Women-Owned Small Businesses and Sole Source Contracts

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President Obama’s administration has made it a priority to meet the Small Business Administration’s (SBA) prime and subcontracting goals, which include metrics relating to the percentage of government contracts awarded to small businesses, women-owned small businesses (WOSB), small disadvantaged businesses, service disabled veteran-owned small businesses, and historically underutilized business zones. Although in fiscal years 2013 and 2014 government agencies met or exceeded their prime contracting goals for small businesses in general, they did not achieve their goals for WOSBs. One way to increase WOSB access to the government contracting pie is to provide for more sole source contracting opportunities. The SBA is in the process of helping to make this a reality.

An interim rule proposed by the Federal Acquisition Regulation (FAR) Council on December 31, 2015, has the potential to increase sole source contracting opportunities for WOSBs. The interim rule permits contracting officers to issue qualifying sole source contracts to WOSBs as authorized in the 2013 National Defense Authorization Act. Any contracting officers who might have been reluctant to exercise their WOSB sole source authority in the absence of a FAR provision may now be encouraged to do so. If finalized, the interim rule would amend numerous aspects of the FAR, including revising FAR 19.1506 to “Women-Owned Small Business Program Sole Source Awards.” The current rule requires contracting officers to consider issuing a sole source award to WOSBs or economically disadvantaged WOSBs if none of the listed exclusions apply. However, under the interim rule, a contract is ripe for a sole source award if:

  • The acquisition is assigned the appropriate NAICS code.
  • There is not a reasonable expectation that offers from two or more qualifying WOSBs or economically disadvantaged WOSBs will be received.
  • The anticipated contract price will not exceed $4 million (or $6.5 million for a manufacturing contract).
  • The award can be made at a fair and reasonable price.

In a related, surprising move, Congress eliminated WOSB self-certification in 2015. Previously, a WOSB could receive certification simply by (1) certifying to the contracting officer that it is a small business concern owned and controlled by women; and (2) providing adequate documentation, in accordance with standards established by the SBA, to support such certification. Current SBA regulations provide for certification by third-party national certifying entities that have been approved by the SBA. However, the SBA is in the process of drafting new regulations that may restructure the WOSB certification program. Once adopted, WOSBs should pay close attention to the new certification regulations so that they are prepared to fully take advantage of new sole source contracting opportunities.

For now, the notice and comment period has begun for the interim rule that would provide for authority to award sole source contracts to economically disadvantaged women-owned small business concerns and to women-owned small business concerns eligible under the WOSB Program. See 80 FR 81888 (Dec. 31, 2015) from the Department of Defense (DoD), General Services Administration (GSA) and NASA. Interested parties should submit written comments to the Regulatory Secretariat Division on or before February 29, 2016, to be considered in the formation of the final rule.