
that the business is owned and controlled by women. We agree that the
two agencies can continue to work together in furtherance of this
program. However, as explained above, SBA must examine a specific UCP
prior to accepting the certification from that certifier as a
certification of WOSB or EDWOSB status.
One comment stated that third-party certifications sometimes list
NAICS codes on the certifications. The comment believed that SBA must
therefore make it clear that such a listing does not limit the
business' ability to submit an offer for a contract outside that NAICS
code. The comment suggested that SBA clarify the regulations or ORCA.
SBA does not believe it must clarify the regulations on this point. The
Final Rule is clear that a contracting officer must assign a NAICS code
to a contract and that a business concern must be small for the size
standard corresponding to that NAICS code. In addition, the contracting
officer can only reserve the contract opportunity for EDWOSBs if the
NAICS code is in an underrepresented industry and for WOSBs if the
NAICS code is in a substantially underrepresented industry.
The SBA received a few comments which addressed the specific
representations we had set forth in the preamble to the proposed rule,
and which will now be a separate certification that must be submitted
to the WOSB Program Repository, and the responsibilities of contracting
officers. One comment stated that it believed the representations are
clearly worded but that the contracting officer needs to know what
should be checked for award. Two comments stated that contracting
officers need more guidance on what specific documents must be
provided. Similarly, SBA received one comment which suggested the
agency establish a defined method of signoff by a contracting officer
that they have
[[Page 62271]]
certified the EDWOSB or WOSB meets the eligibility criteria and provide
a contracting guide that would include a checklist for the contracting
officer that includes all items to be completed or verified. SBA agrees
that this would be helpful to contracting officers and plans to work on
a guide for contracting officers that contains a checklist.
In addition, two comments believed that contracting officers may
not be in the best position to review the submitted documents and make
an accurate determination. In addition, one comment stated that self-
certification places an undue burden on contracting officers and opens
the door for different levels of application of the rules. We note that
the rule does not require the contracting officer to necessarily
determine eligibility of the EDWOSB or WOSB. Rather, the contracting
officer is to check to ensure that the requisite documents, as set
forth in the regulations, are provided and that the ORCA
representations have been made. If any of the documents are missing
from the repository (including the certification), or if the
contracting officer believes the concern is not eligible, he/she must
file a status protest with SBA. SBA, not the contracting officer, will
make the final determination regarding eligibility.
One comment recommended that SBA eliminate the representation
concerning the ability of an EDWOSB to obtain capital and credit
because it only complicates the process. The same comment questioned
why there should be a representation that ``no males or other entity
exercise actual control or have the power to control the concern'' when
there appear to be other questions in the representation that already
address this.
The SBA agrees that the representation concerning the ability to
obtain capital and credit is not necessary because that issue is
addressed with the other questions, especially those concerning the
specific objective criteria for economic disadvantage. SBA has deleted
this representation from the Final Rule.
However, SBA disagrees with the comment concerning whether males
exercise control over the business concern. There is a specific
requirement for an EDWOSB or WOSB in the regulations that no male or
other entity exercises control or the power to control the concern.
Therefore, this representation is required.
The SBA received one comment that recommended having a place in CCR
to acknowledge current certifications and transferring this information
to ORCA. SBA agrees that CCR should be amended and will work with the
appropriate agency to implement these changes to the extent
practicable.
One comment recommended that SBA share information common to other
certification processes when a person is a member of more than one
group. In other words, if a WOSB is also a SDVO SBC, the comment
recommended that the processes be streamlined. Unfortunately, this is
not possible. The SDVO SBC Program is a self-certification program with
different statutory and regulatory requirements than the WOSB Program.
When creating the WOSB Program, SBA sought to align this program with
others as much as possible. For example, SBA has stated that it will
accept 8(a) BD certifications, if the business was certified into the
8(a) BD Program as a women owned business, as evidence that the
business is a WOSB.
Some comments recommended that SBA conduct site visits and check
financial information on all WOSBs. Two comments supported the use of
an outside company to manage the certification and perform site visits.
SBA explained in the proposed rule that it does intend to conduct site
visits on those certifying as EDWOSBs or WOSBs and believes that its
regulations, which permit protests and robust eligibility examinations,
will aid in preventing fraud, waste and abuse in the WOSB program.
The SBA has reviewed all of these comments thoroughly and believes
that it is not necessary to change the proposed regulations concerning
certifications except to amend the ORCA representations to address
changes made to the criteria for economic disadvantage. SBA therefore
has implemented the proposed rule as final, with respect to the
certification requirements. SBA is setting forth a final copy of the
certification that each WOSB or EDWOSB must submit to verify status
(Table 1, Women-Owned Small Business Program Certification--WOSB; Table
2, Women-Owned Small Business Program Certification--EDWOSB).
Table 1--Women-Owned Small Business Program Certification--WOSB.
(i) It is certified as a WOSB by a certifying entity approved by
SBA, the certifying entity has not issued a decision currently in
effect finding that the concern does not qualify as a WOSB, and there
have been no changes in its circumstances affecting its eligibility
since its certification.
[squ] Yes [squ] No [squ] N/A
(ii) It is certified by the U.S. Small Business Administration as
an 8(a) BD Program Participant and the 51% owner is a woman (or women).
[squ] Yes [squ] No [squ] N/A
(iii) If a corporation, the stock ledger and stock certificates
evidence that at least 51% of each class of voting stock outstanding
and 51% of the aggregate of all stock outstanding is unconditionally
and directly 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.
[squ] Yes [squ] No [squ] N/A
(v) If a partnership, the partnership agreement evidences that at
least 51% of each class of partnership interest is unconditionally and
directly owned by one or more women.
[squ] Yes [squ] No [squ] N/A
(iv) If a limited liability company, the articles of organization
and any amendments, and operating agreement and amendments, evidence
that at least 51% of each class of member interest is unconditionally
and directly owned by one or more women.
[squ] Yes [squ] No [squ] N/A
(v) The birth certificates, naturalization papers, or passports for
owners who are women show that the business concern is at least 51%
owned and controlled by women who are U.S. citizens.
[squ] Yes [squ] No
(vi) The ownership by women is not subject to any conditions,
executory agreements, voting trusts, or other arrangements that cause
or potentially cause ownership benefits to go to another.
[squ] Yes [squ] No
(vii) The 51% ownership by women is not through another business
entity (including employee stock ownership plan) that is, in turn,
owned and controlled by one or more women.
[squ] Yes [squ] No
(viii) The 51% ownership by women is held through a trust, the
trust is revocable, and the woman is the grantor, a trustee, and the
sole current beneficiary of the trust.
[squ] Yes [squ] No [squ] N/A
(ix) The management and daily business operations of the concern
are
[[Page 62272]]
controlled by one or more women. Control means that both the long-term
decision making and the day-to-day management and administration of the
business operations are conducted by one or more women.
[squ] Yes [squ] No
(x) A woman holds the highest officer position in the concern and
her resume evidences that she has the managerial experience of the
extent and complexity needed to run the concern.
[squ] Yes [squ] No
(xi) The woman manager does not have the technical expertise or
possess the required license for the business but has ultimate
managerial and supervisory control over those who possess the required
licenses or technical expertise.
[squ] Yes [squ] No [squ] N/A
(xii) The woman who holds the highest officer position of the
concern manages it on a full-time basis and devotes full-time to the
business concern during the normal working hours of business concerns
in the same or similar line of business.
[squ] Yes [squ] No
(xiii) The woman who holds the highest officer position does 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.
[squ] Yes [squ] No
(xiv) If a corporation, the articles of incorporation and any
amendments, articles of conversion, by-laws and amendments, shareholder
meeting minutes showing director elections, shareholder meeting minutes
showing officer elections, organizational meeting minutes, all issued
stock certificates, stock ledger, buy-sell agreements, stock transfer
agreements, voting agreements, and documents relating to stock options,
including the right to convert non-voting stock or debentures into
voting stock evidence that one or more women 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% 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.
[squ] Yes [squ] No [squ] N/A
(xv) If a partnership, the partnership agreement evidences that one
or more women serve as general partners, with control over all
partnership decisions.
[squ] Yes [squ] No [squ] N/A
(xvii) If a limited liability company, the articles of organization
and any amendments, and operating agreement and amendments evidence
that one or more women serve as management members, with control over
all decisions of the limited liability company.
[squ] Yes [squ] No [squ] N/A
(xviii) No males or other entity exercise actual control or have
the power to control the concern.
[squ] Yes [squ] No
(xix) SBA, in connection with an examination or protest, has not
issued a decision currently in effect finding that this business
concern does not qualify as a WOSB.
[squ] Yes [squ] No
(xx) All required documents verifying eligibility for a WOSB
requirement have been submitted to the WOSB Program Repository,
including any supplemental documents if there have been changes since
the last representation, or will be submitted to the contracting
officer if the repository is unavailable and then posted to the WOSB
Program Repository within thirty (30) days of the repository becoming
available.
[squ] Yes [squ] No
[squ] All the statements and information provided in this form and
any documents submitted are true, accurate and complete. If assistance
was obtained in completing this form and the supporting documentation,
I have personally reviewed the information and it is true and accurate.
I understand that these statements are made for the purpose of
determining eligibility for a WOSB Program contract.
[squ] I understand that the information submitted may be given to
Federal, State and local agencies for determining violations of law and
other purposes. The certifications in this document are continuing in
nature. Each WOSB prime contract for which the WOSB submits an offer/
quote or receives an award constitutes a restatement and reaffirmation
of these certifications. I understand that the WOSB may not
misrepresent its status as a WOSB to: (1) Obtain a contract under the
Small Business Act; or (2) obtain any benefit under a provision of
Federal law that references the WOSB Program for a definition of
program eligibility.
[squ] I am an officer of the WOSB authorized to represent it and
sign this certification on its behalf.
Table 2--Women-Owned Small Business Program Certification--EDWOSB
(i) It is certified as an EDWOSB by a certifying entity approved by
SBA, the certifying entity has not issued a decision currently in
effect finding that the concern does not qualify as a EDWOSB, and there
have been no changes in its circumstances affecting its eligibility
since its certification.
[squ] Yes [squ] No [squ] N/A
(ii) It is certified by the U.S. Small Business Administration as
an 8(a) BD Program Participant and the 51% owner is an economically
disadvantaged woman (or women).
[squ] Yes [squ] No [squ] N/A
(iii) If a corporation, the stock ledger and stock certificates
evidence that at least 51% of each class of voting stock outstanding
and 51% of the aggregate of all stock outstanding is unconditionally
and directly owned by one or more women who are economically
disadvantaged. In determining unconditional ownership of the concern,
any unexercised stock options or similar agreements held by an
economically disadvantaged 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.
[squ] Yes [squ] No [squ] N/A
(iv) If a partnership, the partnership agreement evidences that at
least 51% of each class of partnership interest is unconditionally and
directly owned by one or more economically disadvantaged women.
