Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business Certification
| Citation | 85 FR 27650 |
| Record Number | 2020-09022 |
| Published date | 11 May 2020 |
| Section | Rules and Regulations |
| Court | Small Business Administration |
Federal Register, Volume 85 Issue 91 (Monday, May 11, 2020)
[Federal Register Volume 85, Number 91 (Monday, May 11, 2020)]
[Rules and Regulations]
[Pages 27650-27665]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09022]
[[Page 27650]]
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SMALL BUSINESS ADMINISTRATION
13 CFR Parts 124, 125, 126, and 127
RIN 3245-AG75
Women-Owned Small Business and Economically Disadvantaged Women-
Owned Small Business Certification
AGENCY: U.S. Small Business Administration.
ACTION: Final rule.
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SUMMARY: The Small Business Administration (SBA or the Agency) amends
its regulations to implement a statutory requirement to certify Women-
Owned Small Business Concerns (WOSBs) and Economically Disadvantaged
Women-Owned Small Business Concerns (EDWOSBs) participating in the
Procurement Program for Women-Owned Small Business Concerns (the
Program). The certification requirement applies only to those
businesses wishing to compete for set-aside or sole source contracts
under the Program, and to those seeking to be awarded multiple award
contracts for pools reserved for WOSBs and EDWOSBs. Once this rule is
effective, WOSBs and EDWOSBs that are not certified will not be
eligible for contracts under the Program. Other women-owned small
business concerns that do not participate in the Program may continue
to self-certify their status, receive contract awards outside the
Program, and count toward an agency's goal for awards to WOSBs. For
those purposes, contracting officers would be able to accept self-
certifications without requiring them to verify any documentation. In
this rule, SBA implements the statutory mandate to provide
certification, to accept certification from certain identified
government entities, and to allow certification by SBA-approved third-
party certifiers. As part of the changes necessary to implement a
certification program, this final rule amends SBA's regulations with
regard to continuing eligibility and program examinations. This rule
also adjusts the economic disadvantage thresholds for determining
whether an individual qualifies as economically disadvantaged. The new
thresholds will be used for assessing the economic disadvantage of
applicants to the 8(a) Business Development (BD) Program, as well as
applicants seeking EDWOSB status.
DATES: This rule is effective on July 15, 2020, except for the
amendments to Sec. Sec. 127.300, 127.304, 127.305, the addition of
Sec. 127.351, and the amendments to Sec. Sec. 127.400, 127.401,
127.403, 127.405, 127.504, 127.505, 127.603, and 127.604, which are
effective on October 15, 2020. The addition of Sec. 127.355 is delayed
indefinitely and we will publish a document in the Federal Register
announcing the effective date.
FOR FURTHER INFORMATION CONTACT: Nikki Burley, U.S. Small Business
Administration, Office of Policy, Planning and Liaison, 409 Third
Street SW, Washington, DC 20416; (202) 205-6459; sba.gov">[email protected]sba.gov.
SUPPLEMENTARY INFORMATION: As set forth in section 8(m) of the Small
Business Act, 15 U.S.C. 637(m), the Program authorizes Federal
contracting officers to restrict competition to eligible WOSBs or
EDWOSBs for Federal contracts in certain industries. Section 825 of the
National Defense Authorization Act for Fiscal Year 2015, Public Law
113-291, 128 Stat. 3292 (December 19, 2014) (2015 NDAA), amended the
Small Business Act to grant contracting officers the authority to award
sole source awards to WOSBs and EDWOSBs. In addition, section 825 of
the 2015 NDAA amended the Small Business Act to create a requirement
that a concern be certified as a WOSB or EDWOSB by a Federal agency, a
State government, SBA, or a national certifying entity approved by SBA,
in order to be awarded a set aside or sole source contract under the
authority of section 8(m) of the Small Business Act. 15 U.S.C.
637(m)(2)(E). SBA believes that certification is also required where an
agency establishes a pool of WOSBs or EDWOSBs on a multiple award
contract and intends to set-aside or reserve one or more orders for
WOSBs or EDWOSBs.
On September 14, 2015, SBA published in the Federal Register a
final rule to implement the sole source authority for WOSBs and
EDWOSBs. 80 FR 55019 (effective October 14, 2015). SBA did not address
the certification portion of the 2015 NDAA in that final rule because
its implementation could not be accomplished by merely incorporating
the statutory language into the regulations and would have delayed the
implementation of the sole source authority. SBA notified the public
that because it did not want to delay the implementation of the WOSB
sole source authority, it would implement the certification requirement
through a separate rulemaking.
As part of the process to draft the regulations governing the WOSB/
EDWOSB certification program, SBA published an Advance Notice of
Proposed Rulemaking in the Federal Register on December 18, 2015 (80 FR
78984) and a proposed rule in the Federal Register on May 14, 2019 (84
FR 21256). The proposed rule solicited public comments to assist SBA in
drafting a final rule to implement a WOSB/EDWOSB certification program.
SBA received 898 comments from 307 commenters in response to the
proposed rule (Regulations.Gov Docket #SBA-2019-0003). SBA has reviewed
all input from interested stakeholders while drafting this rule.
The proposed rule also revised Sec. 124.104(c) to make the
economic disadvantage requirements for the 8(a) BD Program consistent
with the economic disadvantage requirements for women-owned small
businesses seeking EDWOSB status. The proposed change eliminated the
distinction in the 8(a) BD Program for initial entry into and continued
eligibility for the program.
Economic Disadvantage
Currently, the economic disadvantage criteria for EDWOSBs is
$750,000, which is the same as the continuing eligibility threshold for
the 8(a) BD program, but higher than the $250,000 initial eligibility
threshold for that program. A concern applying for EDWOSB and 8(a) BD
status simultaneously could thus be found economically disadvantaged
for EDWOSB purposes, but not economically disadvantaged for the 8(a) BD
Program. This result would introduce unnecessary confusion and
uncertainty into the application and certification processes. To remedy
this, this final rule makes economic disadvantage consistent across
programs.
SBA commissioned a study to assist the Office of Business
Development in defining or establishing criteria for determining what
constitutes ``economic disadvantage'' for purposes of firms applying to
the 8(a) BD program. The study concluded that the available data
support an economic disadvantage threshold between $375,000 and $1.2
million. This range reflects the complexity of establishing a threshold
that considers the ability of disadvantaged business owners to compete
in the free enterprise system, as well as those individuals' access to
credit and capital. That inherent complexity is evident in the varied
economic disadvantage thresholds established by other Federal and state
programs. For example, the Disadvantaged Business Enterprise Program
(DBE), administered by agencies authorized by the U.S. Department of
Transportation (DOT), uses a $1.32 million economic disadvantage
threshold. States with similar programs for ``minority and
[[Page 27651]]
women business enterprises'' have economic disadvantage thresholds up
to $1.6 million. The study commissioned by SBA did not come to a
definitive conclusion on which threshold the Agency should use. One
suggestion was to use a $1.1 million ``unadjusted'' (home and business
equity included) personal net worth standard, which would be equal to a
$375,000 ``adjusted'' (home and business equity excluded) standard. The
study did not, however, consider differences in economic disadvantage
between applying to the 8(a) BD program and continuing in the program
once admitted, nor did it consider economic disadvantage in the context
of EDWOSB eligibility. Because SBA believes that it is important to
have the same economic disadvantage criteria for the 8(a) BD program as
for the EDWOSB program to avoid confusion and inconsistency between the
programs, SBA considered applying a $375,000 net worth standard to both
the 8(a) BD and EDWOSB programs. SBA requested comments on whether the
$375,000 net worth standard or the $750,000 net worth standard should
be used for the EDWOSB and 8(a) BD and Programs.
In response, SBA received 146 comments that supported $750,000 as
the appropriate economic disadvantage threshold. Of these, a
substantial number explicitly expressed support for changing the
regulations to make the economic disadvantage threshold consistent
between programs, while the rest expressed support more broadly for
maintaining EDWOSB's economic disadvantage threshold of $750,000. SBA
did not receive any comments supporting a common $375,000 net worth
standard for the EDWOSB and 8(a) BD programs. SBA also received four
comments that offered alternative methods to establish an economic
threshold. One argued that the standard should be variable and based on
inflation, one thought the standard should be locality-based, and two
suggested a tiered system. Three additional commenters opposed an
economic disadvantage threshold of $750,000. One recommended an
economic disadvantage threshold of $1 million, one opposed having an
economic disadvantage threshold at all, and the third merely thought
that $750,000 was inappropriate. SBA believes that varying the economic
disadvantage threshold depending on fluid external factors such as
inflation, or applying different thresholds depending on locality,
would introduce too much volatility and confusion into the application
process and lead to inconsistency between programs. Increasing the
economic disadvantage threshold to $1 million or abolishing economic
disadvantage thresholds altogether were not contemplated in the
proposed rule and are not under consideration now. Based on the study's
conclusion that SBA could set an economic disadvantage threshold
between $375,000 and $1.2 million, stakeholders' clear affirmation of a
$750,000 economic disadvantage threshold, and the preference for
uniform standards across programs, SBA is keeping the EDWOSB economic
disadvantage threshold and adjusting the 8(a) BD economic disadvantage
thresholds accordingly.
SBA also received comments regarding how economic disadvantage
would be assessed going forward. Specifically, commenters asked about
whether there is any difference between the EDWOSB and the 8(a) BD
regulations governing how retirement accounts are calculated when
determining an economically disadvantaged individual's net worth, and
if the change in the economic disadvantage threshold will affect that
calculation. In light of this feedback, SBA has revised Sec.
124.104(c)(2)(ii) and Sec. 127.203(b)(3) in the final rule to note
that retirement accounts will now be excluded from calculations of an
economically disadvantaged individual's net worth, irrespective of the
individual's age. SBA has previously contemplated this change,
believing that it accords with the valuable public policy of
incentivizing, rather than punishing, saving for retirement. It also
expands the pool of potential EDWOSB and 8(a) BD participants because
retirement-age small business owners will no longer be ineligible
solely due to their retirement savings. Changing the EDWOSB and 8(a) BD
net worth provisions now, in conjunction with the changes to the
economic disadvantage threshold for both programs, furthers SBA's long-
term aim of promoting regulatory consistency and continuity.
Women-Owned Small Business Certification Program
The 2015 NDAA amended the Small Business Act to require that
concerns participating in the Program must be certified by SBA, a
Federal agency, a state government, or an approved national certifying
entity. In response, SBA proposed amending the regulations in part 127
to remove references to self-certification with respect to the award of
WOSB/EDWOSB contracts. The certification requirement applies only to
participants wishing to compete for set-aside or sole source contracts
under the Program. Once this rule is effective, WOSBs and EDWOSBs that
are not certified will not be eligible for contracts under the Program.
