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June 2011

SBA Implements New Set-Aside Rule for Women-Owned Small Businesses to Facilitate Government Contracts

The Small Business Administration has implemented a new set-aside rule for Women-Owned Small Businesses ("WOSB") that will provide WOSBs with a tool to take more of the nearly $100 billion dollars in government contracts awarded to small businesses.  After 11 years in the making, on October 7, 2010, The U.S. Small Business Administration (SBA) issued its Final Rule to amend its regulations governing women-owned small business contracting procedures.  Federal Register, Vol. 75, No. 194, Part 3, October 7, 2010, pgs. 62258-62293.  While the authority to create a WOSB set-aside program existed since 2000 in section 8(m) of the Small Business Reauthorization Act, little was done, until now, to create a viable program.  The Final Rule amended 13 CFR part 127, entitled "The Women-Owned Small Business Federal Contract Assistance Procedures," and created the Women-Owned Small Business Federal Contract Program (the "WOSB Program").  The WOSB Program creates two new classes of preferred government contractors – Women-Owned Small Businesses and Economically-Disadvantaged Women-Owned Small Businesses (EDWOSBs).  Congress directs that a minimum of 5% of all federal contracts must be awarded to WOSBs or EDWOSBs.  SBA Administrator Karen Mills stated that "this rule will be a platform for changing [women-owned firms' underrepresentation in federal contracting marketplace] by providing greater opportunities for women-owned small businesses to compete for and win federal contracts."  The WOSB Program became effective in the SBA's regulations on February 4, 2011 but did not become effective in the Federal Acquisition Regulation until April 1, 2011.

The WOSB Program authorizes contracting officers to specifically limit competition for and award contracting opportunities solely to WOSBs.  The WOSB Program allows contracting officers to set aside contracts for WOSBs in eighty-three (83) different industry sectors identified by individual North American Industry Classification System (NAICS) codes.  Those 83 NAICS codes were determined to be the ones in which WOSBs were underrepresented or substantially underrepresented in the federal contract marketplace.  A list of the 83 NAICS codes may be found here.  While some of the applicable NAICS codes include apparel accessories and other apparel manufacturing, communications equipment manufacturing, specialized freight trucking, and lessors of residential buildings and dwellings, a substantial number of the NAICS codes relate to the construction industry.

To be eligible for the Program, a business must be a WOSB or EDWOSB, meaning that it must be a small business that meets the size standards for the business' corresponding NAICS code and be at least 51% unconditionally and directly owned and controlled by one or more women who are United States citizens or, in the case of an EDWOSB, one or more economically disadvantaged women who are United States citizens.  To be eligible for a set-aside under the WOSB Program,  the WOSB or EDWOSB must 1) conduct business in one of the 83 industry sectors; 2) become certified as a WOSB or EDWOSB either through self-certification or a third-party certifier; 3) upload the requisite documents to the WOSB Program Repository; 4) register in the Central Contractor Registration (CCR), an online government-maintained database of secure financial data for each registrant; 5) represent its status in the Online Representations and Certifications Application (ORCA), and 6) bid for a project in one of the identified 83 NAICS industry sectors.  Joint Ventures can also participate in the WOSB Program if certain requirements are met. 

Margot Dorfman, CEO of the U.S. Women's Chamber of Commerce  stated that "[t]he shortfall between the contracting dollars awarded to women and the paltry 5 percent goal has been in the range of $5-$8 billion annually."  She continued, "We are confident that, with this program, the federal government will finally have the tool necessary to bring fair access to contracts for women-owned firms?[o]pening the doors to opportunity will enable WOSBs to grow their revenues, sustain their employees, create new job growth, and support our U.S. economy." There is no term limit on WOSB Program participation, so once a WOSB or EDWOSB is in the Program, they are in as long as their business meets all of the requirements.  The Federal Business Opportunities web site (www.fbo.gov) lists the Federal government solicitations that may be set aside for WOSB or EDWOSBs.  The first contracts set aside under the WOSB Program are expected to be awarded in the fourth quarter of fiscal year 2011.

The SBA is charged with implementing and administering the program.  Although there are still some parts of the WOSB Program the SBA is still working to complete, potential WOSBs and EDWOSBs may begin applying for the Program and bidding on contracts.  Becoming eligible for, bidding for, and winning a federal contract also means complying with laws and regulations unique to those doing business with the government.  The SBA is encouraging small business owners to review program requirements and ensure their required documents are uploaded to the repository.  If a business does not upload all of the requisite documents, falsely certifies, misrepresents its status as an EDWOSB or WOSB or provides false information to the Government, the SBA or another Federal agency may propose to suspend and debar the business, or seek administrative, civil and criminal remedies against the business under federal law, and competitors may protest federal contracts award to the putative WOSB.

The WOSB Program creates tremendous opportunities not only for women-owned small businesses, but also for companies that partner, team, and subcontract to and with women-owned businesses, provided that the WOSB and its business partners comply with the program's requirements.

For information on Gordon & Rees's Women's Initiative, please click here.

Business Transactions

Cecily J. McLeod



Business Transactions

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