[squ] Yes [squ] No [squ] N/A
(v) If a limited liability company, the articles of organization
and any amendments, and operating agreement and amendments, evidence
that at least 51% of each class of member interest is unconditionally
and directly owned by one or more economically disadvantaged women.
[squ] Yes [squ] No [squ] N/A
(vi) The birth certificates, naturalization papers, or passports
show that the business concern is at least 51% owned and controlled by
economically disadvantaged women who are U.S. citizens.
[squ] Yes [squ] No
(vii) The ownership by economically disadvantaged women is not
subject to any conditions, executory agreements, voting trusts, or
other arrangements that
[[Page 62273]]
cause or potentially cause ownership benefits to go to another.
[squ] Yes [squ] No
(viii) The 51% ownership by economically disadvantaged women is not
through another business entity (including employee stock ownership
plan) that is, in turn, owned and controlled by one or more
economically disadvantaged women.
[squ] Yes [squ] No
(ix) The 51% ownership by economically disadvantaged women is held
through a trust, the trust is revocable, and the economically
disadvantaged woman is the grantor, a trustee, and the sole current
beneficiary of the trust.
[squ] Yes [squ] No [squ] N/A
(x) The management and daily business operations of the concern are
controlled by one or more economically disadvantaged women. Control
means that both the long-term decision making and the day-to-day
management and administration of the business operations are conducted
by one or more economically disadvantaged women.
[squ] Yes [squ] No
(xi) An economically disadvantaged woman holds the highest officer
position in the concern and her resume evidences that she has the
managerial experience of the extent and complexity needed to run the
concern.
[squ] Yes [squ] No
(xi) The economically disadvantaged woman manager does not have the
technical expertise or possess the required license for the business
but has ultimate managerial and supervisory control over those who
possess the required licenses or technical expertise.
[squ] Yes [squ] No [squ] N/A
(xiii) The economically disadvantaged woman who holds the highest
officer position of the concern manages it on a full-time basis and
devotes full-time to the business concern during the normal working
hours of business concerns in the same or similar line of business.
[squ] Yes [squ] No
(xiv) The economically disadvantaged woman who holds the highest
officer position does 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.
[squ] Yes [squ] No
(xv) If a corporation, the articles of incorporation and any
amendments, articles of conversion, by-laws and amendments, shareholder
meeting minutes showing director elections, shareholder meeting minutes
showing officer elections, organizational meeting minutes, all issued
stock certificates, stock ledger, buy-sell agreements, stock transfer
agreements, voting agreements, and documents relating to stock options,
including the right to convert non-voting stock or debentures into
voting stock evidence that one or more economically disadvantaged women
control the Board of Directors of the concern. Economically
disadvantaged women are considered to control the Board of Directors
when either: (1) One or more economically disadvantaged women own at
least 51% 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) economically
disadvantaged women comprise the majority of voting directors through
actual numbers or, where permitted by state law, through weighted
voting.
[squ] Yes [squ] No [squ] N/A
(xvi) If a partnership, the partnership agreement evidences that
one or more economically disadvantaged women serve as general partners,
with control over all partnership decisions.
[squ] Yes [squ] No [squ] N/A
(xvii) If a limited liability company, the articles of organization
and any amendments, and operating agreement and amendments evidence
that one or more economically disadvantaged women serve as management
members, with control over all decisions of the limited liability
company.
[squ] Yes [squ] No [squ] N/A
(xviii) No males or other entity exercise actual control or have
the power to control the concern.
[squ] Yes [squ] No
(xix) The economically disadvantaged woman upon whom eligibility is
based has read the SBA's regulations defining economic disadvantage and
can demonstrate that her personal net worth is less than $750,000,
excluding her ownership interest in the concern and her equity interest
in her primary personal residence.
[squ] Yes [squ] No
(xx) The personal financial condition of the woman claiming
economic disadvantage, including her personal income for the past three
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, evidences that she is
economically disadvantaged.
[squ] Yes [squ] No
(xxi) The adjusted gross income of the woman claiming economic
disadvantage averaged over the three years preceding the certification
does not exceed $350,000.
[squ] Yes [squ] No
(xxii) The adjusted gross income of the woman claiming economic
disadvantage averaged over the three years preceding the certification
exceeds $350,000; however, the woman can show that this income level
was unusual and not likely to occur in the future, that losses
commensurate with and directly related to the earnings were suffered,
or that the income is not indicative of lack of economic disadvantage.
[squ] Yes [squ] No
(xxiii) The fair market value of all the assets (including her
primary residence and the value of the business concern but excluding
funds invested in an Individual Retirement Account or other official
retirement account that are unavailable until retirement age without a
significant penalty) of the woman claiming economic disadvantage does
not exceed $6 million.
[squ] Yes [squ] No
(xxiv) The woman claiming economic disadvantage has not transferred
any assets within two years of the date of the certification.
[squ] Yes [squ] No
(xxv) The woman claiming economic disadvantage has transferred
assets within two years of the date of the certification. However, the
transferred assets were: (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.
[squ] Yes [squ] No [squ] N/A
(xxvi) SBA, in connection with an examination or protest, has not
issued a decision currently in effect finding that this business
concern does not qualify as a EDWOSB.
[squ] Yes [squ] No
(xxvii) All required documents verifying eligibility for the EDWOSB
requirement have been submitted to the WOSB Program Repository,
including any supplemental documents if there have been changes since
the last representation, or will be submitted to the contracting
officer if the repository is unavailable and then posted to the WOSB
Program Repository within thirty (30) days of the repository becoming
available.
[[Page 62274]]
[squ] Yes [squ] No
[squ] All the statements and information provided in this form and
any documents submitted are true, accurate and complete. If assistance
was obtained in completing this form and the supporting documentation,
I have personally reviewed the information and it is true and accurate.
I understand that these statements are made for the purpose of
determining eligibility for a WOSB Program contract.
[squ] I understand that the information submitted may be given to
Federal, State and local agencies for determining violations of law and
other purposes. The certifications in this document are continuing in
nature. Each EDWOSB or WOSB prime contract for which the EDWOSB submits
an offer/quote or receives an award constitutes a restatement and
reaffirmation of these certifications. I understand that the EDWOSB may
not misrepresent its status as a EDWOSB or WOSB to: (1) Obtain a
contract under the Small Business Act; or (2) obtain any benefit under
a provision of Federal law that references the WOSB Program for a
definition of program eligibility.
[squ] I am an officer of the EDWOSB authorized to represent it and
sign this certification on its behalf.
E. Contract File
The SBA received one comment which recommended that the contracting
officer document the file to include ``underrepresented industries.''
We note that the proposed rule did require the contracting officer to
document the contract file with the results of the market research and
the fact that the NAICS code assigned to the contract is for an
industry that SBA has designated as either underrepresented or
substantially underrepresented industry with respect to WOSBs.
In addition, in the proposed rule, we sought comments on whether
SBA should add the following additional language to proposed Sec.
127.503(e):
In addition, the contracting officer must document the contract
file showing that the apparent successful offeror's ORCA
certifications and associated representations were reviewed.
The SBA received two comments which supported this requirement for
contracting officers to document the contract file. SBA has amended the
proposed rule to add this requirement.
F. Federal Contract Assistance
Subpart E of the Final Rule addresses the contracting assistance
provided to EDWOSBs and WOSBs. For example, this part of the Final Rule
states that a contracting officer may restrict competition to EDWOSBs
if the contract is an industry that SBA has designated as
underrepresented and the contracting officer has a reasonable
expectation based on market research that two or more EDWOSBs will
submit offers, the anticipated award price (including options) does not
exceed $5 million for a contract assigned a NAICS code for
manufacturing or $3 million for a contract assigned any other NAICS
code, and the contract may be awarded at a fair and reasonable price.
The contracting officer may restrict competition for WOSBs in an
industry that SBA has designated as substantially underrepresented if
the contracting officer has a reasonable expectation based on market
research that two or more WOSBs will submit offers, the anticipated
award price (including options) does not exceed $5 million for a
contract assigned a NAICS code for manufacturing or $3 million for a
contract assigned any other NAICS code, and the contract may be awarded
at a fair and reasonable price.
The SBA received over 700 comments which stated that the dollar
value of the contracts available to this program was too low and a few
comments that recommended SBA apply the $5 million contract threshold
to contracts with a NAICS code for construction. SBA notes that the
contract dollar value threshold is specifically set forth in statute,
and therefore, the regulations cannot be changed to reflect different
thresholds.
Other comments that addressed the dollar value of the contract
available to this program recommended that SBA exclude the cost of
construction materials from the contract value since the cost of such
materials generally has nothing to do with the work being performed by
the WOSB. In addition, two comments recommended that SBA not include
option years when determining the cost of the contract. We note that
the Small Business Act specifically states the WOSB Program is limited
to certain contracts with an ``anticipated award price of the contract
(including options)'' of $5 million in the case of a contract assigned
a NAICS code for manufacturing or $3 million for all other contracts.
We do not believe, at this time, that the cost of materials from the
anticipated award price and SBA does not make this exclusion for any of
the contract dollar value limitations for its other procurement
programs. In addition, the statute clearly includes options, and
therefore, SBA cannot exclude options from the anticipated award price
of the contract.
The SBA also received some comments that recommended that the WOSB
Program permit sole source awards similar to those available in the
8(a) BD, HUBZone and SDVO SBC Programs. Likewise, SBA received a few
comments which questioned why the ``rule of two'' as explained in the
FAR at 48 CFR 19.502-2(b) was set forth in the regulations. In response
to these comments, SBA notes that the statutory provision creating the
WOSB Program does not authorize sole source awards while the statutory
provisions creating the other programs do. In addition, the statutory
provisions creating the WOSB Program specifically state that a
contracting officer may use this program only if the ``rule of two'' is
met. Therefore, SBA is not amending the regulations as proposed.
The SBA received one comment which recommended that we cap or limit
how many awards a particular WOSB can receive in order to ensure that
the contracts are going to more than a handful of WOSBs. SBA does not
agree with this recommendation primarily because the statute does not
provide for such a cap or limitation. In addition, it would not serve
the purpose of the WOSB Program to prevent qualified EDWOSBs or WOSBs
from receiving further Federal contracts.
The SBA also received several comments which supported the parity
of the WOSB Program with the other small business programs.
Specifically, in proposed Sec. 127.503 SBA addressed contracting among
the various SBA small business programs for acquisitions valued above
and below the simplified acquisition threshold. The regulation proposed
to provide contracting officers with the discretion to utilize either
the 8(a) BD, SDVO SBC, HUBZone, small business or WOSB Programs,
depending on the acquisition history, dollar value of the contract,
results of the market research, programmatic needs specific to the
procuring agency, and the need to meet the agency's goals.
SBA understands that GAO has issued several decisions over the last
two years stating that agencies must set aside any acquisition for
HUBZone SBCs if the contracting officer has a reasonable expectation
that at least two qualified HUBZone SBCs will submit offers and that
the award can be made at a fair market price (the ``rule of two'' for
HUBZone small businesses). Thus, under GAO rulings, the contracting
officer has no discretion to utilize either the 8(a) BD, SDVO SBC,
small business or the WOSB Program if the HUBZone rule of two is met.
