The End of Self-Certification in SBA ED/WOSB Set-Aside Program

Four years ago, the Small Business Adminstration (SBA) implemented the Women-Owned Small Business (WOSB) Federal Contracting Program with the goal of awarding 5% of every federal department’s prime contracts budget to qualifying WOSBs in industries women are underrepresented or substantially underrepresented.

In 2015, the SBA claims its program finally reached the 5% goal.  But did it?  More specifically, are the WOSBs which won the prime awards from the set-aside program really women-owned?

At least one non-profit third-party certifier of WOSBs, the U.S. Women’s Chamber of Commerce (USWCC), disputes that women-owned businesses are the only businesses receiving the federal prime contracts under ED/WOSB set-aside program.

The USWCCs allegations begin with the controversial decision by Congress and the SBA to allow businesses to be entered into competition for WOSB prime contracts simply by saying they are women-owned without any further verification of that status either by the SBA or by any recognized third-party certifier.  Perhaps predictibly, the result of this self-certification “loophole” has been to allow large and male-owned businesses to win at least 50% of prime contracts awarded under the set-aside program.

In her February 15, 2016, letter to the Brenda J. Fernandez, Procurement Analyst, U.S. Small Business Administration, Margot Dorfman, CEO of the USWCC, bases her estimate of fraud by large or male-owned businesses on investigations by the General Accounting Office (GAO) and SBA Office of Inspector General (OIG).  According to the OIG, many of these fraudulent awards were “given to firms with absolutely no documentation whatsoever and … to firms that had not proven control by the woman/women owner(s).”

Further, whistleblower programs to report specific large and male-owned businesses abusing the program have been ineffective in reducing the number of fraudulent awards.  First, it is difficult and expensive for an objecting business owner to discern whether an award recipient meets certification criteria.  Second, firms denied certification by a third-party certifier and even firms that had been investigated for potential fraud were allowed by the SBA to go ahead and self-certify their status anyway.

Accordingly, Congress has recently acted to remove the self-certification option from the ED/WOSB program.  The SBA is currently seeking comments on how best to remove self-certification as an option and how to improve its certification process overall.  In response to this solicitation of comments, the USWCC recommends a series of steps to reduce the cost of certification for ED/WOSBs by allowing the SBA to accept a wider variety of certifications including those of other federal agencies and even some states, while maintaining the trustworthiness of the certification and the integrity of the program.

If you would like to comment on how the SBA might create a new certification rule to achieve these goals, please write to:

Brenda J. Fernandez
Procurement Analyst
U.S. Small Business Administration
Office of Policy, Planning and Liaison
409 Third Street SW., 8th Floor
Washington, DC 20416,

and include the reference: “RIN 3245-AG75 – Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business—Certification, U.S. Small Business Administration, Advance notice of proposed rulemaking.”

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Sources:

Utilization of Women-Owned Businesses in Federal Prime Contracting: Report Prepared for the Women-Owned Small Business Program of the Small Business Administration,” Beede, David N., et al., Office of the Chief Economist, Economics and Statistics Administration, U.S. Department of Commerce, December 31, 2015 .

USWCC Files Regulatory Comments on End of Self-Certification for WOSB Program,” Margot Dorfman, CEO, U.S. Women’s Chamber of Commerce, February 15, 2016

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