WOMEN-OWNED 

SMALL BUSINESS 

PROGRAM

Certifier Oversight 

and Additional 

Eligibility Controls Are 

Needed

Report to Congressional Requesters

October 2014

GAO-15-54

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-54, a report to 

congressional requesters

October 2014

WOMEN-OWNED SMALL BUSINESS PROGRAM

Certifier Oversight and Additional Eligibility Controls

Are Needed 

Why GAO Did This Study

In 2000, Congress authorized the 

WOSB program to increase contracting 

opportunities for WOSBs by allowing 

contracting officers to set aside 

procurements to such businesses. 

SBA, which administers the program, 

issued implementing regulations that 

became effective in 2011. GAO was 

asked to review the WOSB program. 

This report examines (1) how

businesses are certified as eligible for 

the WOSB program, (2) SBA’s 

oversight of certifications, and (3) the

effect the program has had on federal 

contracting opportunities available to 

WOSBs or EDWOSBs. GAO reviewed 

relevant laws, regulations, and 

program documents; analyzed federal 

contracting data from April 2011 

through May 2014; and interviewed 

SBA, officials from contracting 

agencies selected to obtain a range of 

experience with the WOSB program, 

third-party certifiers, WOSBs, and 

organizations that represent their 

interests.

What GAO Recommends

GAO recommends that SBA, among 

other things, establish and implement 

procedures to monitor certifiers and 

improve annual eligibility examinations, 

including by analyzing examination 

results. SBA generally agreed with 

GAO’s recommendations. 

What GAO Found

Businesses have two options to certify their eligibility for the women-owned small 

business (WOSB) program. Whether self-certifying at no cost or using the feebased services of an approved third-party certifier, businesses must attest that 

they are a WOSB or an economically disadvantaged WOSB (EDWOSB). 

Businesses also must submit documents supporting their attestation to a 

repository the Small Business Administration (SBA) maintains (required 

documents vary depending on certification type), and, if they obtain a third-party 

certification, to the certifier.

SBA performs minimal oversight of third-party certifiers and has yet to develop 

procedures that provide reasonable assurance that only eligible businesses 

obtain WOSB set-aside contracts. For example, 

• SBA generally has not reviewed certifier performance or developed or 

implemented procedures for such reviews, including determining whether 

certifiers inform businesses of the no-cost self-certification option, a 

requirement in the agency’s agreement with certifiers. 

• SBA also has not completed or implemented procedures to review the 

monthly reports that third-party certifiers must submit. 

Without ongoing monitoring and oversight of the activities and performance of

third-party certifiers, SBA cannot reasonably assure that certifiers fulfill the 

requirements of the agreement. Moreover, in 2012 and 2013, SBA found that 

more than 40 percent of businesses (that previously received contracts) it 

examined for program eligibility should not have attested they were WOSBs or 

EDWOSBs at the time of SBA’s review. SBA officials speculated about possible 

reasons for the results, including businesses not providing adequate 

documentation or becoming ineligible after contracts were awarded, but SBA has 

not assessed the results of the examinations to determine the actual reasons for 

the high numbers of businesses found ineligible. SBA also has not completed or 

implemented procedures to conduct eligibility examinations. According to federal 

standards for internal control, agencies should have documented procedures, 

conduct monitoring, and ensure that any review findings and deficiencies are 

resolved promptly. As a result of inadequate monitoring and controls, potentially 

ineligible businesses may continue to incorrectly certify themselves as WOSBs, 

increasing the risk that they may receive contracts for which they are not eligible.

The WOSB program has had a limited effect on federal contracting opportunities 

available to WOSBs. Set-aside contracts under the program represent less than 

1 percent of all federal contract obligations to women-owned small businesses. 

The Departments of Defense and Homeland Security and the General Services 

Administration collectively accounted for the majority of the $228.9 million in setaside obligations awarded under the program between April 2011 and May 2014.