However, on July 10, 2009, the Director of the Office of Management
and Budget (OMB) issued a memorandum stating that GAO's
[[Page 62275]]
decisions are not binding on Federal agencies and are contrary to
regulations promulgated by SBA that provide for ``parity'' among the
three small business programs (8(a) BD, HUBZone and SDVO SBC Programs).
See OMB Memorandum M-09-23, publicly available at http://www.whitehouse.gov/omb/assets/memoranda_fy2009/m09-23.pdf. In
addition, on August 21, 2009, the U.S. Department of Justice's Office
of Legal Counsel (OLC) concluded its review of the legal basis
underlying GAO's decisions. OLC issued an opinion stating that SBA's
regulations governing the interplay among the HUBZone, 8(a) BD and SDVO
SBC Programs are a permissible construction of the Act and are binding
on all Executive Branch agencies. See ``Permissibility of Small
Business Administration Regulations Implementing the Historically
Underutilized Business Zone, 8(a) Business Development, and Service-
Disabled Veteran-Owned Small Business Concern Programs,'' April 21,
2009, publicly available at http://www.usdoj.gov/olc/2009/sba-hubzone-opinion082109.pdf.
In addition, the Court of Federal Claims issued decisions in
Mission Critical v. U.S., 91 Fed.Cl. 386 (2010), and DGR Associates,
Inc. v. U.S., No. 10-396C (Fed. Cl.), stating that HUBZone small
business set asides have priority over 8(a) sole source and set aside
awards. The U.S. Department of Justice has appealed the Mission
Critical decision to the Court of Appeals for the Federal Circuit.
Recently, however, the President enacted Public Law 111-240, known
as the Small Business Jobs and Credit Act of 2010. In this law, the
Small Business Act was amended to delete language stating that a
contracting opportunity ``shall'' be awarded as a HUBZone set-aside if
the HUBZone ``rule of two'' is met. The new statutory language explains
that a contracting opportunity ``may'' be awarded as a HUBZone set-
aside if the HUBZone ``rule of two'' is met. Consequently, the HUBZone
provisions do not unambiguously direct contracting officers to reserve
every available contract opportunity for HUBZone small businesses
whenever the rule of two is met. This statutory change further supports
the SBA's position on parity.
As a result of the foregoing, the final regulation explains that
there is parity among the 8(a) BD, SDVO, HUBZone, small business and
WOSB programs and has implemented the proposed rule as final.
G. Joint Venture Requirements
In the proposed rule, SBA had proposed amending the current joint
venture regulation, permitting EDWOSB or WOSB joint ventures for EDWOSB
or WOSB contracts. The current rule had provided that the EDWOSB or
WOSB must perform a significant portion of the contract and SBA
proposed clarifying this requirement.
SBA received one comment which supported the joint venture
provisions and five comments suggesting that the language for joint
ventures should be strengthened to ensure that women are the primary
beneficiaries of the contract. SBA also received one comment which
stated that SBA should review all joint ventures to ensure that the
percentage of work and the distribution of profits are fair because it
is not possible to assign a fixed percentage of profits to the one WOSB
joint venturer, such as the stated minimum of 51 percent.
First, SBA believes that the regulation has been strengthened
because it requires that not less than 51 percent of the net profits
earned by the joint venture must be distributed to the EDWOSB or WOSB
while the former regulation only required that the WOSB joint venturer
perform a significant portion of the contract, without setting forth a
specific and objective percentage of work to be performed. Second, SBA
also clarified that the joint venture agreement must be in writing and
must set forth the following provisions: The purpose of the joint
venture, that an EDWOSB or WOSB must be the managing venturer, that an
employee of the managing venturer must be the project manager
responsible for the performance of the contract, and the
responsibilities of the parties with regard to contract performance,
sources of labor, and negotiation of the EDWOSB or WOSB contract.
In light of these guidelines, SBA does not believe it is necessary
to review each joint venture agreement, which can slow down the
contracting process. In addition, these same guidelines are in place
for the SDVO SBC Program and there have not been any issues concerning
the ability of the SDVO SBC joint venture partner to meet the 51
percent net profit requirement.
Therefore, SBA does not believe any changes to the proposed rule or
other clarification is necessary and adopts the provision in the Final
Rule as proposed.
H. Protests
In the proposed rule, SBA set forth the procedures by which an
interested party may protest the status of an EDWOSB or WOSB apparent
successful offeror. SBA received a few comments which suggested that
the regulations should state that the contracting officer must file a
status protest if all the required documents are not received. SBA also
received one comment which stated that interested parties should only
be permitted to file a protest if it has credible information calling
into question the apparent successful offeror's eligibility and one
comment recommending that SBA ensure that the protest process is not
abused.
The SBA notes that the requirement that a contracting officer file
a status protest if all documents are not received, or if the
contracting officer has information that calls into question the
eligibility of the business, is set forth in Sec. 127.301, titled
``When may a contracting officer accept a concern's self-
certification?''. In addition, this protest process is the same or
similar to those for SBA's other contracting programs, such as the
HUBZone and SDVO SBC Programs. The process provides that interested
parties must file a protest specifying all grounds for the protest and
cannot merely assert that the protested concern is ineligible without
setting forth specific facts. This protects the protest process from
abuse.
The SBA received another comment which stated that anyone should be
allowed to file a status protest and not just those businesses
competing in the procurement. SBA disagrees with this comment. First,
generally only those businesses competing in the acquisition would know
who the apparent successful offeror is because they have been notified
of this fact by the contracting officer. Second, although a business
that is not competing in the requirement cannot file a status protest,
the business concern should notify SBA, who can then conduct an
eligibility examination. Specifically, Sec. 127.400 explains that SBA
may consider information provided to it by a third party that questions
the eligibility of an EDWOSB or WOSB that has certified its status in
ORCA or CCR in determining whether to conduct an eligibility
examination.
The SBA received one comment which stated that it disagrees with
the ability of the contracting officer to continue a contract with a
business if that business has been found ineligible. The comment
suggested that the contract should be terminated as soon as possible.
According to Sec. 127.604(f)(2)(i), if a contracting officer receives
a protest determination stating that a concern is ineligible after
contract award, and there has been no appeal filed with OHA, the
contracting officer shall terminate the contract. If an appeal has been
filed,
[[Page 62276]]
since the appeal process can be lengthy, the rule explains that the
contracting officer must consider whether performance can be suspended
until an appellate decision has been rendered. If OHA affirms that the
concern is not eligible, then the contracting officer must either
terminate the contract or not exercise the next option. Therefore, we
believe this rule sufficiently limits a contracting officer's ability
to continue a contract with a business found ineligible. SBA has
implemented the rule as it proposed.
I. Other Comments
Several comments stated that the overall size standards for WOSB/
EDWOSBs are too low. SBA notes that this proposed rule did not address
the size standards for EDWOSBs or WOSBs and therefore, those comments
are beyond the scope of the rulemaking.
The SBA also received several comments which suggested that only
those WOSBs certified by third-party certifiers or with completed ORCA
certifications should be counted for goaling purposes. SBA also
received one comment which suggested that the 5 percent goal should be
increased year by year until the percentage of women owned businesses
funded are in proportion to the number of women in the population. One
comment stated that agencies should not be allowed to multiple count
small business programs in meeting their goals because it limits the
effectiveness of the small business programs. SBA notes that the
proposed rule did not specifically address SBA's goaling program and
therefore these comments are outside the scope of the rulemaking, as
well.
In addition, at least one comment suggested that the WOSB Program
have a Mentor Prot[eacute]g[eacute] Program similar to the one in the
8(a) BD Program. As discussed above, the President recently enacted
Public Law 111-240, which authorizes a Mentor-Prot[eacute]g[eacute]
Program for SBA's small business programs. Because the SBA did not
propose guidance for such a program in the WOSB proposed rule, and is
in the process of reviewing the statutory language and determining
guidance on this for its programs, this final rule does not establish a
Mentor-Prot[eacute]g[eacute] Program for the WOSB Program.
The SBA received one comment which stated that there should be a
similar program for non-profits. Because SBA's government contracting
programs require that the small business concern be for profit, and SBA
did not propose changing this requirement for the WOSB Program, we
believe this comment is outside the scope of the rulemaking.
The SBA also received one comment which recommended that SBA audit
prime contractors to ensure that they utilize WOSBs for subcontracts.
This Final Rule addresses prime contracts only because the WOSB Program
is a prime contracting program. However, we note that SBA employs
commercial market representatives to assist small businesses in
obtaining subcontracts and to help other than small businesses meet
their subcontracting goals. In addition, these SBA employees perform
compliance reviews on other than small businesses to determine whether
such contractors are identifying opportunities for small business as
subcontractors and to ensure that the subcontracting plan requirements
are met.
Compliance With Executive Orders 12866, 12988, 13132, the Paperwork
Reduction Act (44 U.S.C., Chapter 35) and the Regulatory Flexibility
Act (5 U.S.C. 601-612)
Executive Order 12866
OMB has determined that this rule is a ``significant'' regulatory
action under Executive Order 12866. In the proposed rule, SBA set forth
its initial regulatory impact analysis, which addressed the following:
Necessity of the regulation; alternative approaches to the proposed
rule; and the potential benefits and costs of the regulation. SBA did
not receive any comment which specifically addressed its regulatory
impact analysis. However, numerous comments agreed that the rule was
necessary to assist WOSB in obtaining Federal contracts. In addition,
SBA received numerous comments which supported its proposed approaches,
especially concerning the use of self-certification, third-party
certifiers, and the document repository. The specific comments on these
approaches are discussed above.
At least one comment noted that SBA's proposed certification
approach was innovative. Another comment stated that by 2018, small
businesses will create 9.7 million new jobs with 5 million being
created by WOSBs. This comment stated that substantial new contract
opportunities must be found to support this growth in employment and
the Federal Government must be one of the accessible markets.
Therefore, it appears this comment believed that the rule will
potentially benefit not just WOSBs and the Federal Government, but will
have a beneficial impact on employment.
For these reasons, and those set forth in the preamble, SBA adopts
as final its initial regulatory impact analysis.
Executive Order 12988
This action meets applicable standards set forth in Sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. This action does
not have retroactive or preemptive effect.
Executive Order 13132
This rule does not have federalism implications as defined in the
Executive Order. 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.
Paperwork Reduction Act (PRA)
For purposes of the Paperwork Reduction Act, 44 U.S.C. chapter 35,
SBA has determined that the rule imposes new reporting and
recordkeeping requirements. The certification process described in
Subpart C, Sec. Sec. 127.300 to 127.302, is an information collection.
The certification process requires a concern seeking to benefit from
Federal contracting opportunities designated for WOSBs or EDWOSBs to
verify its status by submitting a certification to the WOSB Program
Repository, submitting other supporting documents to the WOSB Program
Repository, and by representing its status in an existing electronic
contracting system (i.e., ORCA).