Other women-owned small business concerns that do not participate in
the Program may continue to self-certify their status, receive contract
awards outside the Program, and count toward an agency's goal for
awards to WOSBs. The final rule adds a new Sec. 127.200(c) to make
clear that a concern may continue to self-certify as a WOSB for goaling
purposes. Revised Sec. 127.300 establishes options for small business
concerns seeking certification as WOSBs or EDWOSBs: Applying via SBA's
free online application, submitting evidence of certification from
another approved Government entity, or submitting evidence of
certification from an approved third-party certifier.
SBA received over 400 comments on the proposed revisions to Sec.
127.300(a) and (b), which detail the options for certification. Of
these, 170 commenters expressed a general sentiment that there should
be ``a fair and unified set of requirements and application processes
for all participants'' and ``the process of submitting an application .
. . should be fully uniform and completed at certify.sba.gov.'' An
additional sixteen commenters explicitly supported the proposed
processes, and two commenters opposed them.
SBA shares the view that certification requirements must be fair
and consistently applied. To ensure this consistency, SBA is the final
authority for all of the certification processes. Congress' intent in
allowing SBA to delegate certification to other authorized parties was
to ensure that the public has access to the broadest range of
certification options while at the same time ensuring that consistent
Program eligibility requirements are met. There will naturally be
differences between each of the processes because they will be
administered by different entities, but the foundation for all the
processes is SBA's Program eligibility requirements. Each applicant
will be providing evidence to SBA that it meets these requirements; the
application processes outlined in Sec. Sec. 127.300-127.305 differ
primarily in what kind of documentation demonstrates eligibility.
Based on the comments received, SBA understands that many
stakeholders harbor reservations about the fairness and uniformity of
the application process. As such, the final rule will clarify in
subpart C, ``Certification of WOSB or EDWOSB Status,'' that there is no
distinction between ``Certification by SBA'' and ``Certification by
Third Party,'' as written in the proposed rule.
[[Page 27652]]
Instead, the regulations will refer to all the provisions covering the
different application processes in Sec. Sec. 127.300-127.305 as
``Certification.'' SBA also removed references to SBA in the headings
for Sec. Sec. 127.301-127.305 so that concerns understand that the
regulations apply to all applicants, regardless of how they opt to seek
certification. The rules for third-party certifiers, covered
extensively in new Sec. Sec. 127.350-127.356, will be labeled as
``Requirements for Third-Party Certifiers.'' SBA believes this will
reaffirm that ``Certification'' is a unitary process, that all concerns
must meet the same eligibility requirements, and that the only
difference is in how they can present evidence that they have met those
requirements.
SBA received four comments regarding the proposed change to Sec.
127.300(a)(1), which specifies that concerns can apply for WOSB
certification from SBA. Three commenters were supportive. The fourth
opposed the provision because it believes that concerns should continue
to have the option to self-certify. Because the statutory language
mandates the methods for certification, SBA has no authority to retain
self-certification as an option for concerns seeking to compete for
WOSB and EDWOSB set-aside procurements (as noted above, concerns can
still self-certify for non-WOSB and non-EDWOSB set-aside procurements,
still self-identify as women-owned small businesses, and awards to
firms self-identifying as WOSBs may be counted by a procuring agency
towards its WOSB goal). SBA adopts the proposed language as final.
SBA received 12 comments that specifically touched on Sec.
127.300(a)(2), which outlines the options for non-SBA, government-
entity certification options. The proposed rule stated that a concern
could submit evidence that it was a certified participant of the 8(a)
BD Program or the DBE Program, or that it was certified as a Veteran-
Owned or Service-Disabled Veteran-Owned Small Business by the U.S.
Department of Veterans Affairs (VA) Center for Verification and
Evaluation (CVE). The Supplementary Information in the proposed rule
also contemplated potentially accepting evidence that a concern
participated in SBA's HUBZone Program.
The final rule removes reference to the 8(a) BD Program in Sec.
127.300(a)(2) and instead includes it only in Sec. 127.300(b)(2),
which details EDWOSB certification. Every current 8(a) BD participant
that is 51% owned and controlled by a woman or women is an EDWOSB
because economic disadvantage is a component of 8(a) BD eligibility,
and all EDWOSBs are WOSBs. As such, including this information in the
EDWOSB certification sub-section covers both EDWOSB and WOSB
participation.
The final rule also omits reference to the HUBZone Program in that
section. While evidence of HUBZone participation would indicate a
concern is small, it would not provide any of the other information to
demonstrate WOSB/EDWOSB eligibility. Specifically, a firm need not
demonstrate that it is owned and controlled by a specific individual in
order to be eligible for the HUBZone program. Thus, such a
certification does not include a finding by SBA of any ownership and
control. The purpose of Sec. 127.300(a)(2) and (b)(2) is to expand the
options for concerns to demonstrate Program eligibility as efficiently
as possible. A certification option that necessitates submitting
documentation of all but one of the elements of Program eligibility
does not meaningfully effectuate this purpose. Similarly, the final
rule removes DBE certification from the list of options. After
discussions with stakeholders, SBA concluded that evidence of DBE
certification would not provide the requisite level of certainty that a
concern was eligible for the Program. While the DOT DBE regulations
refer back to SBA's size regulations at 13 CFR part 121, concerns would
still need to provide documentation to confirm they met SBA's distinct
requirements for ownership and control by one or more women, or that
they met SBA's economic disadvantage criteria if they were seeking
EDWOSB certification. As with HUBZone Program participation, evidence
of DBE participation would not help small businesses demonstrate
eligibility as efficiently and easily as possible while still ensuring
the requirements are met. In contrast, the governing regulations for
the CVE program (38 CFR 74.2-74.4) refer to SBA's standards for size,
socioeconomic status, ownership, and control. Documentation of CVE
certification, along with confirmation that the concern was owned and
controlled by one or more women, would demonstrate that a concern had
met all the eligibility requirements for the Program. To help concerns
better understand how to demonstrate their Program eligibility with
their CVE certification, the final rule details the application process
in Sec. 127.303.
SBA received 188 comments on Sec. 127.300(a)(3), which provides
that a concern may submit evidence that it has been certified as an
eligible Program participant by a Third-Party Certifier. Of these, 170
stated generally that SBA should have oversight of third-party
certifiers and implement standards for certifiers. SBA agrees with
these commenters and Sec. Sec. 127.350-127.356, discussed below,
detail requirements for third-party certifiers. These commenters also
requested that SBA update SAM.gov to reflect that they are certified,
including third-party certified. SBA does not oversee SAM.gov but will
maintain its own internal records that will reflect up-to-date
information and that information will be relayed to the General
Services Administration, the agency that maintains SAM.gov.
Fifteen commenters opposed proposed Sec. 127.300(a)(3) for a wide
variety of reasons. One commenter stated that there should not be
``required'' third-party certification. SBA believes that this
commenter misinterpreted the rule. As outlined in the rule, there are
several different certification options, and concerns are not required
to choose third-party certification. Which way to seek WOSB or EDWOSB
certification is a business decision up to discretion of each firm.
Three commenters said all certification should be handled by SBA,
rather than by third-party certifiers that may have differing
standards. In response, SBA notes that Congress specifically enumerated
several different certification options in the statutory language,
making clear that SBA should not be the sole entity processing
certification applications. However, SBA retains responsibility for
overseeing the Program eligibility requirements, and these requirements
are the standards by which all applicants will be assessed. Certifiers
will not be able to impose their own application standards for Program
applicants.
Six commenters opposed third-party certification because of the
associated fees, which commenters perceived as prohibitively expensive
for many small businesses. Both Congress and SBA understand the
importance of ensuring certification is available to every eligible
concern. As such, Congress authorized several free certification
options, and SBA will not distinguish between concerns based on how
they were certified. No firm will be required to pay a fee for
certification. Again, it is up to each firm seeking WOSB or EDWOSB
certification to determine which method of certification makes sense
for it. One commenter opposed third-party certification because of the
``frequency of certification'' associated with third-party certifiers.
Currently, third-party-
[[Page 27653]]
certified concerns are recertified annually. Under the new regulations,
all concerns, whether certified directly by SBA or otherwise, will be
required to attest to SBA annually that they remain eligible for the
Program and undergo a full program examination every three years. As
such, third-party-certified concerns will not face a greater
administrative burden than concerns certified via other processes. SBA
updated subpart D to discuss the requirements for recertification, and
these changes are discussed in greater detail below.
SBA received six comments on Sec. 127.300(b), which discusses how
SBA will certify concerns as EDWOSBs. One commenter supported having an
array of certification options. Two others requested clarification
about how SBA will accept certification from other government entities.
SBA has provided additional detail about what applicants must submit in
order to demonstrate certification via non-SBA government entity
certifiers in Sec. 127.303.
SBA received seven comments related to Sec. 127.300(b)(2), which
states that a woman- or women-owned business that is a certified 8(a)
BD participant qualifies as an EDWOSB. One commenter said that EDWOSB
should be a ``sub-set'' of the 8(a) BD Program. Another commenter said
that EDWOSB certification should automatically confer 8(a) BD
certification. There is significant overlap between the eligibility
requirements of the two programs, but they are not identical. The most
important difference is that a concern can participate in the WOSB
Program for as long as it is eligible, whereas participation in the
8(a) BD Program is limited to nine years. Further, the 8(a) BD Program
has unique eligibility requirements that do not apply to the WOSB
Program. In particular, the 8(a) BD Program requires the principal of a
business to be socially disadvantaged in order to qualify for
participation, and women as a group are not presumed to be socially
disadvantaged. An individual seeking to qualify as socially
disadvantaged based on her status as a woman must demonstrate that she
personally has suffered discrimination or bias that has adversely
affected her entry into or advancement in the business world.
Determining whether an individual woman can demonstrate social
disadvantage requires fact-specific analysis and cannot be
automatically presumed. Thus, EDWOSB qualification does not
automatically confer 8(a) BD qualification, even though the converse is
true. In addition, the 8(a) BD certification process requires an
applicant to demonstrate that it possesses the necessary ``potential
for success,'' as defined in the 8(a) BD regulations, and WOSB
certification has no corresponding requirement.
Two commenters said that SBA should adjust goaling requirements so
that more 8(a) BD awards are apportioned for WOSBs/EDWOSBs. Goaling
thresholds are set by Congress and SBA establishes them in a way that
seeks to ensure that the statutory goal is met Government-wide.
Although SBA has some discretion in the setting of a particular
agency's goals, SBA cannot establish goals that do not meet the overall
Government-wide statutory goal. SBA is always seeking to enhance small
business participation in Federal contracting and will continue to do
so. One commenter suggested that the Program should mirror the outreach
and public education efforts of the 8(a) BD Program because the
contracting community is not aware of or familiar with WOSB and EDWOSB
opportunities. SBA hopes that the increased public outreach during the
rulemaking process has helped ameliorate this perceived lack of
awareness and that the certification application process will further
familiarize concerns with Program benefits and responsibilities. SBA
adopts the proposed language as final.