Contracting officers, business owners, and industry advocates with whom GAO 

spoke identified challenges to program use and suggested potential changes that 

might increase program use, including allowing sole-source contracts rather than 

requiring at least two businesses to compete and expanding the list of 330 

industries in which WOSBs and EDWOSBs were eligible for a set-aside.

View GAO-15-54. For more information, 

contact William Shear at (202) 512-8678 or 

shearw@gao.gov.
Page i GAO-15-54 Women-Owned Small Business Program

Letter 1

Background 4

Businesses Can Use Two Methods to Certify Eligibility for WOSB 

Program 7

SBA’s Oversight of Certifiers Has Been Minimal and Does Not 

Provide Reasonable Assurance That Only Eligible Businesses 

Obtain Set-Aside Contracts 9

Program Set-Asides Have Had Minimal Effect on WOSB 

Contracting 18

Conclusions 25

Recommendations for Executive Action 27

Agency Comments and Our Evaluation 27

Appendix I Objectives, Scope, and Methodology 29

Appendix II Comments from the Small Business Administration 32

Appendix III GAO Contact and Staff Acknowledgments 33

Tables

Table 1: Fees for Third-Party Certification for the Women-Owned 

Small Business (WOSB) Program 6

Table 2: Top Contracting Departments and Agencies, by Total 

Obligations under the WOSB Program, from April 2011 

through May 2014 20

Table 3: Percentage of Contract Obligations Awarded to WomenOwned Small Businesses, Fiscal Years 2011-2013 23

Figure

Figure 1: Percentage of Obligations for Contracts (Set-Aside and 

Not Set-Aside) Awarded to Women-Owned Small 

Businesses (WOSB), from April 2011 through May 2014 21

Contents
Page ii GAO-15-54 Women-Owned Small Business Program

Abbreviations

DHS Department of Homeland Security

DOD Department of Defense

EDWOSB economically disadvantaged women-owned small business

FPDS-NG Federal Procurement Data System-Next Generation

GSA General Services Administration

HUBZone Historically Underutilized Business Zone

NAICS North American Industry Classification System

SAM System for Award Management

SBA Small Business Administration

SDVOSBC Service-Disabled Veteran-Owned Small Business Concern

SOP standard operating procedure

WBENC Women’s Business Enterprise National Council

WOSB women-owned small business

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Page 1 GAO-15-54 Women-Owned Small Business Program

441 G St. N.W.

Washington, DC 20548

October 8, 2014

The Honorable Maria Cantwell

Chairwoman

Committee on Small Business and Entrepreneurship

United States Senate

The Honorable Mary Landrieu

United States Senate

Women-owned businesses contribute significantly to the U.S. economy. 

According to the most recent Census Survey of Business Owners, 28.7 

percent, or 7.8 million, of all U.S. businesses in 2007 were womenowned.1 Between 1997 and 2007, the number of women-owned

businesses grew by 44 percent (or twice as fast as businesses owned by 

men) adding roughly 500,000 jobs nationwide, according to the U.S. 

Department of Commerce.2 However, the federal government has yet to 

meet its annual goal of awarding 5 percent of its procurement to womenowned small businesses (WOSB).

Over the years, Congress has taken a number of actions to increase 

opportunities for small business (including minority-owned and 

economically disadvantaged) participation in federal contracting. In 1978, 

Congress amended the Small Business Act to require federal agencies to 

negotiate with the Small Business Administration (SBA) to establish prime 

and subcontracting goals for certain businesses, which did not specifically 

include WOSBs until 1994.3 In 2000, Congress authorized a contracting 

 1

U.S. Census, 2007 Survey of Business Owners Summaries of Findings (Washington, 

D.C.: 2010). 

2

U.S. Department of Commerce Economics and Statistics Administration, Women-Owned 

Business in the 21st Century (Washington, D.C.: October 2010). 