Specifically, the WOSB or EDWOSB will be required to submit certain
documents verifying eligibility at the time of certification in ORCA
(and every year after). These documents will be submitted to a document
repository, or until the repository is established, the contracting
office upon notice of a proposed award. Further, the protest and
eligibility examination procedures will require the submission of
documents from those parties subject to a protest and eligibility
examination. To reduce the burden on the WOSBs or EDWOSBs, the same
documents submitted at the time of certification will be used for the
protests and eligibility examinations, except that for protests and
eligibility examinations, SBA will also request copies of proposals
submitted in response to a WOSB or EDWOSB solicitation and certain
other documents and information to verify the status of an EDWOSB.
Finally, the Final Rule also requires the WOSBs or EDWOSBs to
retain copies of the documents submitted for
[[Page 62277]]
a period of six (6) years. SBA stated in the proposed rule that it
believes that any additional burden imposed by this recordkeeping
requirement would be minimal since the firms would maintain the
information in their general course of business.
SBA submitted this information collection to OMB for review and it
was approved.
Title and Description of Information Collection: Women-Owned Small
Business Federal Contract Assistance Program Purpose: The information
collected is modeled on two currently approved information collections:
SBA Form 1010, OMB Control 3245-0331, SBA's Application for 8(a)
Business Development, and SBA Form 413, OMB Control 3245-0188, SBA's
Application for Personal Financial Statement, which are used to collect
personal and business information on the businesses and owners applying
to this program. The information requested for this program includes
information verifying the WOSB/EDWOSB status of the business concern,
including tax returns, personal statements, and business documents.
OMB Control Number:
Description of and Estimated Number of Respondents: Information
will be collected from the small business concerns that are not already
certified by an approved third-party certifier and therefore must self-
certify and verify their status by submitting certain required
documents to a document repository at the time of ORCA certification.
This same information must also be collected by the third-party
certifier when making its certification determination. In addition,
those with third-party certifications will also be required to submit
certain documents to the document repository verifying eligibility,
such as a copy of the third-party certification and the SBA
certification form.
Utilizing the RAND FPDS data set for the total number of WOSBs
(identified by Dun and Bradstreet DUNS number) that received obligated
funds from awards, contracts, orders and modifications to existing
contracts for FY 2005, SBA identified approximately 12,000 WOSBs as
recipients of Federal contracts in the 83 NAICS codes that would be
eligible under the WOSB Program. SBA did not receive specific comments
on the estimated number of responses or response times.
Estimated Number of Responses: In FY 2005, there were 12,000 WOSBs
that were identified as recipients of Federal contracts in the 83 NAICS
codes that would be eligible under the WOSB Program. Thus, SBA still
believes there could be an estimated 12,000 responses. In addition, SBA
will conduct eligibility examinations and protests and appeals. SBA
still believes that the total estimated number of responses is 12,200.
Estimated Response Time: 2 hours. Total Estimated Annual Hour
Burden: 24,400 hours.
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 set forth 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?
The Small Business Administration (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 ensure
equal opportunity, and thereby increased Federal procurement
opportunities to WOSBs. SBA is finalizing the Final Rule pursuant to
section 8(m) of the Small Business Act, 15 U.S.C. 637(m). These
Procedures will assist Federal agencies in eliminating barriers to the
participation by WOSBs in Federal contracting, thereby achieving the
Federal Government's goal of awarding five percent of Federal contract
dollars to WOSBs, as provided in the Federal Acquisition Streamlining
Act of 1994.
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
The SBA received a few comments that addressed the IRFA or the
subjects discussed in the IRFA. Several comments stated that SBA should
consider the costs and burdens of the reporting and recordkeeping
requirements for WOSBs because they could inadvertently discourage
WOSBs from taking advantage of the program. These reporting and
recordkeeping requirements include the representations and the
submission of documents relating to WOSB status to the contracting
officer if a repository for documents is unavailable.
The SBA notes that WOSBs have the burden of proving eligibility for
the program. Although the reporting and recordkeeping requirements may
seem onerous, they are necessary to reduce fraud in the program and to
ensure that the benefit of the program--an opportunity to obtain a
contract through restricted competition--is available to only eligible
WOSBs. The SBA's rule adopts methods and processes aimed at meeting
these objectives, while also minimizing, as much as possible, the
burden on small businesses. 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 eligible Federal
contracts are the specific group of small business concerns most
directly affected by this rule. More specifically, this rule may affect
EDWOSBs that participate in Federal procurement in industries where SBA
determines that WOSBs are 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
[[Page 62278]]
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 database used in
the RAND Report 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 Central Contractor Registration (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 only those eligible WOSBs competing for contracts in
the eligible industries could possibly receive contracts under the
program. Utilizing the RAND FPDS data set for the total number of WOSBs
(identified by Dun and Bradstreet DUNS number) that received obligated
funds from awards, contracts, orders and modifications to existing
contracts for FY 2005, SBA identified approximately 12,000 WOSBs as
recipients of Federal contracts in the 83 NAICS codes that would be
eligible under the WOSB Program. Thus, this rule may affect
approximately 12,000 WOSBs.
---------------------------------------------------------------------------
\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 approximately 3,800 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 could affect the number of future contracts 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, thus receiving
fewer contracts than would be expected absent discrimination in the
marketplace, and where the anticipated dollar value of the procurement
does not exceed $3 million or $5 million, in the case of manufacturing
contracts. In addition, we note that industries in which WOSBS are
underrepresented are ones in which they have gotten less than their
fair share of contracts and this suggests, at least implicitly, that
non-WOSBs have therefore been getting more than the share they would
receive in the absence of discrimination. The number of small
businesses that would be excluded from eligibility for competing for
contracts designated for the program under these procurements or from
future such determinations is not known at this time.
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 statutory goals that agencies
strive to achieve through their contracting activities. It is
acknowledged, however, that some redistribution of contracts among the
various programs may occur as a result of these Procedures.
4. What are the projected reporting, recordkeeping, Paperwork Reduction
Act and other compliance Requirements?
For purposes of the Paperwork Reduction Act, 44 U.S.C. Chapter 35,
SBA has determined that the rule imposes new reporting and
recordkeeping requirements. The certification process described in
Subpart C, Sec. Sec. 127.300 to 127.302, is an information collection.
The certification process requires a concern seeking to benefit from
Federal contracting opportunities designated for WOSBs or EDWOSBs to
verify its status by providing documents to the WOSB Program
Repository, submitting a certification to the WOSB Program Repository,
and representing its status in an existing electronic contracting
system (i.e., ORCA). The WOSB or EDWOSB will have to represent in ORCA
that it meets each eligibility requirement of the program.
Specifically, the WOSB or EDWOSB will be required to submit certain
documents verifying eligibility at the time of certification in ORCA
(and every year thereafter). These documents will be submitted to a
document repository established by SBA, or until the repository is
established, the contracting office upon notice of a proposed award.
Further, the protest and eligibility examination procedures will
require the submission of documents from those parties subject to a
protest and eligibility examination. To reduce the burden on the WOSBs
or EDWOSBs, the same documents submitted at the time of certification
will be used for the protests and eligibility examinations, except that
for protests and eligibility examinations, SBA will also request copies
of proposals submitted in response to a WOSB or EDWOSB
[[Page 62279]]
solicitation and certain other documents and information to verify the
status of an EDWOSB.
Finally, the rule also requires the WOSBs or EDWOSBs to retain
copies of the documents submitted for a period of six (6) years. The
SBA stated in the proposed rule that it believes that any additional
burden imposed by this recordkeeping requirement would be minimal since
the firms would maintain the information in their general course of
business.
As stated above, SBA submitted this information collection to OMB
for review and it was approved.
There will also 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. The 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
The SBA has minimized the significant economic impact on small
entities. Pursuant to section 8(m) of the Small Business Act, 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 or provide evidence
of certification from an approved third-party certifier.
An alternative approach would have been to require EDWOSBs and
WOSBs to apply to SBA for formal certification. The SBA has ruled out
this approach as unnecessary, not required by statute, 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. The 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 Final Rule
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 two formal comments on May 3,
2010. The first comment recommended that SBA address new market
opportunities for women-owned small businesses that may not yet be
incorporated in the NAICS System. While SBA understands and appreciates
the concern expressed by the comment to consider emerging areas for
WOSBs, SBA is limited by the data available, particularly the FPDS-NG
and CCR databases, to construct the disparity ratios which determine
underrepresentation. The FPDS-NG and CCR databases contain data which
relate to well-defined NAICS codes in which WOSBs have participated in
Federal procurement. To the extent that there are new areas in which
WOSBs are participating, SBA is committed to making an on-going effort
to obtain accurate and timely data to use in the anticipated updates to
the list of eligible industries.
The second comment received from the SBA Office of Advocacy
expressed concern with the submission of documents that WOSBs are
required to make prior to award. Particularly, the comment was
concerned that ``until the repository is operational, the women-owned
business that decides to self-certify must not only submit documents to
the Online Representations and Certifications Application system (ORCA)
but must provide each contracting officer with eligibility documents.''
The SBA Office of Advocacy was concerned with what it viewed as a
duplicative submission and sought to have SBA seek a less burdensome
alternative.
As stated in the portion of the preamble which discussed the public
comments, many of the public comments confused the CCR and ORCA
databases. However, neither CCR nor ORCA collects documents; rather CCR
is an online government-maintained database on which companies who want
to do business with the Federal Government can register and supply
limited information relative to their size and type of business, and
ORCA collects the representations and certifications required for
Federal contracts.
As a requirement for participation in this Program, an EDWOSB or
WOSB must register in CCR first. Next, it must provide documents
supporting its EDWOSB or WOSB status to an online document repository,
called that the WOSB Program Repository, that the SBA is planning to
establish. The business concern will be placing these documents in a
secure, Web-based environment that would only be accessible to the
individual WOSBs and EDWOSBs, Federal contracting officers and SBA. The
contracting officer would be required to access the documents prior to
contract award to review the submitted documents. The SBA proposed this
approach so that the WOSBs and EDWOSBs would not have to submit
documents each time they are being considered for the award of a WOSB
or EDWOSB contract.
Until the repository is completed, or if the system is otherwise
unavailable, then SBA explained that the WOSB or EDWOSBs must submit
the documents directly to the contracting officer prior to each WOSB or
EDWOSB award. The contracting officer must retain these documents in
the contract file so that SBA may later review the file for purposes of
a status protest or eligibility examination. However, the WOSB or
EDWOSB will also be required to post the documents to the WOSB Program
Repository within thirty (30) days of the repository becoming
available.
Finally, after registering in CCR and submitting the required
document to the repository, the EDWOSB or WOSB must represent its
status in ORCA at https://orca.bpn.gov.