One commenter opposed Sec. 127.300(b)(3), specifically asking why
veteran-owned small business that are owned and controlled by women
could not be automatically certified as WOSBs, but rather had to submit
additional information to SBA to be so designated. CVE eligibility is
not based on gender and thus evidence of CVE certification would not
automatically communicate that an applicant had necessarily satisfied
all Program requirements, including 51% ownership and control by a
woman or women. A CVE certification demonstrates that a firm is owned
and controlled by one or more veterans or service-disabled veterans,
but not necessarily by women veterans or women service-disabled
veterans. The process for CVE-certified small businesses will be to
demonstrate that the individuals certified to own and control the
business concern are women and, if they seek EDWOSB status, that they
are economically disadvantaged. CVE certification alone would also not
demonstrate an applicant's economic disadvantage, which is a necessary
component of EDWOSB participation. SBA adopts the proposed language as
final.
SBA did not receive any comments on proposed Sec. 127.301, which
provides guidance on when concerns should apply for Program
certification. As such, SBA adopts it as final in this rule. SBA did,
however, receive comments regarding who will be deemed certified as a
WOSB or EDWOSB upon this rule becoming effective and, therefore, be
immediately eligible to be awarded set-aside and sole source WOSB and
EDWOSB contracts. SBA agrees that this is an important issue that
should be clarified.
Pursuant to the underlying statutory authority, a concern must be
certified as a WOSB or EDWOSB in order to be awarded a WOSB or EDWOSB
set-aside or sole-source contract. The change in the regulations
implementing that statutory provision does not affect contracts
previously awarded through the Program, so a concern that was
previously awarded a WOSB or EDWOSB contract may continue to perform
that contract and the procuring agency may continue to count the
contract towards its WOSB goal. Once this rule is effective, however, a
concern performing on a long-term WOSB or EDWOSB contract (i.e., one in
excess of five years) must represent that it is a certified WOSB or
EDWOSB in order for the award to continue to count towards an agency's
WOSB goal. For new WOSB and EDWOSB set-aside contracts, a concern must
be able to demonstrate that it has applied for certification before the
date it submitted a bid, and that it has not previously sought and been
denied certification. For new WOSB or EDWOSB sole-source contracts, a
concern must already be certified at the time it seeks to obtain the
sole-source contract. In both situations, the concern must be certified
prior to award. Concerns that are owned and controlled by one or more
women and certified through the 8(a) BD Program, concerns that are
third-party certified, and concerns that were subject to a program
examination or status protest and received a concomitant positive
decision in the three years prior to the rule's effective date will all
be considered certified the day the rule is effective. SBA trusts this
information will help concerns plan for when and how to apply for
certification so that they are ready to compete for new WOSB and EDWOSB
set-aside contracts and able to continue working on existing set-aside
contracts without interruption.
SBA received one comment on Sec. 127.302, which provides that
concerns will apply for certification on certify.sba.gov or any
successor system. The commenter opposed having an electronic-only
application process. SBA believes that an electronic process is the
most efficient and timely way to
[[Page 27654]]
process the number of applications SBA is expecting once the rule is
effective. In today's business environment, SBA believes that every
business concern seeking to contract with the Federal Government must
have access to a computer and that this is the easiest and best way to
transmit and process applications. SBA adopts the proposed language and
will remove ``from SBA'' from the heading in the final rule.
SBA did not receive any comments on Sec. 127.303, which outlines
what documentation concerns must submit for certification. Based on
questions and feedback received on related sections, SBA has expanded
Sec. 127.303 in the final rule. This section now refers to the
documentation applicants must submit for each of the certification
options detailed in Sec. 127.300(a) and (b). This additional
information is intended to help applicants better prepare their
applications and will hopefully facilitate a more efficient process.
SBA received two comments on Sec. 127.304, which discusses how SBA
will process applications. Both commenters opposed the 90-day timeframe
for making determinations after receipt of a completed application.
Neither commenter offered an alternative timeframe that would better
suit the needs of the small business community. This 90-day processing
time aligns with that of the 8(a) BD and HUBZone Programs, and SBA
believes that is appropriate for the WOSB Programs as well. As such,
SBA adopts the proposed language as final.
SBA received eight comments on Sec. Sec. 127.305 and 127.306,
which dealt with how and when applicants could reapply or seek
recertification after being declined or decertified. Five commenters
opposed the provisions, two were supportive, and one sought
clarification. The commenters in opposition vigorously disagreed with
the proposed one-year ``cooling-off'' period, during which time a
concern could not reapply for Program certification. One commenter
noted that not being able to appeal or rectify a negative certification
decision until a year has passed was ``the worst of both worlds.'' In
response to the comments, SBA has amended these provisions. The final
rule removes proposed Sec. 127.305 (reconsideration) and moves the
language in proposed Sec. 127.306 to that section. The final rule also
amends the language in proposed Sec. 127.306 (now Sec. 127.305) to
align with the HUBZone Program regulations, which do not have a
reconsideration or appeal process and instead allow concerns to remedy
their eligibility deficits and reapply after 90 days. In addition to
responding to industry concerns, mirroring the HUBZone Program
regulations has the added benefit of furthering SBA's aim of promoting
consistency between its programs.
Requirements for Third-Party Certifiers
SBA proposed to amend subpart C of part 127 to establish procedures
for Third-Party Certification in the context of a required
certification program. In Sec. 127.350, SBA proposed that all Third-
Party Certifiers must be approved by SBA. Under this rule, an approved
third-party certifier need not be a non-profit entity. SBA also
clarified that a third-party certifier is a non-governmental entity, in
contrast to the governmental certifications (8(a) BD and VA CVE) that
SBA will accept for WOSB/EDWOSB certification purposes. The proposed
rule also stipulated what concerns must do to be certified by a third-
party certifier.
SBA received five comments on revised Sec. Sec. 127.350-127.356.
One commenter said that new third-party certifiers must be
``credible.'' SBA does not have concerns about the credibility of
third-party certifiers. The statutory language stipulates that only
SBA-approved third-party certifiers are authorized to certify concerns.
There are currently four SBA-approved third-party certifiers. In
advance of effectuating the final rule, SBA has focused on providing
clarity and guidance on the certification process as a whole and not on
third-party certifiers specifically, but foresees expanding the list of
authorized third-party certifiers in the future. All third-party
certifiers participating in the Program are required to abide by both
the regulations in part 127, and their agreements with SBA. SBA
communicates regularly with third-party certifiers, collects monthly
data about the WOSBs and EDWOSBs they work with, and periodically
reviews their application processes. This is all intended to ensure
that SBA's eligibility requirements are consistently applied. As such,
SBA feels confident the third-party certifiers are, and will continue
to be, credible partners in the certification process.
Three other commenters sought clarification on different provisions
in this section. In response to Sec. 127.353(b), one commenter
suggested SBA provide language that third-party certifiers can use to
advise applicants that SBA offers a free certification option. SBA
agrees that providing that language would be helpful, but including it
in the regulations would preclude the Agency from refining the language
in response to feedback from applicants once the certification process
is underway. SBA will plan to communicate with third-party certifiers
in the coming months on what the advisory language should look like.
Similarly, another commenter requested additional detail about what
information SBA will require in reports from third-party certifiers
under Sec. 127.355(a). The proposed language was drafted deliberately
to allow for SBA to make determinations about what third-party
certifiers will have to submit regularly once the certification program
is underway and it becomes clear what type of information would be
helpful. A third commenter asked for clarification on the timeline for
periodic compliance reviews, which SBA believes is adequately spelled
out in Sec. 127.355(b)(1).
Finally, several commenters opposed this section on the grounds
that SBA should not allow for-profit entities to certify concerns, that
there will be too many discrepancies between third-party certification
and certification via other entities, and that ``SBA's failure to act
appropriately in the budgetary process'' deprived the Program of the
funds necessary to manage a certification process. On the first point,
the authorizing legislation does not limit third-party certifier
participation to entities that are non-profit, so going forward, SBA
will not require third-party certifiers to maintain non-profit status.
In response to the second concern, SBA reiterates that all certifying
entities will assess applicants against the same eligibility
requirements. The third point, which expressed concern that the
certification program was not appropriately funded, was echoed by many
commenters. All of these commenters used identical language to urge SBA
to, ``act immediately to move budgetary (taxpayer) funds from programs
that have not been sanctioned by Congress towards the full and
effective implementation of this nearly twenty-year-old
Congressionally-mandated program and advise Congress of the full budget
needed so that SBA may receive the necessary funding to assure this
program is well run.'' SBA appreciates these commenters' sense of
urgency about the implementation of the certification program and
understands commenters' frustrations. SBA notes, however, that the
requirement that a concern must be certified as a WOSB or EDWOSB in
order to be awarded a set-aside or sole source contract under the
Program was enacted as part of 2015 NDAA. Further, the Agency's ability
to spend funds that ``have not been sanctioned by Congress'' is
proscribed by law, and its ability to shift money
[[Page 27655]]
between unrelated programs is limited. SBA believes Congress is well-
apprised of the scope and breadth of the certification program. The
plan continues to be to stand up Program certification by leveraging
existing resources.
SBA did not receive specific comments on Sec. 127.354, but in
light of the broader concerns expressed about discrepancies between
third-party certification and certification by a government entity, the
final rule revises the heading of this paragraph to emphasize that SBA
will require third-party certifiers to follow detailed, uniform
guidance to demonstrate capability to certify concerns.
Proposed Sec. 127.357(a) permitted a concern found to be
ineligible by a third-party certifier to request reconsideration and a
redetermination. Proposed Sec. 127.357(c) prohibited a declined
concern from reapplying for WOSB or EDWOSB certification by SBA or a
third-party certifier for a one-year period, and proposed Sec.
127.357(d) prohibited concerns from reapplying through another third-
party certifier during that time. In light of the changes to Sec.
127.305, which shortens the reapplication timeframe from one year to 90
days, Sec. 127.357 is omitted in the final rule. As discussed, SBA's
aim is to ensure consistency and uniformity between the certification
options, both as a policy matter and in response to the 168 commenters
who stressed the importance of, ``a fair and unified set of
requirements and application processes for all participants.'' Allowing
concerns that opt for third-party certification to seek reconsideration
if they are declined would privilege them over concerns that apply for
certification from SBA or another government entity, because the latter
groups will not have a reconsideration option. Removing this proposed
section better facilitates alignment between the certification options
and is responsive to stakeholders' concerns.
SBA received eight comments on proposed Sec. 127.400, which
requires that concerns recertify eligibility every three years. Four
commenters supported recertification every three years and four
opposed. Of the four commenters opposed, three suggested annual
recertification because that is what SBA's other programs require. SBA
believes that a helpful comparison is to look at the requirements of
the HUBZone Program. Per the HUBZone Program regulations at Sec.
