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Another Crack in the WOSB Glass Ceiling

The federal government admitted they fell short in awarding women-owned small businesses their “piece of the government contracting pie.” In 2012, the federal government awarded only $16.1 billion in federal contracts to women-owned small businesses (WOSB).  Attention is turning toward WOSBs on many levels, as the government puts a plan in place to fix this problem.

Contracting officers are now able to set-aside contracts for WOSBs at any dollar level, giving them access to much larger federal contracts than in the past.  Lawmakers are considering the possibility for WOSB sole-source awards.  (Ed. note: It was passed by the US House in late May, 2014, and is awaiting Senate approval.) The SBA may debut a WOSB mentor-protégé program.  There are also discussions that the statutory goal of awarding contracts to small businesses may increase from 23% to 25%. With all of these changes, the glass ceiling for women in government contracting appears to be cracking even more.

The History of WOSB

In December of 2000, Bill Clinton signed the Women’s Equity in Contracting Act.  This established a federal goal of awarding 5% of federal contracts to WOSBs, and allowed federal government contracting officers to set-aside contracts in industries where WOSBs were underrepresented.  With these set-aside contracts, no other type of business can bid—only women owned businesses, and before doing so, they have to meet the qualifications of a small business. Nearly 10 years after this Act was signed, the effects of the Act were minimal.

For more than a decade, the federal government has had a statutory goal of awarding 5% of federal contracts to WOSBs and not once have they met that goal on a government-wide basis (SBA Scorecard).  The Small Business Administration (SBA) recognized this, and on October 7, 2010, the SBA issued a new final rule allowing for the implementation of its Women-Owned Small Business Program; the rule took effect on February 4, 2011 and the WOSB Program became effective in the Federal Acquisition Regulation (FAR) on April 1, 2011. The WOSB program states that if a federal contract is in an industry designated by the SBA as “substantially” underrepresented, then the contracting officer must conduct market research to confirm there is a reasonable expectation that multiple WOSBs will submit offers.  This is commonly known as “the rule of 2.” The underrepresented industries are included within 83 NAICS codes; 45 are set-aside for WOSB and the remaining 38 are set-aside for Economically Disadvantaged Women Owned Small Businesses (EDWOSB).  EDWOSBs can bid on both EDWOSB and WOSB contracts; to be considered an EDWOSB the women must demonstrate economic disadvantage according to the final rule.  Within this rule, the anticipated award price of a contract within these 83 NAICS codes could not exceed $6.5 million for manufacturing contracts and $4 million for all other contracts.  While the industries set-aside for WOSB and EDWOSBs remain, the dollar caps do not.

The Glass Ceiling Cracked

Back in 2010 when the WOSB program was being implemented, United States Senators Olympia Snowe (R-ME) and Kristen Gillibrand (D-NY) recognized an issue with the statutory dollar threshold for this program.  On May 24, 2010 they introduced legislation that would remove the contract award maximums.  The bill, S. 3399, is known as the Fairness in Women-Owned Small Business Contracting Act of 2010. Over the last few years, the federal government continued to see that the statutory caps inhibited the intended effect of the WOSB program, and the cap may play a part in not meeting their 5% goal.  On May 7, 2013 the SBA published an interim final rule (RIN 3245-AG55) enacting section 1697 of the NDAA and amending 13 CFR 127.503.  The interim final rule removes the statutory cap on set-aside contracts for WOSBs and EDWOSBs.

The Fine Print

Just because a business holds a commercial sector women-owned certification does not mean they meet the requirements for the WOSB/EDWOSB certification. Corporate structure, by-laws, voting, contractual agreements, trust agreements—anything that impacts the ownership and direct control of the business must be reviewed. Documentation must also be submitted to apply for and obtain WOSB/EDWOSB certification. With all of the complex ownership, control and other eligibility requirements, West Michigan Law can review your documents, explain the programs, and help your business obtain and maintain women-owned small business and economically disadvantaged women owned small business certifications. If you are interested in more information, please contact us.