Thus, the supporting documents will be provided to a repository
(which is not necessarily part of ORCA) or, if the repository is
unavailable, to the contracting officer. The SBA notes that
[[Page 62280]]
the statute requires the submission of supporting documents to the
contracting officer and, until or unless the repository is established,
this appears to be the sole alternative that meets this statutory
requirement. In addition, SBA believes that although the
representations and document requirement may seem burdensome to some
small businesses, this is required to meet the statutory provisions,
reduce fraud in the program, and ensure that only eligible concerns
receive the benefits of the program.
List of Subjects
13 CFR Part 121
Administrative practice and procedure, Government procurement,
Government property, Reporting and recordkeeping requirements, Small
businesses.
13 CFR Part 124
Administrative practice and procedure, Government procurement,
Hawaiian natives, Indians--business and finance, Minority businesses,
Reporting and recordkeeping requirements, Technical assistance.
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 (Government agencies).
0
Accordingly, for the reasons stated in the preamble, SBA amends 13 CFR
parts 121, 124, 125, 126, 127 and 134 as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
0
1. The authority citation for 13 CFR part 121 continues to read as
follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637, 644, 662(5)
and 694a; and Pub. L. 105-135, sec. 401 et seq., 111 Stat. 2592.
0
2. Revise Sec. 121.401 to read as follows:
Sec. 121.401 What procurement programs are subject to size
determinations?
The rules set forth in Sec. Sec. 121.401 through 121.413 apply to
all Federal procurement programs for which status as a small business
is required or advantageous, including the small business set-aside
program, SBA's Certificate of Competency program, SBA's 8(a) Business
Development program, SBA's HUBZone program, the Women Owned Small
Business (WOSB) Federal Contract Program, SBA's Service-Disabled
Veteran-Owned Small Business program, the Small Business Subcontracting
program, and the Federal Small Disadvantaged Business (SDB) program.
0
3. Amend Sec. 121.1001 by revising paragraph (a)(9) to read as
follows:
Sec. 121.1001 Who may initiate a size protest or request a formal
size determination?
(a) * * *
(9) For SBA's WOSB Federal Contracting Program, 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 of this
chapter;
(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 sentence after the third
sentence to read as follows:
Sec. 121.1008 What occurs after SBA receives a size protest or
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 124--8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS
STATUS DETERMINATIONS
0
5. The authority citation for 13 CFR part 124 continues to read as
follows:
Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d) and Pub.
L. 99-661, sec. 1207, Pub. L. 100-656, Pub. L. 101-37, Pub. L. 101-
574, and 42 U.S.C. 9815.
0
6. Amend Sec. 124.503 by revising paragraph (j) to read as follows:
Sec. 124.503 How does SBA accept a procurement for award through the
8(a) BD program?
* * * * *
(j) Contracting Among Small Business Programs.
(1) Acquisitions Valued At or Below $100,000/Simplified Acquisition
Threshold. The contracting officer shall set aside any acquisition with
an anticipated dollar value exceeding $3,000 ($15,000 for acquisitions
as described in the Federal Acquisition Regulation (FAR) at 48 CFR
13.201(g)(1)) but valued below $100,000 ($250,000 for acquisitions
described in paragraph (1) of the Simplified Acquisition Threshold
definition in the FAR at 48 CFR 2.101) for small business concerns when
there is a reasonable expectation that offers will be obtained from at
least two small business concerns that are competitive in terms of
quality and delivery and award will be made at fair market prices. This
requirement does not preclude a contracting officer from setting aside
a contract under the 8(a) BD, HUBZone, Service Disabled Veteran Owned
(SDVO), or WOSB programs.
(2) Acquisitions Valued Above $100,000/Simplified Acquisition
Threshold.
(i) The contracting officer shall set aside any acquisition with an
anticipated dollar value exceeding $100,000 ($250,000 for acquisitions
described in paragraph (1) of the Simplified Acquisition Threshold
definition in the FAR at 48 CFR 2.101) for small business concerns when
there is a reasonable expectation that offers will be obtained from at
least two small business concerns that are competitive in terms of
quality and delivery and award will be made at fair market prices.
However, after conducting market research, the contracting officer
shall first consider a set-aside or sole source award (if the sole
source award is permitted by statute or regulation) under the 8(a) BD,
HUBZone, SDVO SBC or WOSB programs before setting aside the requirement
as a small business set-aside. There is no order of precedence among
the 8(a) BD, HUBZone, SDVO SBC or WOSB programs. The contracting
officer must document the contract file with the rationale used to
support the specific set-aside, including the type and extent of market
research conducted. In addition, the contracting officer must document
the contract file showing that the apparent successful offeror's ORCA
certifications and associated representations were reviewed.
(ii) SBA believes that Progress in fulfilling the various small
business goals, as well as other factors such as the results of market
research, programmatic needs specific to the procuring agency,
anticipated award price, and the acquisition history, will be
considered in making a decision as to which program to use for the
acquisition.
[[Page 62281]]
PART 125--GOVERNMENT CONTRACTING PROGRAMS
0
7. 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
8. Add new paragraph (f) to Sec. 125.2 to read as follows:
Sec. 125.2 Prime contracting assistance.
* * * * *
(f) Contracting Among Small Business Programs.
(1) Acquisitions Valued At or Below $100,000/Simplified Acquisition
Threshold. The contracting officer shall set aside any acquisition with
an anticipated dollar value exceeding $3,000 ($15,000 for acquisitions
as described in the Federal Acquisition Regulation (FAR) at 48 CFR
13.201(g)(1)) but valued below $100,000 ($250,000 for acquisitions
described in paragraph (1) of the Simplified Acquisition Threshold
definition in the FAR at 48 CFR 2.101) for small business concerns when
there is a reasonable expectation that offers will be obtained from at
least two small business concerns that are competitive in terms of
quality and delivery and award will be made at fair market prices. This
requirement does not preclude a contracting officer from setting aside
a contract under the 8(a) BD, HUBZone, Service Disabled Veteran Owned
(SDVO), or WOSB programs.
(2) Acquisitions Valued Above $100,000/Simplified Acquisition
Threshold.
(i) The contracting officer shall set aside any acquisition with an
anticipated dollar value exceeding $100,000 ($250,000 for acquisitions
described in paragraph (1) of the Simplified Acquisition Threshold
definition in the FAR at 48 CFR 2.101) for small business concerns when
there is a reasonable expectation that offers will be obtained from at
least two small business concerns that are competitive in terms of
quality and delivery and award will be made at fair market prices.
However, after conducting market research, the contracting officer
shall first consider a set-aside or sole source award (if the sole
source award is permitted by statute or regulation) under the 8(a) BD,
HUBZone, SDVO SBC or WOSB programs before setting aside the requirement
as a small business set-aside. There is no order of precedence among
the 8(a) BD, HUBZone, SDVO SBC or WOSB programs. The contracting
officer must document the contract file with the rationale used to
support the specific set-aside, including the type and extent of market
research conducted. In addition, the contracting officer must document
the contract file showing that the apparent successful offeror's ORCA
certifications and associated representations were reviewed.
(ii) SBA believes that Progress in fulfilling the various small
business goals, as well as other factors such as the results of market
research, programmatic needs specific to the procuring agency,
anticipated award price, and the acquisition history, will be
considered in making a decision as to which program to use for the
acquisition.
0
9. Amend Sec. 125.19 by revising paragraph (b) to read as follows:
Sec. 125.19 When may a contracting officer set-aside a procurement
for SDVO SBCs?
* * * * *
(b) Contracting Among Small Business Programs.
(1) Acquisitions Valued At or Below $100,000/Simplified Acquisition
Threshold. The contracting officer shall set aside any acquisition with
an anticipated dollar value exceeding $3,000 ($15,000 for acquisitions
as described in the Federal Acquisition Regulation (FAR) at 48 CFR
13.201(g)(1)) but valued below $100,000 ($250,000 for acquisitions
described in paragraph (1) of the Simplified Acquisition Threshold
definition in the FAR at 48 CFR 2.101) for small business concerns when
there is a reasonable expectation that offers will be obtained from at
least two small business concerns that are competitive in terms of
quality and delivery and award will be made at fair market prices. This
requirement does not preclude a contracting officer from setting aside
a contract under the 8(a) BD, HUBZone, Service Disabled Veteran Owned
(SDVO), or WOSB programs.
(2) Acquisitions Valued Above $100,000/Simplified Acquisition
Threshold.
(i) The contracting officer shall set aside any acquisition with an
anticipated dollar value exceeding $100,000 ($250,000 for acquisitions
described in paragraph (1) of the Simplified Acquisition Threshold
definition in the FAR at 48 CFR 2.101) for small business concerns when
there is a reasonable expectation that offers will be obtained from at
least two small business concerns that are competitive in terms of
quality and delivery and award will be made at fair market prices.
However, after conducting market research, the contracting officer
shall first consider a set-aside or sole source award (if the sole
source award is permitted by statute or regulation) under the 8(a) BD,
HUBZone, SDVO SBC or WOSB programs before setting aside the requirement
as a small business set-aside. There is no order of precedence among
the 8(a) BD, HUBZone, SDVO SBC or WOSB programs. The contracting
officer must document the contract file with the rationale used to
support the specific set-aside, including the type and extent of market
research conducted. In addition, the contracting officer must document
the contract file showing that the apparent successful offeror's ORCA
certifications and associated representations were reviewed.
(ii) SBA believes that Progress in fulfilling the various small
business goals, as well as other factors such as the results of market
research, programmatic needs specific to the procuring agency,
anticipated award price, and the acquisition history, will be
considered in making a decision as to which program to use for the
acquisition.
* * * * *
PART 126--HUBZONE PROGRAM
0
10. The authority citation for part 126 continues to read as follows:
Authority: 15 U.S.C. 632(a), 632(j), 632(p) and 657a.
0
11. Amend Sec. 126.607 by revising paragraph (b) to read as follows:
Sec. 126.607 When must a contracting officer set aside a requirement
for qualified HUBZone SBCs?
* * * * *
(b) Contracting Among Small Business Programs.
(1) Acquisitions Valued At or Below $100,000/Simplified Acquisition
Threshold. The contracting officer shall set aside any acquisition with
an anticipated dollar value exceeding $3,000 ($15,000 for acquisitions
as described in the Federal Acquisition Regulation (FAR) at 48 CFR
13.201(g)(1)) but valued below $100,000 ($250,000 for acquisitions
described in paragraph (1) of the Simplified Acquisition Threshold
definition in the FAR at 48 CFR 2.101) for small business concerns when
there is a reasonable expectation that offers will be obtained from at
least two small business concerns that are competitive in terms of
quality and delivery and award will be made at fair market prices. This
requirement does not preclude a contracting officer from setting aside
a contract under the 8(a) BD, HUBZone, Service Disabled Veteran Owned
(SDVO), or WOSB programs.
[[Page 62282]]
(2) Acquisitions Valued Above $100,000/Simplified Acquisition
Threshold.