126.500, SBA conducts a program examination and recertification of each
HUBZone concern every three years, and concerns are required to
represent annually that they continue to meet all program criteria. In
contrast, proposed Sec. 127.400 would only have required WOSBs and
EDWOSBs to recertify every three years. In an effort to more closely
align the WOSB Program regulations with other SBA regulations, and in
response to the commenters concerned that recertification every three
years is insufficient, the final rule revises Sec. 127.400 to require
concerns to annually attest to SBA that they meet the Program
requirements, and undergo a full program examination and
recertification every three years. SBA added two examples to this
section to help illustrate the recertification requirements detailed in
the final rule.
Proposed Sec. 127.401 provided that all certified concerns have an
affirmative duty to notify SBA of any material changes in writing. SBA
did not receive any comments on this section and adopts the proposed
language as final.
Proposed Sec. 127.402 addressed the failure of a concern to
recertify every three years or to notify SBA of a material change. SBA
did not receive any comments on this section. In light of the changes
to the rest of this subpart, Sec. 127.402 is omitted in the final rule
and the subsequent sections have been renumbered. The information
detailed in proposed Sec. 127.402 is included in Sec. 127.405
(formerly Sec. 127.406) in the final rule, which discusses the
consequences if SBA is unable to determine a concern's eligibility or
determines that a concern is no longer eligible for the Program.
Proposed Sec. 127.403 detailed how SBA would conduct program
examinations and specifically how program examinations would change
after the certification process is implemented. SBA did not receive any
comments on this section. To align with the changes discussed above,
SBA has renumbered sections Sec. Sec. 127.403-127.406. Aside from
renumbering, SBA adopts as final the language in proposed Sec. 127.403
(now Sec. 127.402).
Proposed Sec. 127.404 detailed when SBA was authorized to conduct
program examinations. SBA did not receive any comments on this section.
SBA revised this section in the final rule to reflect that concerns
will undergo program examinations every three years in accordance with
the recertification process set forth in Sec. 127.400. SBA also
renumbered this section to Sec. 127.403 in the final rule. SBA adopts
as final the revised and renumbered paragraph.
Proposed Sec. 127.405 authorized SBA to request additional
information, in addition to material already submitted, when conducting
a program examination. SBA did not receive any comments on this
section. SBA renumbered this section to Sec. 127.404 in the final
rule. SBA adopts as final the proposed language and renumbered
paragraph.
Proposed Sec. 127.406 authorized SBA to decertify concerns that
fail to provide or maintain the required certifications or documents.
SBA did not receive any comments on this section. This section has been
renumbered to Sec. 127.405 in the final rule. SBA also revised this
provision in the final rule to more clearly lay out the causes for
which SBA can propose decertification, including a failure to follow
the recertification processes in Sec. 127.400. Paragraph (a) describes
the steps SBA will take to propose decertification and how a concern
must respond to a notice of proposed decertification. Paragraph (b)
states that SBA's decision on decertification is final and cannot be
appealed, and paragraph (c) permits concerns to reapply to the Program
after decertification. SBA adopts as final the revised and renumbered
paragraph.
The final rule revises Sec. 127.503(h)(2) to confirm that if a
concern cannot recertify as a WOSB or EDWOSB by the end of the fifth
year of a long-term contract, the procuring agency can no longer count
awards made pursuant to that contract as WOSB/EDWOSB awards. SBA's
rules have long required recertification of size for contracts with a
duration of more than five years. If a concern is unable to recertify
its size, the contracting officer could no longer consider awards to
that concern towards the procuring agency's small business goals. The
Agency's intent in drafting Sec. 127.503(h)(2), and its corresponding
paragraphs in Sec. Sec. 124.1015(f), 125.18(f), and 126.601(i), was to
mandate that contracting officers must request that a concern recertify
its status on long-term contracts, including Multiple Award Contracts.
If a concern were unable to recertify its status as a WOSB, for
example, the contracting officer could no longer consider awards to
that concern towards the procuring agency's WOSB goals. Procuring
agencies understood this was SBA's intent in drafting Sec. Sec.
124.1015, 125.18(e), 126.601(h), and 127.503(h)(2), and have read them
accordingly. The revision to these paragraphs in the final rule
confirms that agencies correctly deduced SBA's intent and brings the
regulatory text into alignment with already-existing practice, which
SBA believes will provide helpful clarity to small businesses and
contracting officers.
SBA proposed to remove Sec. 127.505, as the pertinent information
in this provision was already detailed in
[[Page 27656]]
Sec. 121.406(b). SBA did not receive any comments on this proposed
change and finalizes the deletion in the final rule.
SBA proposed to revise Sec. 127.604(f)(4) to clarify that concerns
found to be ineligible would need to reapply, rather than request a
reexamination. SBA did not receive any comments on this change and
adopts the proposed language as final, except for updating a citation
to the appropriate regulation for reapplication procedures (formerly at
Sec. 127.306 and now at Sec. 127.305).
Compliance With Executive Orders 12866, 13563, 12988, 13132, and 13771,
the Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory
Flexibility Act (5 U.S.C. 601-612)
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
rule is a significant regulatory action for the purposes of Executive
Order 12866. Accordingly, the next section contains SBA's Regulatory
Impact Analysis. This is not a major rule, however, under the
Congressional Review Act.
Regulatory Impact Analysis
1. Is there a need for the regulatory action?
The U.S. Small Business Administration (SBA) is required by statute
to administer the WOSB Federal Contract Program (WOSB Program). The
Small Business Act (Act) sets forth the certification criteria for the
WOSB Program. Specifically, the Act states that a WOSB or EDWOSB must,
``be certified by a Federal agency, a State government, the
Administrator, or a national certifying entity approved by the SBA
Administrator, as a small business concern owned and controlled by
women.'' 15 U.S.C. 637(m)(2)(E).
The Federal Acquisition Regulation (FAR) and SBA regulations
require that in order to be certified as a WOSB or EDWOSB a small
business concern must provide documents supporting its WOSB or EDWOSB
status to SBA. See 13 CFR 127.300 and FAR 19.1503(b)(3). The specific
documents concerns are required to provide are outlined in Sec.
127.303. The Act also states that the SBA is authorized to conduct
eligibility examinations of any certified WOSB or EDWOSB, and to handle
protests and appeals related to such certifications. 15 U.S.C.
637(m)(5)(A) and (5)(B).
Under the current system, WOSBs and EDWOSBs may be certified by
third-party certifiers, or they may essentially self-certify and upload
the required documents to sba.certify.gov. In order to award a WOSB
set-aside or sole source contract, the contracting officer must
document that the contracting officer reviewed the concern's
certifications and documentation. 13 CFR 127.503(g); FAR 19.1503(b)(3).
The lack of required certification, coupled with the requirement that
the contracting officer must verify that documents have been uploaded,
may contribute to reluctance by procuring agencies to use the program,
resulting in the failure to meet the statutory goal of 5% of all prime
contract dollars being awarded to WOSBs. In FY 2018, the government-
wide WOSB goal of 5% was not met with actual performance at 4.75%
($22.9B). The government has only met the goal once (FY 2015). While
the amount of dollars awarded to WOSBs under the set aside program is
trending up, they still account for less than 0.016% of dollars awarded
to WOSBs. A certification could help entice agencies to set aside more
contracts for WOSBs, so that the government can meet the statutory 5%
goal.
2. What are the potential benefits and costs of this regulatory action?
The benefit of this regulation is a significant improvement in the
confidence of contracting officers to make Federal contract awards to
eligible concerns. Under the existing system, the burden of eligibility
compliance is placed upon the awarding contracting officer. Contracting
officers must review the documentation of the apparent successful
offeror on a WOSB or EDWOSB contract. Under this rule, the burden is
placed upon SBA and/or third-party certifiers. All that a contracting
officer needs to do is to verify that the concern is in fact a
certified WOSB or EDWOSB in SAM. A contracting officer would not have
to look at any documentation provided by a concern or prepare any
internal memorandum memorializing any review. This will encourage more
contracting officers to set aside opportunities for WOSB Program
participants as the validation process will be controlled by SBA in
both SAM and DSBS. Increased procurement awards to WOSB concerns can
further close a gap of under-representation of women in industries
where in the aggregate WOSB represent 12 percent of all sales in
contrast with male-owned businesses that represent 79% of all sales
(per SBA Office of Advocacy Issue Brief Number 13, dated May 31, 2017
https://www.sba.gov/sites/default/files/advocacy/Womens-Business-Ownership-in-the-US.pdf).
Another benefit of this rule is to reduce the cost associated with
the time required for completing WOSB certification by replacing the
WOSB Program Repository with Certify.SBA.gov (``Certify'') in the
regulation. It is also anticipated that the WOSB certification
methodology and likely increased use of WOSB/EDWOSB set asides will
likely increase program participation levels. Under the prior WOSB
Program Repository, SBA determined that the average time required to
complete the process required by the WOSB Program Repository was two
hours, whereas the use of Certify requires only one hour. Across an
estimated 12,347 firms, the total cost savings is significant, as
discussed below. Another potential benefit is the reduction of time and
costs to WOSB firms through the reduction of program participation
costs. By successfully leveraging technology, SBA has reduced the total
cost of burden hours substantially.
Based on the calculations below, the total estimated number of
respondents (WOSBs and EDWOSBs) for this collection of information
varies depending upon the types of certification that a business
concern is seeking. For initial certification, the total estimated
number of respondents is 9,349. The total number was calculated using
the two-year average number of business concerns that have provided
information through Certify from March 2016 through February 2018. For
annual updates and new certifications, the total number is 12,347. For
examinations and protests, the total number is 130.
[[Page 27657]]
------------------------------------------------------------------------
Number of
Type of certification respondents Source
------------------------------------------------------------------------
Initial certification.......... 9,349 Average annual number
of respondents to
Certify between March
2016 and February
2018.
New certifications each year... 500 Program participation
is expected to remain
constant after initial
year of certification,
with 500 new
certifications
annually.
Annual updates to certification 11,847 Program participation
is expected to remain
constant after initial
year of certification,
with a reduction of
500 participants
annually through
attrition.
Total annual responses......... 12,347 Annual new
certifications plus
annual updates.
------------------------------------------------------------------------
Each respondent submits one response at the time of initial
certification and one at the time of annual update. Estimated burden
hours vary depending upon the type of certification that a WOSB or
EDWOSB pursues. SBA conducted a survey among a sample of entities that
assist WOSBs and EDWOSBs to provide information through Certify. The
majority of those surveyed stated that for initial certifications the
estimated time for completion is one hour per submission. For annual
updates, because of the need to submit little if any additional
information, the estimated burden is 0.5 hour per submission. For
examinations and protests, the estimated burden is 0.25, which is much
lower because firms have already provided the documentation referred to
in 13 CFR 127.303 through Certify. It is estimated that the initial
certification will involve 9,349 existing participants and 2,998 new
respondents in the first year. After the first year, initial
certifications are expected for 500 new respondents annually with an
additional 11,847 annual certifications for existing participants for a
total of 12,347 participants in each succeeding year. The participant
level is expected to remain stable at 12,347 participants annually with
500 new respondents and 500 attritions from the program annually. Based
on the number of protests and appeals received in years past, 130
respondents are expected to participate in protests and appeals. The
respondent's cost of burden hours for a five-year period and average is
provided in the following table and detailed below.