3

15 U.S.C. § 644(g). The Small Business Act defines various socioeconomic categories of 

businesses and SBA administers contracting programs targeted to these groups. Small 

businesses are those that are independently owned and operated and are not dominant in 

their field of operations. 15 U.S.C. § 632(a). Women-owned small businesses must have 

at least 51 percent female ownership and must be controlled by one or more women who 

are U.S. citizens. The ownership must be direct, not subject to conditions, and the woman 

must manage the day-to-day operations of the business and make its long-term decisions. 

See 15 U.S.C. § 632(n); 13 C.F.R. § 127.102; 13 C.F.R. § 127.201; 13 C.F.R. § 127.202.
Page 2 GAO-15-54 Women-Owned Small Business Program

program to reserve contracts for WOSBs in industries where the 

businesses were historically underrepresented. Its purpose is to enable 

federal contracting officers to identify and establish a sheltered market, or 

set-aside, for competition among only WOSBs or economically 

disadvantaged WOSBs (EDWOSB) to provide goods and services 

through contracts in designated industries.4 On October 7, 2010, SBA 

issued a final rule to implement the WOSB Federal Contract Program and 

the program started operating in 2011.5 To establish WOSB program setasides, SBA conducted studies to identify industries in which WOSBs 

were underrepresented and substantially underrepresented and 

published a list of specific industries in which these businesses needed 

greater access to federal contracts.6 EDWOSBs may receive contracts in 

any industry SBA identified as eligible for the program, and WOSBs may 

 4

Although the statute requires SBA to conduct a study to identify industries in which 

WOSBs are underrepresented, according to officials SBA’s interpretation of the statute is 

that it requires the agency to identify industries in which EDWOSBs are underrepresented 

and industries in which WOSBs are substantially underrepresented. Economically 

disadvantaged is a determination made if a woman can demonstrate that her ability to 

compete in the free enterprise system is impaired due to diminished capital and credit 

opportunities as compared with others in the same or similar business. For example, a 

woman can demonstrate disadvantage with a net worth of less than $750,000 (with certain 

regulatory exclusions). Generally, a woman with an adjusted gross income for the prior 3 

years averaging $350,000 or with assets of $6 million or more is not deemed economically 

disadvantaged. Additionally, a spouse’s financial situation can be considered.

5

Women-Owned Small Business Federal Contract Program, 75 Fed. Reg. 62258 (Oct. 7, 

2010). WOSB program provisions were formally added to the Federal Acquisition 

Regulations on April 1, 2011.

6

In 2006, SBA asked the RAND Corporation to compute disparity ratios for WOSBs based 

on the number and dollar value of federal contracts awarded to WOSBs. See KauffmanRAND Institute for Entrepreneurship Public Policy, The Utilization of Women-Owned Small 

Businesses in Federal Contracting (Santa Monica, Calif.: 2007). According to this study, 

underrepresentation in government contracting has come to mean that the share of 

contracts awarded to a particular type of business is small relative to the prevalence of 

such businesses in the pool of businesses “ready, willing, and able” to perform 

government contracts. This measure of underrepresentation is typically referred to as a 

disparity ratio. The RAND study identified 83 North American Industry Classification 

System (NAICS) sectors, which were published in the WOSB program final rule on 

October 7, 2010. In 2012, SBA updated four-digit NAICS codes to six-digit codes to 

incorporate Office of Management and Budget modifications of the classification system 

(identified as NAICS 2012) into its table of small business size standards. According to 

SBA’s interim final rule on August 20, 2012, the large majority of changes involve 

renumbering or redefining codes (or both) without warranting change to the agency’s size 

standards. On August 19, 2013, SBA published a list of 330 industry sectors (identified by 

six-digit codes) eligible for use in the WOSB program, with some codes eligible for use 

under the WOSB set-aside, and some under the EDWOSB set-aside.
Page 3 GAO-15-54 Women-Owned Small Business Program

receive contracts in industries in which SBA deemed WOSBs to be 

substantially underrepresented. According to SBA officials, program staff 

have been planning a new study of underrepresented EDWOSBs and 

substantially underrepresented WOSBs, which the agency expects to 

complete by 2015.