(i) The contracting officer shall set aside any acquisition with an
anticipated dollar value exceeding $100,000 ($250,000 for acquisitions
described in paragraph (1) of the Simplified Acquisition Threshold
definition in the FAR at 48 CFR 2.101) for small business concerns when
there is a reasonable expectation that offers will be obtained from at
least two small business concerns that are competitive in terms of
quality and delivery and award will be made at fair market prices.
However, after conducting market research, the contracting officer
shall first consider a set-aside or sole source award (if the sole
source award is permitted by statute or regulation) under the 8(a) BD,
HUBZone, SDVO SBC or WOSB programs before setting aside the requirement
as a small business set-aside. There is no order of precedence among
the 8(a) BD, HUBZone, SDVO SBC or WOSB programs. The contracting
officer must document the contract file with the rationale used to
support the specific set-aside, including the type and extent of market
research conducted. In addition, the contracting officer must document
the contract file showing that the apparent successful offeror's ORCA
certifications and associated representations were reviewed.
(ii) SBA believes that Progress in fulfilling the various small
business goals, as well as other factors such as the results of market
research, programmatic needs specific to the procuring agency,
anticipated award price, and the acquisition history, will be
considered in making a decision as to which program to use for the
acquisition.
* * * * *
Sec. 126.609 [Removed and Reserved]
0
12. Remove and reserve Sec. 126.609.
0
13. Revise part 127 to read as follows:
PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT PROGRAM
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 EDWOSB or WOSB status protest pursuant to subpart F of this
part?
127.402 How will SBA conduct an 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 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?
127.507 Are there EDWOSB and WOSB contracting opportunities at or
below the Simplified Acquisition Threshold?
127.508 May SBA appeal a contracting officer's decision not to
reserve a procurement for award as a WOSB Program Contract?
127.509 What is the process for such an appeal?
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 ensure that Women-Owned Small Businesses
(WOSBs) have an equal opportunity to participate in Federal
contracting. This part implements these mechanisms and ensures that the
program created, referred to as the WOSB Program, is substantially
related to this important Congressional goal in accordance with
applicable law.
Sec. 127.101 What type of assistance is available under this part?
This part authorizes contracting officers to restrict competition
to eligible Economically Disadvantaged Women-Owned Small Businesses
(EDWOSBs) for certain Federal contracts in industries in which the
Small Business Administration (SBA) determines that WOSBs are
underrepresented or substantially underrepresented in Federal
procurement. It also authorizes contracting officers to restrict
competition to eligible WOSBs for certain Federal contracts in
industries in which SBA determines that WOSBs are substantially
underrepresented in Federal procurement and has waived the economically
disadvantaged requirement.
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 and whose term has
not expired or otherwise left the 8(a) BD program early.
AA/GC&BD means SBA's Associate Administrator for Government
Contracting and Business Development.
Central Contractor Registration (CCR) Database means the primary
[[Page 62283]]
Government repository for contractor information required for the
conduct of business with the Government. It is also a means for
conducting searches for small business contractors. In general,
prospective Federal contractors must be registered in CCR prior to
award of a contract or purchase agreement. CCR is located at https://www.bpn.gov/ccr/.
Citizen means a person born or naturalized in the United States.
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 of 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 chapter and that is at least 51
percent owned and controlled by one or more women who are 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, stepchild, 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 (the Online Representations and Certifications Application)
means the primary Government repository for contractor submitted
representations and certifications required for the conduct of business
with the Government. ORCA is located at https://orca.bpn.gov.
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.
Same or similar line of business means business activities within
the same four-digit ``Industry Group'' of the NAICS Manual as the
primary industry classification of the WOSB or EDWOSB.
Substantial underrepresentation means a disparity ratio which is
less than 0.5.
Underrepresentation means a disparity ratio between 0.5 and 0.8.
WOSB means a concern that is small pursuant to part 121 of this
chapter, and that is at least 51 percent owned and controlled by one or
more women who are citizens in accordance with Sec. Sec. 127.200,
127.201 and 127.202.
WOSB Program Repository means a secure, Web-based application that
collects, stores and disseminates documents to the contracting
community and SBA, which verify the eligibility of a business concern
for a contract to be awarded under a WOSB or EDWOSB requirement.
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 for its
primary industry classification; 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 one or more economically
disadvantaged women must unconditionally and directly own at least 51
percent of the concern. To qualify as a 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 plan) 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, the 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 or in the case of an
EDWOSB, economically disadvantaged 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 or in the case of an EDWOSB, economically disadvantaged
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, or in the case of
an EDWOSB, economically disadvantaged 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
[[Page 62284]]
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 a WOSB, the management and daily
business operations of the concern must be controlled by one or more
women. To qualify as an EDWOSB, the management and daily business
operations of the concern must be controlled by one or more women who
are economically disadvantaged. Control by one or more women or
economically disadvantaged 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 or economically
disadvantaged women.
(b) Managerial position and experience. A woman, or in the case of
an EDWOSB an economically disadvantaged woman, must hold the highest
officer position in the concern and must have managerial experience of
the extent and complexity needed to run the concern. The woman or
economically disadvantaged woman manager need not have the technical
expertise or possess the required license 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 or economically
disadvantaged woman who holds the highest officer position of the
concern must manage it on a full-time basis and devote full-time to the
business concern during the normal working hours of business concerns
in the same or similar line of business. The woman or economically
disadvantaged woman who holds the highest officer position 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, or in the case of an EDWOSB, economically disadvantaged
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, or in the case of an
EDWOSB, economically disadvantaged 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, or in the case
of an EDWOSB, economically disadvantaged women, must control the Board
of Directors of the concern. Women or economically disadvantaged women
are considered to control the Board of Directors when either:
(1) One or more women or economically disadvantaged 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 or economically disadvantaged 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 percent 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. SBA does
not take into consideration community property laws when determining
economic disadvantage when the woman has no direct, individual or
separate ownership interest in the property.
(b) Limitation on personal net worth.
(1) 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 her equity interest in her
primary personal residence.
(2) Income received from an EDWOSB that is an S corporation, LLC or
partnership will be excluded from net worth where the EDWOSB provides
documentary evidence demonstrating that the income was reinvested in
the business concern or the distribution was solely for the purposes of
paying taxes arising in the normal course of operations of the business
concern. Losses from the S corporation, LLC or partnership, however,
are losses to the EDWOSB only, not losses to the individual, and cannot
be used to reduce an individual's net worth.
(3) Funds invested in an Individual Retirement Account (IRA) or
other official retirement account that are unavailable until retirement
age without a significant penalty will not be considered in determining
a woman's net worth. In order to properly assess whether funds invested
in a retirement account may be excluded from a woman's net worth, she
must provide information about the terms and restrictions of the
account to SBA and certify that the retirement account is legitimate.
(c) Factors to be considered.
(1) General. The personal financial condition of the woman claiming
economic disadvantage, including her personal income for the past three
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, will be considered in
determining whether she is economically disadvantaged.
(2) Spouse's financial situation. SBA may consider a spouse's
financial situation in determining a woman's access to credit and
capital. When married, an individual claiming economic disadvantage
must submit separate financial information for her spouse, unless the
individual and the spouse are legally separated. SBA will consider a
spouse's financial situation in determining an individual's access to
credit and capital where the spouse has a role in the business (e.g.,
an officer, employee or director) or has lent money to, provided credit
or financial support to, or guaranteed a loan of the business. SBA may
also consider the spouse's financial condition if the spouse's business
is in the same or similar line of business as the EDWOSB or WOSB and
the spouse's business and WOSB share similar names, Web sites,
equipment or employees. In addition, all transfers to a spouse within
two years of a certification will be attributed to a woman claiming
economic disadvantage as set forth in paragraph (d) of this section.
(3) Income.
(i) When considering a woman's personal income, if the adjusted
gross yearly income averaged over the three years preceding the
certification exceeds $350,000, SBA will presume that she is not
economically disadvantaged. The
[[Page 62285]]
presumption may be rebutted by a showing that this income level was
unusual and not likely to occur in the future, that losses commensurate
with and directly related to the earnings were suffered, or by evidence
that the income is not indicative of lack of economic disadvantage.
(ii) Income received by an EDWOSB that is an S corporation, LLC, or
partnership will be excluded from an individual's income where the
EDWOSB provides documentary evidence demonstrating that the income was
reinvested in the EDWOSB or the distribution was solely for the
purposes of paying taxes arising in the normal course of operations of
the business concern. Losses from the S corporation, LLC or
partnership, however, are losses to the EDWOSB only, not losses to the
individual, and cannot be used to reduce a woman's personal income.
(4) Fair market value of all assets. A woman will generally not be
considered economically disadvantaged if the fair market value of all
her assets (including her primary residence and the value of the
business concern) exceeds $6 million. The only assets excluded from
this determination are funds excluded under paragraph (b)(3) of this
section as being invested in a qualified IRA account or other official
retirement account.
(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), have a current
representation posted on the Online Representations and Certifications
Application (ORCA) that it qualifies as an EDWOSB or WOSB and have
provided the required documents to the WOSB Program Repository, or if
the repository is unavailable, be prepared to submit the documents to
the contracting officer if selected as the apparent successful offeror.
(b) Form of certification. In conjunction with its required
registration in the CCR database, the concern must submit a copy of the
Women-Owned Small Business Program Certification (WOSB or EDWOSB) to
the WOSB Program Repository and representations to the electronic
annual representations and certifications at http://orca.bpn.gov, that
it is a qualified EDWOSB or WOSB. The Women-Owned Small Business
Program Certification (WOSB or EDWOSB) and representation must state,
subject to penalties for misrepresentation, that:
(1) The concern is an EDWOSB or WOSB or is certified as an EDWOSB
or WOSB by a certifying entity approved by SBA, and there have been no
changes in its circumstances affecting its eligibility since
certification;
(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 an EDWOSB or WOSB.
(c) Documents provided to contracting officer. All of the documents
set forth in paragraphs (d) and (e) of this section must be provided to
the contracting officer to verify eligibility at the time of initial
offer. The documents will be provided via the WOSB Program Repository
or, if the repository is unavailable, directly to the contracting
officer. The documents must be retained for a minimum of six (6) years.
(d) Third-Party Certification.
(1) Prior to certification in ORCA, the WOSB or EDWOSB that has
been certified as a WOSB or EDWOSB by a certifying entity approved by
SBA, including those certifiers from which SBA will accept
certifications from the U.S. Department of Transportation's (DOT)
Disadvantaged Business Enterprise (DBE) Program, or by SBA as an 8(a)
BD Participant, must provide a copy of the third-party Certification to
the WOSB Program Repository. If the WOSB Program Repository is
unavailable, then prior to the award of a WOSB or EDWOSB contract, the
apparent successful offeror WOSB or EDWOSB that has been certified as a
EDWOSB or WOSB by a certifying entity approved by SBA must provide a
copy of the third-party Certification to the contracting officer
verifying that it was a WOSB or EDWOSB at the time of initial offer.
(2) The EDWOSB or WOSB must also provide a copy of the joint
venture agreement, if applicable.