Cost of Burden Hours--5 Year Cost Estimate and Average
----------------------------------------------------------------------------------------------------------------
Initial-- Initial--new Protests and
existing 1 participants 1 Annual updates appeals .25
Year hour at hour at .5 hour at hour at Annual totals
$164.23 per $164.23 per $164.23 per $164.23 per
participant participant participant participant
----------------------------------------------------------------------------------------------------------------
Number of Program Participants
----------------------------------------------------------------------------------------------------------------
1............................... 9,349 2,998 .............. 130 12,477
2............................... .............. 500 11,847 130 12,477
3............................... .............. 500 11,847 130 12,477
4............................... .............. 500 11,847 130 12,477
5............................... .............. 500 11,847 130 12,477
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
1............................... $1,535,386 $492,362 .............. $5,337 $2,033,085
2............................... .............. 82,115 972,816 5,337 1,060,269
3............................... .............. 82,115 972,816 5,337 1,060,269
4............................... .............. 82,115 972,816 5,337 1,060,269
5............................... .............. 82,115 972,816 5,337 1,060,269
-------------------------------------------------------------------------------
5 Year Total................ .............. .............. .............. .............. 6,274,161
-------------------------------------------------------------------------------
Annual Cost Avg......... .............. .............. .............. .............. 1,254,832
----------------------------------------------------------------------------------------------------------------
Initial certification--transition of existing participants (one-
time cost):
Estimated officer's salary = $164.23/hour (based on General
Schedule 15 Step 10, Washington-Baltimore-Northern Virginia area, plus
an additional 100% to account for the cost of benefits and overhead,
which would be equivalent to a senior manager in an average small
business firm).
Total estimated burden: 9,349 x 1 hour x $164.23/hour = $1,535,386.
Initial certification--new participants (first year cost):
Estimated officer's salary = $164.23/hour (based on General
Schedule 15 Step 10, Washington-Baltimore-Northern Virginia area, plus
an additional 100% to account for the costs of benefits and overhead,
which would be equivalent to a senior manager in an average small
business firm).
Total estimated burden: 2998 x 1 hour x $164.23/hour = $492,362.
Initial certification--new participants (cost for each succeeding
year after initial year):
Estimated officer's salary = $164.23/hour (based on General
Schedule 15 Step 10, Washington-Baltimore-Northern Virginia area, plus
an additional 100% to account for the cost of benefits and overhead,
which would be equivalent to a senior manager in an average small
business firm).
Total estimated burden: 500 x 1 hour x $164.23/hour = $82,115.
Annual update:
Estimated officer's salary = $164.23/hour (based on General
Schedule 15 Step 10, Washington-Baltimore-Northern Virginia area, plus
an additional 100% to account for the cost of benefits and overhead,
which would
[[Page 27658]]
be equivalent to a senior manager in an average small business firm).
Total estimated burden: 11,847 x .5 hour x $164.23/hour = $72,816.
Examinations and Protests (each year):
Estimated officer's salary = $164.23/hour (based on General
Schedule 15 Step 10, Washington-Baltimore-Northern Virginia area, plus
an additional 100% to account for the cost of benefits and overhead,
which would be equivalent to a senior manager in an average small
business firm).
Total estimated burden: 130 x .25 hour x $164.23/hour = $5,337.
Previously, the estimated respondents' cost of burden hours was
determined to be $4,066,170 for the initial year of certification and
$2,120,538 in subsequent years. By successfully leveraging technology,
SBA has reduced the cost of burden hours substantially, from $4,066,170
to $2,033,085 in the initial year of certification, and from $2,120,538
to $1,060,269 in subsequent years. This results in annual savings of
$2,033,085 initially and $1,060,269 each year thereafter, with a total
five-year savings of $6,274,161 for WOSBs to redirect as revenue
generating resources to close the noted revenue disparity with male-
owned businesses. SBA believes that there are no additional capital or
start-up costs or operation and maintenance costs and purchases of
services costs to respondents as a result of this rule because there
should be no cost in setting up or maintaining systems to collect the
required information. As stated previously, the information requested
should be collected and retained in the ordinary course of business.
SBA estimates the cost to the government of implementing the
certification program to be $3,126,184 in the initial year of
certification, and approximately $2,704,140 annually thereafter. SBA is
currently working to enhance its existing information technology
infrastructure, Certify, to expand its capacity to support SBA's
government contracting certification programs. The cost to develop the
WOSB and EDWOSB certification processing systems in Certify is
$1,654,000. After the initial improvements, Certify should not require
a substantial investment of capital. In FY2020, SBA hired a Program
Lead, Team Lead, and two Analysts, and brought on via internal transfer
a third Analyst and a Marketing and Outreach specialist. The total cost
of bringing onboard the new hires and backfilling the positions left
vacant by the internal transfers is $1,472,184 (based on General
Schedule 13 Step 1 through General Schedule 15 Step 1, Washington-
Baltimore-Northern Virginia area plus 100% to account for the cost of
benefits and overhead). In the future, the Program hopes to hire an
additional six FTEs to further support Program Operations, the cost of
which would be $1,231,956 (based on General Schedule 13 Step 1,
Washington-Baltimore-Northern Virginia area plus 100% to account for
the cost of benefits and overhead).
3. What are the alternatives to this rule?
This rule is required to implement specific statutory provisions
which require promulgation of implementing regulations. One alternative
considered would be to rely solely on third-party certifiers to certify
WOSBs and EDWOSBs. However, there is a cost to small businesses for
third-party certifiers. Firms submit the same documentation to third-
party certifiers that would submit to SBA, but third-party certifiers
charge on average $380 annually. Consequently, the cost of relying
completely on third-party certifiers would be $3,552,620 a year (9,349
initial applicants x $380). If third-party certifiers were used for the
anticipated increase to 12,477 annual participants, the cost would be
$4,741,260. In addition, SBA maintains that certification for Federal
procurement purposes is an inherently governmental function.
Consequently, even if SBA utilized third-party certifiers for an
initial or preliminary review, SBA or a governmental entity would still
have to be involved in reviewing those certifications. In addition,
there is an intended benefit of certification. The intent is to
increase confidence in the eligibility of firms so that contracting
officers and activities utilize the sole source authority. Although
trending upwards, the government-wide WOSB goal of 5% was not met with
actual performance at 4.75%. In addition, WOSB/EDWOSB set-aside and
sole-source awards only accounted for 4.1% of total dollars awarded to
WOSBs in FY 2018. The Federal Government has met the statutory WOSB
goal of 5% of total dollars awarded to WOSBs only once (FY 2015).
Executive Order 13563
A description of the need for this regulatory action and the
benefits and costs associated with this action, including possible
distributional impacts that relate to Executive Order 13563, are
included above in the Regulatory Impact Analysis under Executive Order
12866. As part of its ongoing efforts to engage stakeholders in the
development of its regulations, SBA issued an Advance Notice of
Proposed Rulemaking (ANPR) on December 18, 2015. 80 FR 78984. The ANPR
solicited public comments to assist SBA in drafting a proposed rule to
implement a WOSB/EDWOSB certification program. SBA received 122
comments in response to the ANPR. SBA issued a Proposed Rule in the
Federal Register on May 14, 2019. 84 FR 21256. The Proposed Rule
solicited public comments to assist SBA in drafting a final rule to
implement a WOSB/EDWOSB certification program. SBA received 898
comments from 307 commenters in response to the Proposed Rule. SBA has
reviewed all the comments while drafting this final rule.
Executive Order 12988
For purposes of Executive Order 12988, SBA has drafted this rule,
to the extent practicable, in accordance with the standards set forth
in section 3(a) and 3(b)(2) of Executive Order 12988, to minimize
litigation, eliminate ambiguity, and reduce burden. This rule has no
preemptive or retroactive effect.
Executive Order 13132
For the purpose of Executive Order 13132, SBA has determined that
this rule will not have substantial direct effects on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various layers
of government. Therefore, SBA has determined that this rule has no
federalism implications warranting preparation of a federalism
assessment.
Executive Order 13771
This rule is an Executive Order 13771 regulatory action with
annualized net costs of $1,514,179 and a net present value of
$21,631,135, both in 2016 dollars. Details on the estimated costs of
this rule can be found in the rule's economic analysis. Table 1
summarizes the savings and costs of the first three years of
implementation, with the savings and costs in Year 3 expected to
continue into perpetuity. Table 2 presents the annualized savings in
perpetuity using a 7% discount rate, in 2016 dollars.
Table 1--Schedule of Costs/(Savings) Over 3 Year Horizon, Current
Dollars
------------------------------------------------------------------------
Savings Costs
------------------------------------------------------------------------
Year 1.................................. $(2,033,085) $3,126,184
Year 2.................................. (1,060,269) 2,704,140
Year 3.................................. (1,060,269) 2,704,140
------------------------------------------------------------------------
[[Page 27659]]
Table 2--Annualized Savings in Perpetuity With 7% Discount Rate, 2016
Dollars
------------------------------------------------------------------------
Estimate
------------------------------------------------------------------------
Annualized Savings...................................... (1,058,441)
Annualized Costs........................................ 2,572,621
Annualized Net Costs.................................... 1,514,179
------------------------------------------------------------------------
Paperwork Reduction Act, 44 U.S.C. Ch. 35
In carrying out its statutory mandate to provide oversight of
certification related to SBA's WOSB Federal Contract Program, SBA is
currently approved to collect information from the WOSB applicants or
participants through SBA Form 2413, and for EDWOSB applicants or
participants, through SBA Form 2414. (OMB Control Number 3245-0374,
Certification for the Women-Owned Small Business Federal Contract
Program). This collection of information also requires submission or
retention of documents that support the applicant's certification. The
information collected through Certify includes eligibility documents
previously collected in the WOSB Repository, and information collected
on SBA Form 2413 (WOSB) and SBA Form 2414 (EDWOSB). SBA revised this
information collection in 2018 to establish that the Agency has
discontinued these paper forms and will collect the information and
supporting documents electronically through Certify, as well as to make
minor changes to the requests for information.
As discussed above, this rule will fully implement the statutory
requirement for small business concerns to be certified by a Federal
agency, a State government, SBA, or a national certifying entity
approved by SBA, in order to be awarded a set-aside or sole source
contract under the WOSB program. As a result of these changes, the rule
eliminates the option to self-certify for WOSB/EDWOSB set-aside and
sole source contracts, permits applicants to provide their CVE
certification, along with documentation that they meet Program
eligibility requirements, as a certification option, and clarifies the
third-party certification requirements.
The clarifications for authorized Third-party certifiers impose an
additional reporting or recordkeeping requirements under the Paperwork
Reduction Act, 44 U.S.C. Chapter 35. A summary description of the
reporting requirement, description of respondents, and estimate of the
annual burden is provided below.