You asked us to examine the WOSB program, including any effects it has 

had on increasing contracting opportunities for WOSBs. This report (1) 

describes how WOSBs and EDWOSBs are certified as eligible for the 

program; (2) examines the extent to which SBA has implemented internal 

control and oversight procedures of WOSB program certifications; and (3) 

discusses the effect the program has had on federal contracting 

opportunities available to WOSBs or EDWOSBs.

To describe how businesses are certified as eligible for the WOSB 

program, we reviewed SBA’s policies and procedures to establish 

program eligibility, including the responsibilities of businesses, third-party 

certifiers, contracting officers, and SBA. To evaluate how certification 

procedures may affect program participation, we obtained data from SBA 

and the Federal Procurement Data System-Next Generation (FPDS-NG) 

to determine the number of WOSBs that used third-party certifiers from 

August 2011 through May 2014. Using electronic edit checks and a 

review of data system documentation, we deemed these data sufficiently 

reliable for this purpose.7 We interviewed SBA officials, contracting 

officials at the Departments of Defense (DOD) and Homeland Security 

(DHS), and the General Services Administration (GSA); and interviewed 

selected WOSBs for perspectives on the program. The agencies were 

selected to reflect varying levels of program participation (based on 

contracts issued and program obligations from 2011 through 2013). To 

evaluate SBA’s internal controls and oversight of certification methods, 

we reviewed the program regulation and program documents, 

agreements with third-party certifiers, and monthly reports submitted by 

third-party certifiers to SBA, among other documents. We interviewed 

three of the four certifiers: El Paso Hispanic Chamber of Commerce, the 

National Women Business Owners Corporation, and the U.S. Women’s 

Chamber of Commerce. We were not able to interview the fourth certifier, 

the Women’s Business Enterprise National Council (WBENC). To 

 7

We were not able to determine how many self-certified businesses obtained contracts 

under the program because SBA does not maintain this information.
Page 4 GAO-15-54 Women-Owned Small Business Program

evaluate the effect the program has had on federal contracting 

opportunities for WOSBs, we analyzed FPDS-NG data from April 2011 

through May 2014 and identified trends in program participation by 

agencies. Finally, we interviewed SBA officials and contracting agency 

officials about the extent to which the program has met its regulatory 

purpose of increasing contracting opportunities for WOSBs. We deemed 

the FPDS-NG data sufficiently reliable for our purposes. Appendix I 

contains additional information on our scope and methodology.

We conducted this performance audit from August 2013 to October 2014 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Federal agencies conduct a variety of procurements that are reserved for 

small business participation (through small business set-aside and solesource opportunities, hereafter called set-asides). The set-asides can be 

for small businesses in general or be specific to small businesses 

meeting additional eligibility requirements in the Service-Disabled 

Veteran-Owned Small Business Concern (SDVOSBC), Historically 

Underutilized Business Zone (HUBZone), 8(a) Business Development, 

and WOSB programs.

The WOSB program, which started operating in 2011, has requirements 

that pertain to the sectors in which set-asides can be offered as well as 

eligibility requirements for businesses. That is, set-aside contracts under 

the WOSB program can only be made in certain industries in which 

WOSBs were substantially underrepresented and EDWOSBs 

underrepresented, according to the program regulation. Additionally, only 

certain businesses are eligible to participate in the WOSB program. The 

business must be at least 51 percent owned and controlled by one or 

more women. The owner must provide documents demonstrating that the 

business meets program requirements, including submitting a document 

in which the owner attests to the business’s status as a WOSB or 

EDWOSB.

The program’s authorizing statute directs that each business either be 

certified by a third party, or self-certified by the business owner. SBA’s 

Background
Page 5 GAO-15-54 Women-Owned Small Business Program

final rule includes these two methods. Self-certification is free and 

businesses pay a fee for third-party certification.

