By: Edward T. DeLisle & Lori Wisniewski Azzara
On March 4, 2010, the Small Business Administration released a proposed rule that, if adopted, would significantly expand federal contracting opportunities for eligible women-owned small businesses (“WOSB”). The SBA conducted a study that identified 83 industries, based upon the NAICS code, in which WOSBs are either “underrepresented” or “substantially underrepresented.” Those industries include construction and design-related services, among others. The proposed rule allows for contracting officers to restrict competition to eligible WOSBs, thereby ensuring that they have an equal opportunity to participate in federal contracting opportunities. The proposed rule specifically authorizes the restriction of competition to WOSBs where the anticipated award does not exceed $5 million for manufacturing contracts and $3 million for all other contracts.
“Women-owned small businesses are one of the fastest growing segments of our economy, yet they continue to be under-represented when it comes to federal contracting,” said SBA Administrator Karen Mills. “Across the country, women are leading strong, innovative companies, and we know that securing federal contracts can be the opportunity that helps them take their business to the next level, expand their volume and create good-paying jobs. This proposed rule is a step forward in helping ensure greater access for women-owned small businesses in the federal marketplace.”
To be an eligible WOSB, a business must be 51% owned and controlled, as well as primarily managed, by one or more women. The business must also be “small” in its primary industry, consistent with the SBA’s size standards for that industry. A WOSB can be deemed “economically disadvantaged” as long as its women owners can demonstrate that their 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. Several factors are considered when determining whether a woman is economically disadvantaged, such as her personal income, her personal net worth and the fair market value of all of her assets. The SBA does impose monetary limitations on these factors. For example, the SBA will presume that a woman is not economically disadvantaged if her adjusted gross yearly income, averaged over the two (2) years preceding certification, exceeds $200,000.00. Moreover, a woman’s personal net worth cannot exceed $750,000.00, but that amount excludes any ownership interest in the WOSB and any equity interest in her primary personal residence. Finally, a woman will not be considered economically disadvantaged if the fair market value of all of her assets, including the value of the WOSB and her primary residence, exceeds $3 million.
The SBA’s proposed rule allows WOSBs to self-certify or to be certified by third-parties, including the government and private certification groups. To prevent fraud and abuse, the SBA intends to engage in a significant number of program examinations to confirm eligibility and to vigorously pursue ineligible firms that attempt to take advantage of the program.
The comment period for the proposed rule ended on May 3, 2010. The SBA is currently reviewing and responding to the comments and will likely issue a final rule at some point in the near future.
Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group. Lori Wisniewski Azzara is an Associate in the firm's Construction Group, who focuses her practice on disadvantaged business entities.