Summary Description of Compliance Information: Third-party
certifiers will be required to provide SBA with monthly reports that
include the number of applications received, number of applications
approved and denied, and other information that SBA determines may be
helpful for ensuring that third-party certifiers are meeting their
obligations or information or data that may be useful for improving the
program.
Description of and Estimated Number of Respondents: There are four
third-party certifiers authorized by SBA to certify WOSB and EDWOSB
applicants. The four third-party certifiers will be required to submit
reports to SBA monthly, for a total of 48 reports.
Respondents: 4.
Responses per respondent: 12.
Total annual responses: 48.
Preparation hours per response: 0.5 hour.
Total response burden hours: 24 hours.
Cost per hour: $67.78/hour (based on 2018 Median Pay for
accountants and auditors, Bureau of Labor Statistics, plus an
additional 100% to account for cost of benefits and overhead).
Total estimated annual cost burden: $1,626.72.
SBA will revise the information collection accordingly and resubmit
to OMB for review and approval.
Regulatory Flexibility Act, 5 U.S.C. 601-612
According to the Regulatory Flexibility Act (RFA), 5 U.S.C. 601,
when an agency issues a rulemaking, it must prepare a regulatory
flexibility analysis to address the impact of the rule on small
entities. However, section 605 of the RFA allows an agency to certify a
rule, in lieu of preparing an analysis, if the rulemaking is not
expected to have a significant economic impact on a substantial number
of small entities. The RFA defines ``small entity'' to include ``small
businesses,'' ``small organizations,'' and ``small governmental
jurisdictions.'' This rule concerns various aspects of SBA's
contracting programs. As such, the rule relates to small business
concerns, but would not affect ``small organizations'' or ``small
governmental jurisdictions.'' SBA's contracting programs generally
apply only to ``business concerns'' as defined by SBA regulations, in
other words, to small businesses organized for profit. ``Small
organizations'' or ``small governmental jurisdictions'' are non-profits
or governmental entities and do not generally qualify as ``business
concerns'' within the meaning of SBA's regulations.
As stated in the regulatory impact analysis, this rule will impact
approximately 9,000-12,000 women-owned small businesses. These
businesses will have to apply to be certified as WOSBs or EDWOSBs to
SBA or third-party certifiers in order to be eligible to be awarded any
WOSB or EDWOSB set-aside contract. However, SBA has minimized the
impact on WOSBs by accepting certifications already conferred by SBA
(through the 8(a) BD Program or a positive determination after a status
protest or program examination), VA, and third-party certifiers. The
costs to WOSBs for certification should be de minimis, because the
required documentation (articles of incorporation, bylaws, stock
ledgers or certificates, tax records, etc.) already exists. In
addition, this information is already required to be provided either to
third-party certifiers, governmental certifying entities, or to SBA
through Certify. SBA expects WOSBs to see a reduction in burden because
under the prior WOSB Program Repository, SBA determined that the
average time required to complete the process required by the WOSB
Program Repository was two hours, whereas the use of Certify results
requires only one hour due to technological improvements. Thus, the
Administrator certifies that the rulemaking is not expected to have a
significant economic impact on a substantial number of small entities.
List of Subjects
13 CFR Part 124
Administrative practice and procedure, Government procurement,
Minority businesses, Reporting and recordkeeping requirements,
Technical assistance.
13 CFR Part 125
Government contracts, Government procurement, Reporting and
recordkeeping requirements, Small business, Technical assistance,
Veterans.
13 CFR Part 126
Administrative practice and procedure, Government procurement,
Penalties, Reporting and recordkeeping requirements, Small business.
13 CFR Part 127
Government contracts, Reporting and recordkeeping requirements,
Small businesses.
For the reasons stated in the preamble, SBA amends 13 CFR parts
124, 125, 126, and 127 as follows:
[[Page 27660]]
PART 124--8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS
STATUS DETERMINATIONS
0
1. The authority citation for part 124 continues to read as follows:
Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d), and 644.
0
2. Amend Sec. 124.104 as follows:
0
a. Remove the first two sentences of paragraph (c)(2) introductory text
and add one sentence in their place;
0
b. Revise the first sentence of paragraph (c)(2)(ii);
0
c. Remove the first two sentences of paragraph (c)(3)(i) and add one
sentence in their place; and
0
d. Revise the first sentence of paragraph (c)(4).
The additions and revisions read as follows:
Sec. 124.104 Who is economically disadvantaged?
* * * * *
(c) * * *
(2) * * * The net worth of an individual claiming disadvantage must
be less than $750,000. * * *
* * * * *
(ii) Funds invested in an Individual Retirement Account (IRA) or
other official retirement account will not be considered in determining
an individual's net worth. * * *
* * * * *
(3) * * * (i) SBA will presume that an individual is not
economically disadvantaged if his or her adjusted gross income averaged
over the three preceding years exceeds $350,000. * * *
* * * * *
(4) * * * An individual will generally not be considered
economically disadvantaged if the fair market value of all his or her
assets (including his or her primary residence and the value of the
applicant/Participant firm) exceeds $6 million. * * *
0
3. Amend Sec. 124.1015 by adding a sentence at the end of paragraph
(f)(2) to read as follows:
Sec. 124.1015 What are the requirements for representing SDB status,
and what are the penalties for misrepresentation?
* * * * *
(f) * * *
(2) * * * If the business is unable to recertify its SDB status,
the procuring agency may no longer be able to count the options or
orders issued pursuant to the contract, from that point forward,
towards its SDB goals.
* * * * *
PART 125--GOVERNMENT CONTRACTING PROGRAMS
0
4. The authority citation for part 125 continues to read as follows:
Authority: 15 U.S.C. 632(p), (q), 634(b)(6), 637, 644, 657(f),
and 657r.
0
5. Amend Sec. 125.18 by adding a sentence at the end of paragraph
(e)(2) to read as follows:
Sec. 125.18 What requirements must an SDVO SBC meet to submit an
offer on a contract?
* * * * *
(e) * * *
(2) * * * If the business is unable to recertify its SDVO status,
the procuring agency may no longer be able to count the options or
orders issued pursuant to the contract, from that point forward,
towards its SDVO goals.
* * * * *
PART 126--HUBZONE PROGRAM
0
6. The authority citation for part 126 continues to read as follows:
Authority: 15 U.S.C. 632(a), 632(j), 632(p), 644 and 657a.
0
7. Amend Sec. 126.619 by adding a sentence at the end of paragraph (b)
introductory text to read as follows:
Sec. 126.619 When must a certified HUBZone small business concern
recertify its status for a HUBZone contract?
* * * * *
(b) * * * If the business is unable to recertify its HUBZone
status, the procuring agency may no longer be able to count the options
or orders issued pursuant to the contract, from that point forward,
towards its HUBZone goals.
* * * * *
PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT PROGRAM
0
8. The authority citation for part 127 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 637(m), 644 and 657r.
0
9. Amend Sec. 127.200 by adding paragraphs (c) and (d) to read as
follows:
Sec. 127.200 What are the requirements a concern must meet to
qualify as an EDWOSB or WOSB?
* * * * *
(c) WOSB and EDWOSB certifications. (1) A concern must be certified
as a WOSB or EDWOSB pursuant to Sec. 127.300 in order to be awarded a
WOSB or EDWOSB set-aside or sole-source contract.
(2) Other women-owned small business concerns that do not seek WOSB
or EDWOSB set-aside or sole-source contracts may continue to self-
certify their status, receive contract awards outside the Program, and
count toward an agency's goal for awards to WOSBs.
(d) Suspension and debarment. In order to be eligible for WOSB and
EDWOSB certification and to remain certified, the concern and any of
its owners must not have an active exclusion in the System for Award
Management at the time of application or recertification.
0
10. Amend Sec. 127.203 by revising the first sentence of paragraph
(b)(3) to read as follows:
Sec. 127.203 What are the rules governing the requirement that
economically disadvantaged women must own EDWOSBs?
* * * * *
(b) * * *
(3) Funds invested in an Individual Retirement Account (IRA) or
other official retirement account will not be considered in determining
an individual's net worth. * * *
* * * * *
Subpart C--[Amended]
0
11. Subpart C is amended by adding the undesignated center heading
``Certification'' above Sec. 127.300.
0
12. Effective October 15, 2020, Sec. 127.300 is revised to read as
follows:
Sec. 127.300 How is a concern certified as an WOSB or EDWOSB?
(a) WOSB certification. (1) A concern may apply to SBA for WOSB
certification. There is no cost to apply to SBA for certification. SBA
will consider the information provided by the concern in order to
determine whether the concern qualifies. SBA, in its discretion, may
rely solely upon the information submitted to establish eligibility,
may request additional information, or may verify the information
before making a determination. SBA may draw an adverse inference and
deny the certification where the concern fails to cooperate with SBA or
submit information requested by SBA.
(2) A concern may submit evidence to SBA that it is a women-owned
and controlled small business that is certified by the U.S. Department
of Veterans Affairs Center for Verification and Evaluation as a
Service-Disabled Veteran Owned Business or Veteran-Owned Business.
(3) A concern may submit evidence that it has been certified as a
WOSB by an approved Third-Party Certifier in accordance with this
subpart.
[[Page 27661]]
(b) EDWOSB certification. (1) A concern may apply to SBA for EDWOSB
certification. There is no cost to apply to SBA for certification. SBA
will consider the information provided by the concern in order to
determine whether the concern qualifies. SBA, in its discretion, may
rely solely upon the information submitted to establish eligibility,
may request additional information, or may verify the information
before making a determination. SBA may draw an adverse inference and
deny the certification where the concern fails to cooperate with SBA or
submit information requested by SBA.
(2) A concern that is a certified participant in the 8(a) BD
Program and owned and controlled by one or more women qualifies as an
EDWOSB.
(3) A concern may submit evidence to SBA that it is an economically
disadvantaged women-owned and controlled small business that is
certified by the U.S. Department of Veterans Affairs Center for
Verification and Evaluation as a Service-Disabled Veteran Owned
Business or Veteran-Owned Business.
(4) A concern may submit evidence that it has been certified as an
EDWOSB by a Third-Party Certifier under this subpart.
(c) SBA notification and designation. If SBA determines that the
concern is a qualified WOSB or EDWOSB, it will issue a letter of
certification and designate the concern as a certified WOSB or EDWOSB
on the Dynamic Small Business Search (DSBS) system, or successor
system.
0
13. Sections 127.301 through 127.303 are revised to read as follows:
Sec.
* * * * *
127.301 When may a concern apply for certification?
127.302 Where can a concern apply for certification?
127.303 What must a concern submit for certification?
* * * * *
Sec. 127.301 When may a concern apply for certification?
A concern may apply for WOSB or EDWOSB certification and submit the
required information whenever it can represent that it meets the
eligibility requirements, subject to the restrictions of Sec. 127.306.
All representations and supporting information contained in the
application must be complete and accurate as of the date of submission.