(3) The EDWOSB or WOSB must also provide a signed copy of the
Women-Owned Small Business Program Certification (WOSB or EDWOSB).
(4) The EDWOSB or WOSB must also provide any additional documents
as requested by SBA in writing that are necessary to satisfy the WOSB
Program requirements.
(5) Within thirty (30) days of the WOSB Program Repository becoming
available, the WOSB or EDWOSB must provide the same documents to the
repository.
(e) Non-Third Party Certification. A concern that has not been
certified as a WOSB or EDWOSB by a third-party certifier approved by
SBA or as a DBE or by SBA as an 8(a) BD Participant must also provide
documents to the WOSB Program Repository. If the WOSB Program
Repository is unavailable, then prior to award of a WOSB or EDWOSB
contract, the apparent successful offeror must provide a copy of the
documents to the contracting officer verifying that it was a WOSB or
EDWOSB at the time of initial offer. Within thirty (30) days of the
WOSB Program Repository becoming available, the WOSB or EDWOSB must
provide the same documents to the WOSB Program Repository. These
documents must be signed and include the following:
(1) Birth certificates, Naturalization papers, or unexpired
passports for owners who are women;
(2) Copy of the joint venture agreement, if applicable;
(3) For limited liability companies:
(i) Articles of organization (also referred to as certificate of
organization or articles of formation) and any amendments; and
(ii) Operating agreement, and any amendments;
(4) For corporations:
(i) Articles of incorporation and any amendments;
(ii) By-laws and any amendments;
[[Page 62286]]
(iii) All issued stock certificates, including the front and back
copies, signed in accord with the by-laws;
(iv) Stock ledger; and
(v) Voting agreements, if any;
(5) For partnerships, the partnership agreement and any amendments;
(6) For sole proprietorships (and corporations, limited liability
companies and partnerships if applicable), the assumed/fictitious name
certificate(s);
(7) A signed copy of the Women-Owned Small Business Program
Certification-WOSBs; and
(8) For EDWOSBs, in addition to the above:
(i) SBA Form 413, Personal Financial Statement, available to the
public at http://www.sba.gov/tools/Forms/index.html, for each woman
claiming economic disadvantage; and
(ii) A signed copy of the Women-Owned Small Business Program
Certification-EDWOSBs.
(f) Update of certification and documents.
(1) The concern must update its Women-Owned Small Business Program
Certification (WOSB or EDWOSB) and 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 certification
and representations are effective for a period of one year from the
date of submission or update.
(2) The WOSB or EDWOSB must update the documents submitted to the
contracting officer via the WOSB Program Repository as necessary to
ensure they are kept current, accurate and complete. If the WOSB
Program Repository is not available, the WOSB or EDWOSB must provide
current, accurate and complete documents to the contracting officer for
each contract award. Within thirty (30) days of the WOSB Program
Repository becoming available, the WOSB or EDWOSB must provide the same
documents to the WOSB Program Repository.
Sec. 127.301 When may a contracting officer accept a concern's self-
certification?
(a) General.
(1) Third-Party Certifications. A contracting officer may accept a
concern's self-certification on ORCA as accurate for a specific
procurement reserved for award under this Part if the apparent
successful offeror WOSB or EDWOSB provided the required documents,
which are set forth in Sec. 127.300(d), and there has been no 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.
(2) Non-Third Party Certification. A contracting officer may accept
a concern's self-certification in ORCA if the apparent successful
offeror WOSB or EDWOSB has provided the required documents, which are
set forth in Sec. 127.300(e).
(b) Referral to SBA. When the contracting officer has information
that calls into question the eligibility of a concern as an EDWOSB or
WOSB or the concern fails to provide all of the required documents to
verify its eligibility, the contracting officer shall refer the concern
to SBA for verification of the concern's eligibility by filing an
EDWOSB or WOSB status protest pursuant to subpart F of this part. If
the apparent successful offeror WOSB or EDWOSB fails to submit any of
the required documents, the contracting officer cannot award a WOSB or
EDWOSB contract to that business concern.
Sec. 127.302 What third-party certifications may a concern use as
evidence of its status as a qualified EDWOSB or WOSB?
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:
(a) SBA as an 8(a) BD Program participant; or
(b) An entity designated as an SBA-approved certifier on SBA's Web
site located at http://www.sba.gov/GC.
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, State government, or
national certifying entity if SBA determines that the entity's
certification process complies with SBA-approved certification
standards and tracks the 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) It will retain the documents submitted by the approved WOSB or
EDWOSB for a period of six (6) years from the date of certification
(initial and any recertification) and provide any such documents to SBA
in response to a status protest or eligibility examination or agency
investigation or audit.
(3) Its certification process will require applicant concerns to
pre-register on CCR and submit sufficient information as determined by
SBA 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.
(4) 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, including certifiers from which SBA will accept
DOT DBE certifications, 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 or SBA Area Office for
Government Contracting.
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.
[[Page 62287]]
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, 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?
(a) Purpose of examination. Eligibility examinations are
investigations that verify the accuracy of any certification made or
information provided as part of the certification process (including
third-party certifications) or in connection with an EDWOSB or WOSB
contract. In addition, eligibility examinations may verify that a
concern meets the EDWOSB or WOSB eligibility requirements at the time
of the examination. SBA will, in its sole discretion, perform
eligibility examinations at any time after a concern self-certifies in
CCR or ORCA that it is an EDWOSB or WOSB. SBA may conduct the
examination, or parts of the examination, at one or all of the
concern's offices.
(b) Determination on conduct of an examination. SBA may consider
protest allegations set forth in a protest in determining whether to
conduct an examination of a concern pursuant to subpart D of this part,
notwithstanding a dismissal or denial of a protest pursuant to Sec.
127.604. SBA may also consider information provided to the D/GC by a
third-party that questions the eligibility of a WOSB or EDWOSB that has
certified its status in ORCA or CCR in determining whether to conduct
an eligibility examination.
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 accuracy of
any certification made or information provided as part of the
certification process or in connection with an EDWOSB or WOSB contract.
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 fifteen (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 five (5) business days before
commencing an examination, SBA will notify the concern in writing that
it will conduct an examination to verify the status of the concern as
an EDWOSB or WOSB. However, SBA reserves the right to conduct a site
visit without prior notification to the concern.
(b) Request for information. SBA will request that the concern or
contracting officer provide documentation and information related to
the concern's EDWOSB or WOSB eligibility. These documents will include
those submitted under Sec. 127.300 and any other pertinent documents
requested by SBA at the time of eligibility examination to verify
eligibility, including but not limited to, documents submitted by a
concern in connection with any WOSB or EDWOSB certification. SBA may
also request copies of proposals or bids submitted in response to an
EDWOSB or WOSB solicitation. In addition, EDWOSBs will be required to
submit signed copies of SBA Form 413, Personal Financial Statement, the
three most recent personal income tax returns (including all schedules
and W-2 forms) for the women claiming economic disadvantage and their
spouses, unless the individuals and their spouses are legally
separated, and SBA Form 4506-T, Request for Tax Transcript Form,
available to the public at http://www.sba.gov/tools/Forms/index.html.
SBA may draw an adverse inference where a concern fails to cooperate in
providing the requested information. The WOSB or EDWOSB must retain
documentation demonstrating satisfaction of the eligibility
requirements for six (6) years from date of self-certification.
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, then the D/GC will send the concern a
written decision to that effect and will allow the concern's EDWOSB or
WOSB designation in CCR and ORCA to stand and the concern may continue
to self-certify its EDWOSB or WOSB status.
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, then
the D/GC will send the concern a written notice explaining the reasons
SBA believes the concern did not qualify at the time of certification
or does not qualify as an EDWOSB or WOSB. The notice will advise the
concern that it has fifteen (15) calendar days from the date of the
notice to respond.
(b) SBA determination. Following the fifteen (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 with its findings. The D/
GC's decision is effective immediately and remains in full force and
effect unless a new examination verifies the concern is an eligible
EDWOSB or WOSB or the concern is certified by a third-party certifier.
(1) 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 (5) calendar days after the date of the decision.
(2) If the concern has already certified itself as a WOSB or EDWOSB
on a pending procurement the concern must immediately inform the
officials responsible for the procurement of the adverse determination.
[[Page 62288]]
(3) If SBA determines that the concern did not qualify as an EDWOSB
or WOSB at the time it submitted its initial offer for an EDWOSB or
WOSB requirement, the contracting officer may terminate the contract,
not exercise any option, or not award further task or delivery orders.
(4) Whether or not a contracting officer decides to allow or not
allow an ineligible concern to fully perform a contract under paragraph
(b)(2) of this section, 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.
(c) A concern that has been found to be ineligible may not
represent itself as a WOSB or EDWOSB until it cures the reason for its
ineligibility and SBA determines that the concern qualifies as a WOSB
or EDWOSB. 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 this section.
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 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 Eligibility Examination.''
(d) Notice of receipt of request. SBA will immediately notify the
concern in writing once SBA receives its request for an examination.
SBA will 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 G 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
immediately and remains in full force and effect unless a new
examination verifies the concern is an eligible EDWOSB or WOSB or the
concern is certified by a third-party certifier. If the concern has
already certified itself as a WOSB or EDWOSB on a pending procurement
the concern must immediately inform the officials responsible for the
procurement of the adverse determination.
(g) Determinations of Ineligibility. A concern that has been found
to be ineligible shall not represent itself as a WOSB or EDWOSB until
it cures the reason for its ineligibility and SBA determines that the
concern qualifies as a WOSB or EDWOSB. 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 this section.
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.
Sec. 127.501 How will SBA determine the industries that are eligible
for EDWOSB or WOSB requirements?
(a) Based upon its analysis, SBA will designate by NAICS Industry
Subsector Code those industries in which WOSBs are underrepresented and
substantially underrepresented.
(b) In determining the extent of disparity of WOSBs, SBA may
request that the head of any Federal department or agency provide SBA,
data or information necessary to analyze the extent of disparity of
WOSBs.
Sec. 127.502 How will SBA identify and provide notice of the
designated industries?
SBA will post on its Internet Web site at http://www.sba.gov a list
of NAICS Industry Subsector industries it designates under Sec.
127.501. 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 as underrepresented pursuant to Sec. 127.501, a contracting
officer may restrict competition to EDWOSBs if the 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. For requirements in industries designated by
SBA as substantially underrepresented pursuant to Sec. 127.501, a
contracting officer may restrict competition to WOSBs if the
contracting officer has a reasonable expectation based on market
research that:
(1) Two or more WOSBs will submit offers (this includes EDWOSBs,
which are also WOSBs);
(2) 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
(3) 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) Contracting Among Small Business Programs.
