In this article, we will discuss a recent change to the certification process for government set-aside and sole-source contracts for women-owned small businesses (WOSB) and economically disadvantaged women-owned small businesses (EDWOSB). We will answer the following questions:
- What is a sole-source or set-aside contract?
- What does the new certification process look like for WOSBs and EDWOSBs?
- What are the eligibility requirements for the woman’s contracting program?
Until October 15th of this year (2020), women-owned small businesses and economically disadvantaged women-owned small businesses could self-certify that they met the requirements for the Procurement Program for Women-Owned Small Business Concerns. According to the SBA, in an effort to make the contracting process under the Women-Owned Small Business Concerns program easier and efficient, and also to avoid exclusion of potentially eligible businesses, the contracting process was updated according to the guidelines put forth in the 2015 National Defense Authorization Act.
What Is A Sole-Source Or Set-Aside Contract?
A Set-Aside contract is a contract for work that the government has set-aside specifically for businesses that have taken the time and effort to certify for eligibility to undertake these contracts. The government requires that twenty-three percent of all federal spending be allocated to small businesses. This percentage is broken down further into specific categories of private sectors and business delineations.
When a contract is referred to as “sole-source” it means that the entity purchased or procured the contract after negotiating with only one company. This type of contract is also commonly referred to as a “no-bid contract.” The government uses these types of contracts to satisfy quotas for programs such as the Women-Owned Small Business Concerns Program, although it is not a requirement that a contract under this program is a sole-source contract. There are several other benefits and drawbacks to sole-sourced contracts that are outside the scope of this article.
What Does The New Certification Process Look Like For WOSBs and EDWOSBs?
As of October 15th, the SBA requires that WOSBs and EDWOSBs seek an official government-issued certification, requiring interested businesses to create an account and upload the required documentation. Businesses have the option of doing this through a third party (usually a fee is involved) or completing the process internally (Free). Businesses must update information yearly, including any changes that might affect eligibility, and recertify every three years. It is at the SBA’s discretion to ask for whatever information and documentation that it deems necessary to determine a business’s eligibility.
Businesses that apply should receive a notification from the SBA approving the application, asking for more information, or denying the application, within 15 days of submitting. After 90 days, the SBA will make its final decision. If the application is denied, the business can reapply after 90 days.
A business may be flagged for decertification. If this occurs the company has 20 days to address all the reasons for decertification listed in the SBA’s notification. If the SBA ultimately decertifies the company, it can reapply after 90 days.
What Are The Eligibility Requirements For The Women’s Contracting Program?
A business must meet the following requirements to be eligible for the women’s contracting program:
- Be classified as a small business;
- Have documentation that shows that women manage day-to-day operations and also make decisions that will impact the company long-term;
- Be at least 51 percent owned and control by women who are U.S. citizens
Further requirements are necessary to qualify as economically disadvantaged under the women’s contracting program, including:
- The women who own and control the business must have an individual net worth of less than $750,000;
- The company must be owned and controlled by one or more women, who individually have $350,000 or less in adjusted gross income averaged over the previous three years;
- Be owned or controlled by one or more women, who individually have $6 million or less in personal assets
Funds invested in official retirement accounts are excluded from the eligibility assessment for individuals applying under the economically disadvantaged program.
There are further requirements for the WOSB and EDWOSB, including business type, control type, spousal income, etc. Interested companies can find more information and begin the certification process at beta.certify.sba.gov.
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