The application must be signed by an officer of the concern who is
authorized to represent the concern.
Sec. 127.302 Where can a concern apply for certification?
A concern seeking certification as a WOSB or EDWOSB may apply to
SBA for certification via https://certify.sba.gov or any successor
system. Certification pages must be validated electronically or signed
by a person authorized to represent the concern.
Sec. 127.303 What must a concern submit for certification?
(a)(1) SBA certification. (i) To be certified by SBA as a WOSB or
EDWOSB, a concern must provide documents and information demonstrating
that it meets the requirements set forth in part 127, subpart B. SBA
maintains a list of the minimum required documents that can be found at
https://certify.sba.gov or any successor system. A concern may submit
additional documents and information to support its eligibility. The
required documents must be provided to SBA during the application
process electronically. This may include, but is not limited to,
corporate records, business and personal financial records, including
copies of signed Federal personal and business tax returns, and
individual and business bank statements.
(ii) A concern that is certified by the 8(a) BD Program and is
owned and controlled by one or more women may use documentation of its
most recent annual review, or documentation of its 8(a) acceptance if
it has not yet had an annual review, in support of its application for
certification.
(iii) A concern that is certified through a program examination or
status protest may use the positive determination from SBA as evidence
for certification.
(2) CVE certification. (i) To be certified as a WOSB, a concern
that is certified by the U.S. Department of Veterans Affairs Center for
Verification and Evaluation may submit documentation of its most recent
certification, along with documentation confirming that it is owned and
controlled by one or more women, in support of its application for
certification.
(ii) To be certified as an EDWOSB, a concern that is certified by
the U.S. Department of Veterans Affairs Center for Verification and
Evaluation may submit documentation of its most recent certification,
along with documentation confirming that it is owned and controlled by
one or more women who are economically disadvantaged in accordance with
Sec. 127.203(b)(3), in support of its application for certification.
(3) Third-Party Certifier certification. A concern that is
certified by a Third-Party Certifier must provide a current, valid
certification from an entity designated as an SBA-approved certifier.
(b) In addition to the minimum required documents, SBA may request
additional information from applicants in order to verify eligibility.
(c) After submitting the required documentation, an applicant must
notify SBA of any changes that could affect its eligibility.
(d) If a concern was decertified or previously denied
certification, it must include with its application for certification a
full explanation of why it was decertified or denied certification, and
what, if any, changes have been made. If SBA is not satisfied with the
explanation provided, SBA will decline to certify the concern.
(e) If the concern was decertified for failure to notify SBA of a
material change affecting its eligibility pursuant to Sec. 127.401, it
must include with its application for certification a full explanation
of why it failed to notify SBA of the material change. If SBA is not
satisfied with the explanation provided, SBA will decline to certify
the concern.
0
14. Effective October 15, 2020, Sec. Sec. 127.304 and 127.305 are
revised to read as follows:
Sec. 127.304 How is an application for certification processed?
(a) The SBA's Director of Government Contracting (D/GC) or designee
is authorized to approve or decline applications for certification. SBA
must receive all required information and supporting documents before
it will begin processing a concern's application. SBA will not process
incomplete applications. SBA will advise each applicant within 15
calendar days after the receipt of an application whether the
application is complete and suitable for evaluation and, if not, what
additional information or clarification is required to complete the
application. SBA will make its determination within ninety (90)
calendar days after receipt of a complete package, whenever
practicable.
(b) SBA may request additional information or clarification of
information contained in an application or document submission at any
time.
(c) The burden of proof to demonstrate eligibility is on the
applicant concern. If a concern does not provide requested information
within the allotted time provided by SBA, or if it submits incomplete
information, SBA may presume that disclosure of the
[[Page 27662]]
missing information would adversely affect the business concern's
eligibility or demonstrate a lack of eligibility in the area or areas
to which the information relates.
(d) The applicant must be eligible as of the date it submitted its
application and up until the time the D/GC issues a decision. The
decision will be based on the facts contained in the application, any
information received in response to SBA's request for clarification,
and any changed circumstances since the date of application.
(e) Any changed circumstances occurring after an applicant has
submitted an application will be considered and may constitute grounds
for decline. After submitting the application and signed
representation, an applicant must notify SBA of any changes that could
affect its eligibility. The D/GC may propose decertification for any
EDWOSB or WOSB that fails to inform SBA of any changed circumstances
that affected its eligibility for the program during the processing of
the application.
(f) If SBA approves the application, SBA will send a written notice
to the concern and update https://certify.sba.gov or any successor
system, and update DSBS and the System for Award Management (or any
successor systems) to indicate the concern has been certified by SBA as
a WOSB and/or EDWOSB.
(g) A decision to deny eligibility must be in writing and state the
specific reasons for denial.
(h) SBA will send a copy of the decision letter to the electronic
mail address provided with the application. SBA will consider any
decision sent to this electronic mail address provided to have been
received by the applicant concern.
(i) The decision of the D/GC to decline certification is the final
agency decision. The concern can reapply for certification after ninety
(90) days, as set forth in Sec. 127.305.
Sec. 127.305 May declined or decertified concerns seek
recertification at a later date?
(a) A concern that SBA or a third-party certifier has declined or
that SBA has decertified may seek certification after ninety (90) days
from the date of decline or decertification if it believes that it has
overcome all of the reasons for decline or decertification and is
currently eligible. A concern that has been declined may seek
certification by any of the certification options listed in Sec.
127.300.
(b) A concern found to be ineligible during a WOSB/EDWOSB status
protest or program examination is precluded from applying for
certification for ninety (90) days from the date of the final agency
decision (the D/GC's decision if no appeal is filed or the decision of
SBA's Office of Hearings and Appeals (OHA) where an appeal is filed
pursuant to Sec. 127.605).
0
15. An undesignated center heading and Sec. 127.350 are added to
subpart C to read as follows:
Requirements for Third-Party Certifiers
Sec. 127. 350 What is a third-party certifier?
A third-party certifier is a non-governmental entity that SBA has
authorized to certify that an applicant concern is eligible for the
WOSB or EDWOSB contracting program. A third-party certifier may be a
for-profit or non-profit entity. The list of SBA-approved third-party
certifiers may be found on SBA's website at sba.gov.
0
16. Effective October 15, 2020, Sec. 127.351 is added to subpart C to
read as follows:
Sec. 127.351 What third-party certifications may a concern use as
evidence of its status as a qualified EDWOSB or WOSB?
In order for SBA to accept a third-party certification that a
concern qualifies as a WOSB or EDWOSB, the concern must have a current,
valid certification from an entity designated as an SBA-approved
certifier. The third-party certification must be submitted to SBA
through https://certify.sba.gov or a successor system.
0
17. Sections 127.352 through 127.356 are added to subpart C to read as
follows:
Subpart C--Certification of EDWOSB or WOSB Status
* * * * *
Sec.
127.352 What is the process for becoming a third-party certifier?
127.353 May third-party certifiers charge a fee?
127.354 What requirements must a third-party certifier follow to
demonstrate capability to certify concerns?
127.355 How will SBA ensure that approved third-party certifiers are
meeting the requirements?
127.356 How does a concern obtain certification from an approved
certifier?
Sec. 127.352 What is the process for becoming a third-party
certifier?
SBA will periodically hold open solicitations. All entities that
believe they meet the criteria to act as a third-party certifier will
be free to respond to the solicitation.
Sec. 127.353 May third-party certifiers charge a fee?
(a) Third-party certifiers may charge a reasonable fee, but must
notify applicants first, in writing, that SBA offers certification for
free.
(b) The method of notification and the language that will be used
for this notification must be approved by SBA. The third-party
certifier may not change its method or the language without SBA
approval.
Sec. 127.354 What requirements must a third-party certifier follow
to demonstrate capability to certify concerns?
(a) All third-party certifiers must enter into written agreements
with SBA. This agreement will detail the requirements that the third-
party certifier must meet. SBA may terminate the agreement if SBA
subsequently determines that the entity's certification process does
not comply with SBA-approved certification standards or is not based on
the same program eligibility requirements as set forth in subpart B of
this part or if, upon review, SBA determines that the third-party
certifier has demonstrated a pattern of certifying concerns that SBA
later determines to be ineligible for certification.
(b) Third-party certifiers' certification process must comply with
SBA-approved certification standards and track the WOSB or EDWOSB
eligibility requirements set forth in subpart B of this part.
(c) In order for SBA to enter into an agreement with a third-party
certifier, the entity must establish the following:
(1) It will render fair and impartial WOSB/EDWOSB Federal Contract
Program eligibility determinations;
(2) It will provide the approved applicant a valid certificate for
entering into the SBA electronic platform, and will retain documents
used to determine eligibility for a period of six (6) years to support
SBA's responsibility to conduct a status protest, eligibility
examination, agency investigation, or audit of the third party
determinations;
(3) Its certification process will require applicant concerns to
register in SAM (or any successor system) and submit sufficient
information as determined by SBA to enable it to determine whether the
concern qualifies as a WOSB. This information must include
documentation demonstrating whether the concern is:
(i) A small business concern under the SBA size standard
corresponding to the concern's primary industry, as defined in Sec.
121.107 of this part;
(ii) At least 51 percent owned and controlled by one or more women
who are United States citizens; and
[[Page 27663]]
(4) It will not decline to accept a concern's application for WOSB/
EDWOSB certification on the basis of race, color, national origin,
religion, age, disability, sexual orientation, marital or family
status, or political affiliation.
Sec. 127.355 How will SBA ensure that approved third-party
certifiers are meeting the requirements?
(a) SBA will require third-party certifiers to submit monthly
reports to SBA. These reports will contain information including the
number of applications received, number of applications approved and
denied, and other information that SBA determines may be helpful for
ensuring that third-party certifiers are meeting their obligations or
information or data that may be useful for improving the program.
(b) SBA will conduct periodic compliance reviews of third-party
certifiers and their underlying certification determinations to ensure
that they are properly applying SBA's WOSB/EDWOSB requirements and
certifying concerns in accordance with those requirements.
(1) SBA will conduct a full compliance review on every third-party
certifier at least once every three years.
(2) At the conclusion of each compliance review, SBA will provide
the third-party certifier with a written report detailing SBA's
findings with regard to the third-party certifier's compliance with
SBA's requirements. The report will include recommendations for
possible improvements, and detailed explanations for any deficiencies
identified by SBA.
(c) If SBA determines that a third-party certifier is not properly
applying SBA's eligibility requirements, SBA may revoke the approval of
that third-party certifier.
Sec. 127.356 How does a concern obtain certification from an
approved certifier?
(a) A concern that seeks WOSB or EDWOSB certification from an SBA-
approved third-party certifier must submit its application directly to
the approved certifier in accordance with the specific application
procedures of the particular certifier.
(b) The concern must register in the System for Award Management
(SAM), or any successor system.
(c) The approved certifier must ensure that all documents used to
determine that a concern is approved for certification are uploaded in
https://certify.sba.gov or any successor system.
