The Small Business Administration (SBA) is changing how small businesses seek the award of federal contracting dollars designated for concerns owned and controlled by women.
Self-certification for WOSBs and EDWOSBs seeking new contracts will be phased out beginning this summer and eliminated entirely this fall.
On Oct. 15, 2020, small businesses seeking new set-aside, sole source, or multiple-award contracts under the Women-Owned Small Business Federal Contracting Program (the Program) will no longer be able to self-certify their eligibility for contracting preferences based on female ownership, control, or economic disadvantage.
Through a rule change announced last week, SBA will require that Women-Owned Small Business Concerns (WOSBs) and Economically Disadvantaged Women-Owned Small Business Concerns (EDWOSBs) bidding on set-aside, sole source, or multiple-award contracts with pools reserved for WOSBs / EDWOSBs be certified using one of three options:
submitting an application for certification through SBA’s free online system;
submitting evidence of certification from another approved government entity (e.g., the 8(a) Business Development Program or the Department of Veterans Affairs Center for Verification and Evaluation); or
submitting evidence of certification from an approved third-party certifier.[1]
SBA will begin implementing these changes to the certification process on July 15, 2020, and WOSBs / EDWOSBs that are not certified by mid-October 2020 will become ineligible for new contracts under the Program. According to SBA guidance, the rule change will not affect existing contracts awarded under the Program, so a small business that was awarded a WOSB or EDWOSB contract previously may continue to perform that contract. However, SBA advises that contracts (including multiple-award contracts) with durations of more than five years (including options) will necessitate certification prior to the end of the fifth year of the contract.
WOSBs and EDWOSBs should start collecting documentation before the revised certification process is rolled out this summer.
For those WOSBs / EDWOSBs seeking certification to pursue new contracts under the Program, between now and July 15, 2020, certified WOSBs / EDWOSBs can download their documentation housed in the WOSB Program Repository on certify.sba.gov. Effective July 15, 2020, firms can begin submitting applications for certification to SBA for initial processing and, on October 15, 2020, SBA will begin issuing certification decisions.
Other revisions: The EDWOSB and 8(a) Business Development programs now have consistent economic disadvantage standards that are calculated without considering retirement savings.
Under the new rule, individuals with a personal net worth of up to $750,000 are eligible to participate in the 8(a) Business Development Program based on economic disadvantage (previously capped at $250,000). Through this revision, SBA aligned the economic disadvantage threshold for the 8(a) Business Development Program with that of EDWOSBs and eliminated the result where small businesses were found economically disadvantaged for EDWOSB purposes, but not economically disadvantaged for the 8(a) Business Development Program. Moreover, retirement accounts will now be excluded from the calculation of an economically disadvantaged individual’s net worth, irrespective of the individual’s age. Overall, this should expand the pool of potential EDWOSB and 8(a) Business Development Program participants going into 2021.
With the federal government’s goal remaining to award at least 5% of all federal contracting dollars to women-owned small businesses each year, SBA’s rule change presents an opportunity for proactive WOSBs and EDWOSBs, including those now eligible based on personal net worth calculations, to position themselves for early certification and eligibility for new contract awards under the Program.
Contact OFP Attorney Jim Miller at 703-218-2154 with questions or for more information.
[1] SBA also clarified that firms with existing third-party certifications and concerns that were subject to a program examination or status protest and received a concomitant positive decision in the three years prior to the rule’s effective date will be considered certified the day the rule is effective.
Disclaimer: The information contained herein is provided for informational purposes only and should not be construed as legal advice on any subject matter. This information contained herein is not provided in the course of an attorney-client relationship and is not intended to constitute legal advice. Any information contained in this article is not intended to be a substitute for legal counsel. No one should act or refrain from acting on the basis of any content included in this article but should instead seek the appropriate legal advice on the particular facts and circumstances at issue from a properly licensed attorney. The author expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this article. This article contains general information and may not reflect current legal developments.