On March 3, 2016, the SBA announced that it has expanded the list of industries in which a contract can be set-aside for women-owned small businesses (“WOSB”) or economically disadvantaged women-owned small businesses (“EDWOSB”). This expansion was mandated last year by section 825 of the National Defense Authorization Act for Fiscal Year 2015 (“NDAA”), which required numerous changes be made to the SBA’s WOSB/EDWOSB contracting program.
By way of background, the WOSB program authorizes Federal contracting officers to set a contract aside for WOSBs if: (1) there is “a reasonable expectation” that at least two WOSBs will submit offers that meet the requirements of the acquisition “at a fair and reasonable price”; and (2) if the acquisition is for a good or service in a North American Industry Classification System (“NAICS”) industry code in which SBA has determined that WOSBs are “substantially underrepresented.” Similarly, EDWOSBs can receive set-asides in industries where the SBA has determined that WOSBs are “underrepresented” (but not “substantially” so). In other words, federal contracts can be set aside for WOSBs only if the contract’s NAICS code relates to an industry in which WOSBs are considered “substantially underrepresented” and federal contracts can be set aside for EDWOSBs if the NAICS code relates to an industry in which WOSBs are considered “underrepresented.”
Prior to the March 3 expansion, there were 83 four-digit NAICS industry groups identified by the SBA as areas in which women were either “underrepresented” or “substantially underrepresented.” These lists were created in 2012, based on a 2007 report authored by the Kauffman-Rand Institute for Entrepreneurship Public Policy. In our experience, at least, these 2012 lists excluded many industries in which our WOSB/EDWOSB clients were active, despite the fact those clients were clearly operating at a disadvantage due to gender.
Perhaps recognizing this issue, Congress amended the Small Business Act in 2014. The amended version of the Act required the SBA to conduct a new study concerning WOSB/EDWOSBs, and, in particular, the industries in which these businesses were truly underrepresented. Following the enactment of these amendments, the SBA asked the department of Commerce to assist with the required study. The Department of Commerce agreed, and it issued its report late last year. The report, which is definitely worth a read, made detailed findings concerning the challenges faced by women in the federal contracting arena. In news that no woman contractor will find surprising, the report concluded that women-owned businesses were less likely to win Federal contracts in 254 of the 304 industries included in the study!
Clearly, something needed to change. After reviewing the report, the SBA determined that an expansion of the WOSB/EDWOSB eligible industry list was required. Specifically, the SBA found that 113 industry groups – not only the previous 83 – should be eligible for set-aside contracting under the WOSB/EDWOSB Program. This includes 21 4-digit NAICS industry groups in which WOSBs are “underrepresented” (meaning contracting officers can make EDWOSB set-aside and sole source awards in these industries) and 92 4-digit NAICS industry groups in which WOSBs are “substantially underrepresented” (meaning contracting officers can make WOSB set-aside and sole source awards in these industries).
The expansion includes many notable additions. Most important for many of our clients, the expansion includes the addition of numerous construction-related NAICS industries to the WOSB set-aside approved list, including: Residential Building Construction (2361), Nonresidential Building Construction (2362), Utility System Construction (2371), Highway, Street, and Bridge Construction (2373), and Heavy and Civil Engineering Construction (23710). Other notable changes include the addition of Services to Buildings and Dwellings (5617), as well as education-related (6113, 6114, 6116, 6117) industries and medical-related (6211, 6214, 6215, 6219, 6221, 6231) industries to the WOSB-approved list, as well as the addition of Wired Telecommunications Carriers (5171) and Waste Collection (5621) to the EDWOSB-approved list.
This is a huge win for women-owned businesses. And it comes on the heels of another victory: on March 2, 2016, the SBA announced that it had, for the first time ever, surpassed its five percent contracting goal for WOSBs. With the expansion of these lists, we are hopeful that more and more contracts can be set-aside for women businesses, and that the performance of these contracts can help foster the further growth of women-owned businesses. We will keep you posted on any new developments.
Michael H. Payne is the Chairman of the firm’s Federal Contracting Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues, and dispute resolution.
Maria L. Panichelli is an Associate in the firm’s Federal Contracting Practice Group. Her practice includes a wide variety of federal contracting and construction matters, as well as all aspects of small business procurement.