0
18. Effective October 15, 2020, Sec. Sec. 127.400 and 127.401 are
revised to read as follows:
Sec. 127.400 How does a concern maintain its WOSB or EDWOSB
certification?
(a) Any concern seeking to remain a certified WOSB or EDWOSB must
annually represent to SBA that it continues to meet all WOSB/EDWOSB
eligibility criteria.
(1) Except as provided in paragraph (b) of this section, unless SBA
has reason to question the concern's representation of its continued
eligibility, SBA will accept the representation without requiring the
certified WOSB or EDWOSB to submit any supporting information or
documentation.
(2) The concern's recertification must be submitted within 30 days
of the anniversary date of its original certification. The date of
certification is the date specified in the concern's certification
letter. If the concern fails to recertify, SBA may propose the concern
for decertification pursuant to Sec. 127.405.
(b) Any concern seeking to remain a certified WOSB or EDWOSB must
undergo a program examination and recertify its continued eligibility
to SBA every three years.
(1) SBA or a third-party certifier will conduct a program
examination three years after the concern's initial WOSB or EDWOSB
certification (whether by SBA or a third-party certifier) or three
years after the date of the concern's last program examination,
whichever date is later.
(i) Example 1. Concern A is certified by SBA to be eligible for the
WOSB program on July 20, 2021. Concern A must recertify its eligibility
to SBA between June 20, 2022 and July 19, 2022. Concern A will continue
to be a certified WOSB that is eligible to receive WOSB contracts (as
long as it is small for the size standard corresponding to the NAICS
code assigned to the contract) through July 19, 2023. Concern A must
recertify its eligibility to SBA between June 20, 2023 and July 19,
2023. Concern A will continue to be a certified WOSB that is eligible
to receive WOSB contracts (as long as it is small for the size standard
corresponding to the NAICS code assigned to the contract) through July
19, 2024. Concern A must recertify its eligibility to SBA between June
20, 2024 and July 19, 2024. Because three years have elapsed since its
application and original certification, SBA will conduct a program
examination of Concern A at that time. In addition to its
representation that it continues to be an eligible WOSB, Concern A must
provide additional information as requested by SBA to demonstrate that
it continues to meet all the eligibility requirements of the WOSB
Program.
(ii) Example 2. Concern B is certified by a third-party certifier
to be eligible for the WOSB program on September 27, 2021. Concern B
must recertify its eligibility to SBA between August 28, 2022 and
September 26, 2022. Concern B will continue to be a certified WOSB that
is eligible to receive WOSB contracts (as long as it is small for the
size standard corresponding to the NAICS code assigned to the contract)
through September 26, 2023. On March 31, 2023, Concern B is awarded a
WOSB set-aside contract. Subsequently, Concern B's status as an
eligible WOSB is protested. On June 28, 2023, Concern B receives a
positive determination from SBA confirming that it is an eligible WOSB.
Concern B's new certification date is June 28, 2023. Concern B must
recertify its eligibility to SBA between May 29, 2024 and June 27,
2024. Concern B will continue to be a certified WOSB that is eligible
to receive WOSB contracts (as long as it is small for the size standard
corresponding to the NAICS code assigned to the contract) through June
27, 2025. Concern B must recertify its eligibility to SBA between May
29, 2025 and June 27, 2025. Concern B will continue to be a certified
WOSB that is eligible to receive WOSB contracts (as long as it is small
for the size standard corresponding to the NAICS code assigned to the
contract) until June 27, 2026. Concern B must recertify its eligibility
to SBA between May 29, 2026 and June 27, 2025. Because three years have
elapsed since its certification date of June 28, 2022, Concern B must
seek a program examination, by SBA or a third-party certifier, between
May 29, 2025 and June 27, 2026. In addition to its representation that
it continues to be an eligible WOSB, Concern B must provide additional
information as requested by SBA or a third-party certifier to
demonstrate that it continues to meet all the eligibility requirements
of the WOSB Program.
(2) The concern must either request a program examination from SBA
or notify SBA that it has requested a program examination by a third-
party certifier no later than 30 days prior to its certification
anniversary. Failure to do so will result in the concern being
decertified.
Sec. 127.401 What are a WOSB's and EDWOSB's ongoing obligations to
SBA?
Once certified, a WOSB or EDWOSB must notify SBA of any material
changes that could affect its eligibility within 30 calendar days of
any such change. Material change includes, but is not limited to, a
change in the ownership, business structure, or
[[Page 27664]]
management. The notification must be in writing and must be uploaded
into the concern's profile with SBA. The method for notifying SBA can
be found on https://certify.sba.gov. A concern's failure to notify SBA
of such a material change may result in decertification and removal
from SAM and DSBS (or any successor system) as a designated certified
WOSB/EDWOSB concern. In addition, SBA may seek the imposition of
penalties under Sec. 127.700.
0
19. Section 127.402 is revised to read as follows:
Sec. 127.402 What is a program examination, who will conduct it, and
what will SBA examine?
(a) A program examination is an investigation by SBA officials or
authorized third-party certifier that verifies the accuracy of any
certification of a concern issued in connection with the concern's WOSB
or EDWOSB status. Thus, examiners may verify that the concern currently
meets the program's eligibility requirements, and that it met such
requirements at the time of its application for certification, its most
recent recertification, or its certification in connection with a WOSB
or EDWOSB contract.
(b) Examiners may review any information related to the concern's
eligibility requirements. SBA may also conduct site visits.
(c) It is the responsibility of program participants to ensure the
information provided to SBA is kept up to date and is accurate. SBA
considers all required information and documents material to a
concern's eligibility and assumes that all information and
documentation submitted are up to date and accurate unless SBA has
information that indicates otherwise.
0
20. Effective October 15, 2020, Sec. 127.403 is revised to read as
follows:
Sec. 127.403 When will SBA conduct program examinations?
(a) SBA may conduct a program examination at any time after the
concern submits its application, during the processing of the
application, and at any time while the concern is a certified WOSB or
EDWOSB.
(b) SBA will conduct program examinations periodically as part of
the recertification process set forth in Sec. 127.400.
0
21. Section 127.404 is revised to read as follows:
Sec. 127.404 May SBA require additional information from a WOSB or
EDWOSB during a program examination?
At the discretion of the D/GC, SBA has the right to require that a
WOSB or EDWOSB submit additional information at any time during the
program examination. SBA may draw an adverse inference from the failure
of a concern to cooperate with a program examination or provide
requested information.
0
22. Effective October 15, 2020, Sec. 127.405 is revised to read as
follows:
Sec. 127.405 What happens if SBA determines that the concern is no
longer eligible for the program?
If SBA believes that a concern does not meet the program
eligibility requirements, the concern fails to recertify in accordance
with the requirements in Sec. 127.400, or the concern has failed to
notify SBA of a material change, SBA will propose the concern for
decertification from the program.
(a) Proposed decertification. The D/GC or designee will notify the
concern in writing that it has been proposed for decertification. This
notice will state the reasons why SBA has proposed decertification, and
that the WOSB or EDWOSB must respond to each of the reasons set forth.
(1) The WOSB or EDWOSB must respond in writing to a proposed
decertification within 20 calendar days from the date of the proposed
decertification.
(2) If the initial certification was done by a third-party
certifier, SBA will also notify the third-party certifier of the
proposed decertification in writing.
(b) Decertification. The D/GC or designee will consider the reasons
for proposed decertification and the concern's response before making a
written decision whether to decertify. The D/GC may draw an adverse
inference where a concern fails to cooperate with SBA or provide the
information requested. The D/GC's decision is the final agency
decision.
(c) Reapplication. A concern decertified pursuant to this section
may reapply to the program pursuant to Sec. 127.305.
0
23. Amend Sec. 127.503 by adding a sentence at the end of paragraph
(h)(2) to read as follows:
Sec. 127.503 When is a contracting officer authorized to restrict
competition or award a sole source contract or order under this part?
* * * * *
(h) * * *
(2) * * * If the business is unable to recertify its WOSB/EDWOSB
status, the procuring agency may no longer be able to count the options
or orders issued pursuant to the contract, from that point forward,
towards its women-owned small business goals.
* * * * *
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24. Effective October 15, 2020, amend Sec. 127.504 by revising
paragraph (a), redesignating paragraphs (b) and (c) as paragraphs (c)
and (d) respectively, and adding a new paragraph (b).
The revision and addition read as follows:
Sec. 127.504 What additional requirements must a concern satisfy to
submit an offer on an EDWOSB or WOSB requirement?
(a) In order for a concern to submit an offer on a specific EDWOSB
or WOSB set-aside requirement, the concern must qualify as a small
business concern under the size standard corresponding to the NAICS
code assigned to the contract, and either be a certified EDWOSB or WOSB
pursuant to Sec. 127.300, or represent that it has submitted a
complete application for WOSB or EDWOSB certification to SBA or a
third-party certifier and has not received a negative determination
regarding that application from SBA or the third party certifier.
(1) If a concern becomes the apparent successful offeror while its
application for WOSB or EDWOSB certification is pending, either at SBA
or a third-party certifier, the contracting officer for the particular
contract must immediately inform SBA's D/GC. SBA will then prioritize
the concern's WOSB or EDWOSB application and make a determination
regarding the firm's status as a WOSB or EDWOSB within 15 calendar days
from the date that SBA received the contracting officer's notification.
Where the application is pending with a third-party certifier, SBA will
immediately contact the third-party certifier to require the third-
party certifier to complete its determination within 15 calendar days.
(2) If the contracting officer does not receive an SBA or third-
party certifier determination within 15 calendar days after the SBA's
receipt of the notification, the contracting officer may presume that
the apparently successful offeror is not an eligible WOSB or EDWOSB and
may make award accordingly, unless the contracting officer grants an
extension to the 15-day response period.
(b) In order for a concern to seek a specific sole source EDWOSB or
WOSB requirement, the concern must be a certified EDWOSB or WOSB
pursuant to Sec. 127.300 and qualify as small under the size standard
corresponding to the requirement being sought.
* * * * *
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Sec. 127.505 [Removed and Reserved]
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25. Effective October 15, 2020, remove and reserve Sec. 127.505.
Sec. 127.603 [Amended]
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26. Effective October 15, 2020, amend Sec. 127.603 by removing the
next to last sentence in paragraph (d).
0
27. Effective October 15, 2020, amend Sec. 127.604 by revising
paragraph (f)(4) to read as follows:
Sec. 127.604 How will SBA process an EDWOSB or WOSB status protest?
* * * * *
(f) * * *
(4) A concern that has been found to be ineligible will be
decertified from the program and may not submit an offer as a WOSB or
EDWOSB on another procurement until it is recertified. A concern may be
recertified by reapplying to the program pursuant to Sec. 127.305.
Jovita Carranza,
Administrator.
[FR Doc. 2020-09022 Filed 5-8-20; 8:45 am]
BILLING CODE 8026-03-P