[[Page 62289]]
(1) Acquisitions Valued At or Below $100,000/Simplified Acquisition
Threshold. The contracting officer shall set aside any acquisition with
an anticipated dollar value exceeding $3,000 ($15,000 for acquisitions
as described in the Federal Acquisition Regulation (FAR) at 48 CFR
13.201(g)(1)) but valued below $100,000 ($250,000 for acquisitions
described in paragraph (1) of the Simplified Acquisition Threshold
definition in the FAR at 48 CFR 2.101) for small business concerns when
there is a reasonable expectation that offers will be obtained from at
least two small business concerns that are competitive in terms of
quality and delivery and award will be made at fair market prices. This
requirement does not preclude a contracting officer from setting aside
a contract under the 8(a) BD, HUBZone, Service Disabled Veteran Owned
(SDVO), or WOSB programs.
(2) Acquisitions Valued Above $100,000/Simplified Acquisition
Threshold.
(i) The contracting officer shall set aside any acquisition with an
anticipated dollar value exceeding $100,000 ($250,000 for acquisitions
described in paragraph (1) of the Simplified Acquisition Threshold
definition in the FAR at 48 CFR 2.101) for small business concerns when
there is a reasonable expectation that offers will be obtained from at
least two small business concerns that are competitive in terms of
quality and delivery and award will be made at fair market prices.
However, after conducting market research, the contracting officer
shall first consider a set-aside or sole source award (if the sole
source award is permitted by statute or regulation) under the 8(a) BD,
HUBZone, SDVO SBC or WOSB programs before setting aside the requirement
as a small business set-aside. There is no order of precedence among
the 8(a) BD, HUBZone, SDVO SBC or WOSB programs. The contracting
officer must document the contract file with the rationale used to
support the specific set-aside, including the type and extent of market
research conducted. In addition, the contracting officer must document
the contract file showing that the apparent successful offeror's ORCA
certifications and associated representations were reviewed.
(ii) SBA believes that Progress in fulfilling the various small
business goals, as well as other factors such as the results of market
research, programmatic needs specific to the procuring agency,
anticipated award price, and the acquisition history, will be
considered in making a decision as to which program to use for the
acquisition.
(e) Contract file. When restricting competition to WOSBs or EDWOSBs
in accordance with Sec. 127.503, 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 an underrepresented or, with
respect to WOSBs, substantially underrepresented, industry. In
addition, the contracting officer must document the contract file
showing that the apparent successful offeror's documents and ORCA
certifications and associated representations were reviewed.
Sec. 127.504 What additional requirements must a concern satisfy to
submit an offer on an EDWOSB or WOSB requirement?
(a) 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:
(1) It is small under the size standard corresponding to the NAICS
code assigned to the contract;
(2) It is listed on CCR and ORCA as an EDWOSB or WOSB; and
(3) There has been no material change in any of its circumstances
affecting its EDWOSB or WOSB eligibility.
(b) The concern must also 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) of this chapter.
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 parties to the joint venture must enter into a written
joint venture agreement. The joint venture agreement must contain a
provision:
(1) Setting forth the purpose of the joint venture.
(2) Designating an EDWOSB or WOSB as the managing venturer of the
joint venture, and an employee of the managing venturer as the project
manager responsible for the performance of the contract;
(3) Stating that not less than 51 percent of the net profits earned
by the joint venture will be distributed to the EDWOSB or WOSB;
(4) Specifying the responsibilities of the parties with regard to
contract performance, sources of labor, and negotiation of the EDWOSB
or WOSB contract; and
(5) Requiring the final original records be retained by the
managing venturer upon completion of the EDWOSB or WOSB contract
performed by the joint venture.
(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);
(e) The procuring activity will execute the contract in the name of
the EDWOSB or WOSB or joint venture.
(f) The WOSB or EDWOSB must provide a copy of the joint venture
agreement to the contracting officer.
Sec. 127.507 Are there EDWOSB and WOSB contracting opportunities at
or below the simplified acquisition threshold?
If the requirement is at or below the simplified acquisition
threshold, the contracting officer may set-aside the requirement as set
forth in Sec. 127.503.
Sec. 127.508 May SBA appeal a contracting officer's decision not to
reserve a procurement for award as a WOSB Program contract?
The Administrator may appeal a contracting officer's decision not
to make a particular requirement available for award under the WOSB
Program.
Sec. 127.509 What is the process for such an appeal?
(a) Notice of appeal. When the contacting officer rejects a
recommendation by SBA's Procurement Center Representative to make a
requirement available for the WOSB Program, he or she must notify the
Procurement Center Representative as soon as practicable. If the
Administrator
[[Page 62290]]
intends to appeal the decision, SBA must notify the contracting officer
no later than five (5) business days after receiving notice of the
contracting officer's decision.
(b) Suspension of action. Upon receipt of notice of SBA's intent to
appeal, the contracting officer must suspend further action regarding
the procurement until the Secretary of the department or head of the
agency issues a written decision on the appeal, unless the Secretary of
the department or head of the agency makes a written determination that
urgent and compelling circumstances which significantly affect the
interests of the United States compel award of the contract.
(c) Deadline for appeal. Within fifteen (15) business days of SBA's
notification to the CO, SBA must file its formal appeal with the
Secretary of the department or head of the agency, or the appeal will
be deemed withdrawn.
(d) Decision. The Secretary of the department or head of the agency
must specify in writing the reasons for a denial of an appeal brought
under this section.
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 sufficient credible evidence
to show that the concern may not be 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
percent owned and controlled by one or more women who are economically
disadvantaged. In addition, SBA will consider a protest challenging the
status of a concern as an EDWOSB or WOSB if the contracting officer has
protested because the WOSB or EDWOSB apparent successful offeror has
failed to provide all of the required documents, as set forth in Sec.
127.300.
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, e-mail, or by U.S.
mail (received by the applicable date) 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. IF SBA initiates a protest, the D/GC will notify the
contracting officer of such protest.
(c) Timeliness.
(1) For negotiated acquisitions, a protest from an interested party
must be received by the contracting officer prior to 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, a protest from an interested party
must be received by close of business on the fifth business day after
bid opening.
(3) Any protest received after the time limit is untimely, unless
it is from SBA or the contracting officer. A 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 and documents,
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. In addition, the contracting officer must send copies of any
documents provided to the contracting officer pursuant to Sec. 127.300
(if the repository is unavailable). 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. The contracting officer
may award the contract after receipt of a protest if the contracting
officer determines in writing that an award must be made to prevent
significant harm to the public interest.
(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 or submit a protest itself.
(c) Notice to protested concern. If SBA determines that the protest
is timely, sufficiently specific and is based upon protestable
allegations, SBA will:
[[Page 62291]]
(1) Notify the protested concern of the protest and request
information and documents responding to the protest within five (5)
business days from the date of the notice. These documents will include
those that verify the eligibility of the concern, respond to the
protest allegations, and copies of proposals or bids submitted in
response to an EDWOSB or WOSB requirement. In addition, EDWOSBs will be
required to submit signed copies of SBA Form 413, Personal Financial
Statement, the two most recent personal income tax returns (including
all schedules and W-2 forms) for the women claiming economic
disadvantage and their spouses, unless the individuals and their
spouses are legally separated, and SBA Form 4506-T, Request for Tax
Transcript Form. SBA may draw an adverse inference where a concern
fails to cooperate in providing the requested information and
documents; 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 fifteen (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 fifteen (15) day period, the contracting
officer must contact SBA to ascertain when SBA estimates that it will
issue its decision. After contacting SBA, the contracting officer may
award the contract if he or she determines in writing that there is an
immediate need to award the contract and that waiting until SBA makes
it determination will harm the public interest. The determination must
be included in the contract file and a written copy sent to the D/GC.
(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. Regardless of a decision not to sustain 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.
(f) Effect of determination. SBA's determination is effective
immediately and is final unless overturned by SBA's Office of Hearings
and Appeals (OHA) on appeal pursuant to Sec. 127.605.
(1) A contracting officer may award the contract to a protested
concern after the D/GC either has determined that the protested concern
is an eligible WOSB or EDWOSB or has dismissed all protests against it.
If OHA subsequently overturns the D/GC's determination or dismissal,
the contracting officer may apply the OHA decision to the procurement
in question.
(2) A contracting officer shall not award the contract to a
protested concern that the D/GC has determined is not an EDWOSB or WOSB
for the procurement in question.
(i) Where the contracting officer has made a written determination
under paragraph (d) of this section that there is an immediate need to
award the contract and waiting until SBA makes its determination will
harm the public interest, the contracting officer receives the D/GC's
determination after contract award finding the business concern does
not qualify as EDWOSB or WOSB, and no OHA appeal has been filed, the
contracting officer may terminate the award, and shall not exercise any
options, or not award further task or delivery orders. If no such
written determination by the contracting officer has been made, the
contracting officer receives the D/GC's determination after contract
award finding the business concern does not qualify as an EDWOSB or
WOSB, and no OHA appeal has been filed, the contracting officer shall
terminate the award.
(ii) If a timely OHA appeal has been filed after contract award,
the contracting officer must consider whether performance can be
suspended until an appellate decision is rendered.
(iii) If OHA affirms the D/GC's determination finding that the
protested concern is ineligible, the contracting officer shall either
terminate the contract, not exercise the next option or not award
further task or delivery orders.
(3) The contracting officer must update the Federal Procurement
Data System and other procurement reporting databases to reflect the
final agency decision (the D/GC's decision if no appeal is filed or
OHA's decision).
(4) A concern that has been found to be ineligible may not submit
an offer as a WOSB or EDWOSB on another procurement until it cures the
reason(s) for its ineligibility and SBA issues a decision to this
effect. 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 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, provide false
information to the Government, 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, 48 CFR 9.4;
(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
14. The authority citation for part 134 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
15. In Sec. 134.102, paragraph (s) is revised to read as follows:
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;
* * * * *
[[Page 62292]]
Subpart E--Rules of Practice for Appeals from Service-Disabled
Veteran Owned Small Business Concern Protests
0
16. In Sec. 134.515, paragraph (b) is revised 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 twenty (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 twenty (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
17. Revise 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
Sec.
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 Concern (WOSB) or Economically Disadvantaged WOSB Concern
(EDWOSB) protest. 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 percent 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
subparts 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 ten (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 must 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 a
timely OHA appeal has been filed after contract award, the contracting
officer must consider whether performance can be suspended until an
appellate decision is rendered. If OHA affirms the D/GC's determination
finding that the protested concern is ineligible, the contracting
officer shall either terminate the contract, not exercise the next
option or not award further task or delivery orders. If OHA overturns
the D/GC's dismissal or determination that the concern is an eligible
EDWOSB or WOSB, the contracting officer may apply the OHA decision to
the procurement in question.
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.
[[Page 62293]]
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
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 must 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 seven (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 Sec. 134.710.
Sec. 134.714 When must the Judge issue his or her decision?
The Judge shall issue a decision, insofar as practicable, within
fifteen (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 twenty (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 twenty (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.
Dated: October 1, 2010.
Karen Gordon Mills,
Administrator.
[FR Doc. 2010-25179 Filed 10-4-10; 11:15 am]
BILLING CODE 8025-01-P