Last week, I attended the ChallengeHER event in Arlington, VA where I had the pleasure of meeting other females in federal contracting. ChallengeHER events, which are organized by Women Impacting Public Policy (WIPP), the U.S. Small Business Administration (SBA), and American Express (AMEX), are designed to supply women business owners with information and resources regarding the SBA’s Women-Owned Small Businesses (WOSB) Program in order to provide more federal government contracting opportunities for small businesses owned by women.
One thing was made clear at the event – federal agencies, including the Department of Defense (DoD), are indeed striving to achieve their goals of awarding 5% of their prime contracting dollars to WOSBs. Ms. Amy Kim, the SBA’s WOSB Program Manager, informed attendees that although federal agencies fell just shy of meeting the 5% goal in FY2017, they did award $20.8 Billion contracting dollars to WOSBs. While this number also includes contracting dollars awarded to WOSBs under other SBA socio-economic programs, it was encouraging to learn that FY2017 saw $723.5 Million in WOSB set-aside contract award dollars, which is a 60% increase from FY2016! Several representatives from the DoD discussed how the number of set-aside contract award dollars can continue to increase.
A Contracting Officer (CO) is authorized to issue a WOSB or Economically Disadvantaged Women-Owned Small Business (EDWOSB) set-aside procurement, which restricts competition to WOSB or EDWOSB certified businesses, when (1) the contract is for industries where WOSBs or EDWOSBs are substantially underrepresented,¹ and (2) the CO has identified, through market research, two or more WOSBs or EDWOSBs likely to submit an offer that can perform the requirement at a fair and reasonable price. A list of those industries, which was expanded in 2016 and includes construction as well as professional, scientific and technical services, can be found on the SBA’s website. Several panelists at the event explained that when agencies issue RFI’s or Sources Sought in one of these industries, they are hoping to identify whether they can administer WOSB/EDWOSB set-aside procurements. However, even when the CO is unable to identify two or more WOSB or EDWOSBs, the panelists reminded the attendees that under certain conditions, the CO is now authorized to issue sole source awards. The panelists, therefore, stressed the importance of WOSBs and EDWOSBs responding to these RFI’s and Sources Sought.
So, how can a business take advantage of WOSB and EDWOSB set-aside contracts in the first place? To qualify as a WOSB, a concern must (1) be a small business (as defined by the SBA) for its primary industry classification, (2) be at least 51% unconditionally owned by one or more women who are U.S. citizens, and (3) be unconditionally controlled by one or more women. Unconditional control includes both the management of day-to-day operations as well as the long-term decision-making of the concern. To qualify as an EDWOSB, a concern must meet those three requirements, and also be owned and controlled by one or more women who are “economically disadvantaged.”
In determining whether or not an individual is “economically disadvantaged” for purposes of participation in the EDWOSB program, an applicant must fall below certain thresholds relating to: (1) personal net worth; (2) adjusted gross income, averaged over the previous three years; and (3) the fair market value of all personal assets. Generally speaking, for a woman to be considered eligible, her net worth must be less than $750,000 (excluding the ownership interest in the concern itself, ownership interest in a primary residence, and the value of retirement accounts), her income must be less than $350,000, and the fair market value of her assets must be less than $6,000,000. However, many different tax, accounting and financial issues must be considered when evaluating eligibility; in practice, evaluating these financial criteria can be more difficult than one would expect.
Currently, companies looking to participate in the WOSB/EDWOSB program can go through the SBA’s self-certification process, provide an SBA-approved Third Party Certification, or provide 8(a) certification (if their business is already 8(a) certified). Note, however, that Congress has decreed that the SBA must transition from a self-certification system into an application-and-approval based system (similar to 8(a) or the VA’s VetBiz database), but that change has not yet been codified in the rules. Presumably, that change will happen soon, and self-certification will no longer be an option.
While the criteria laid out above may seem simple, navigating the SBA’s regulations on WSOB/EDWOSB eligibility and preparing the necessary paperwork for certification can, in reality, be extremely complicated. There are a number of hidden pitfalls and missteps that contractors tend to make, and the consequences for misstating eligibly can be severe. Our Government Contracting team has considerable experience assisting clients through this process and is here to help you and your business navigate this process to avoid the common pitfalls. If you have questions, or if you believe your concern meets these criteria and you are interested in obtaining certification, contact a legal professional.
¹In the case of EDWOSB set-asides, the industry need only be underrepresented by WOSB’s, as opposed to “substantially underrepresented.”