A third-party certifier is a federal agency, state government, or national 

certifying entity approved by SBA to provide certifications of WOSBs or 

EDWOSBs. To be approved as certifiers, interested organizations submit 

an application to SBA that contains information on the organization’s 

structure and staff, policies and procedures for certification, and 

attestations that they will adhere to program requirements. SBA has 

approved four organizations to act as third-party certifiers:

• El Paso Hispanic Chamber of Commerce;

• National Women Business Owners Corporation;

• U.S. Women’s Chamber of Commerce; and

• Women’s Business Enterprise National Council.

The most active certifier is the Women’s Business Enterprise National 

Council (WBENC), which completed about 76 percent of all WOSB thirdparty certifications performed from August 2011 through May 2014. To 

conduct the certifications, WBENC uses 14 regional partner 

organizations.

The fees for certification vary depending on a WOSB’s gross annual 

sales, membership status in the certifying organization, and geographic 

location (see table 1). In the case of businesses that seek a WOSB 

program certification through WBENC’s partner organizations, businesses 

that pay for a Women’s Business Enterprise certification (used for privatesector or some local, state, and federal procurement, but not for the 

WOSB program) can receive WOSB program certifications at no 

additional cost. We discuss the WOSB certification process in greater 

detail later in this report.
Page 6 GAO-15-54 Women-Owned Small Business Program

Table 1: Fees for Third-Party Certification for the Women-Owned Small Business (WOSB) Program 

Initial Renewal 

Member 

discount 

Fee based on 

gross annual 

sales Other characteristics

El Paso Hispanic 

Chamber of 

Commerce $225 $100 None ——

Fee waiver in select 

cases.

U.S. Women’s 

Chamber of 

Commerce $275-$350 $275-$350 $75 off initial —— ——

National Women 

Business Owners 

Corporation

$400

$200-300 based on 

gross annual sales.

None $100 additional for 

renewals for 

businesses with 

gross annual sales 

over $2 million.

Women-owned small 

business (WOSB) and 

economically 

disadvantaged WOSB 

certification offered as a 

package certification for 

$700.

Women’s Business 

Enterprise National 

Council

$350-$1,000. Fee 

varies by 14 regional 

partner organizations.

$350-$1,000. Fee 

varies by 14 regional 

partner organizations.

None Varies based on 

gross annual sales

with ranges from 

under $1 million to 

$100 million and 

over.

A WOSB third-party 

certification is obtained 

as part of a bundle 

including a Women’s 

Business Enterprise 

certification. 

Source: GAO analysis of third-party certifier documents. | GAO-15-54

SBA’s Office of Government Contracting administers the WOSB program 

by publishing regulations for the program, conducting eligibility 

examinations of businesses that received contracts under the WOSB or 

EDWOSB set-aside, deciding protests related to eligibility for a WOSB 

program contract award, conducting studies to determine eligible 

industries, and working with other federal agencies in assisting WOSBs 

and EDWOSBs. According to SBA officials, the agency also works at the 

regional and local levels with its Small Business Development Centers, 

district offices, and other organizations (such as Procurement Technical 

Assistance Centers) to assist WOSBs and EDWOSBs to receive 

contracts with federal agencies. The services SBA coordinates with these 

offices and organizations include training, counseling, mentoring, access 

to information about federal contracting opportunities, and business 

financing.
Page 7 GAO-15-54 Women-Owned Small Business Program

According to the program regulation, businesses may use self- or thirdparty certification to demonstrate they are eligible for WOSB or EDWOSB 

status. Both certification processes require signed representations by 

businesses about their WOSB or EDWOSB eligibility. For this reason, 

SBA has described all participants in the program as self-certified. When 

using the self-certification option, businesses must provide documents 

supporting their status to the online document repository for the WOSB 

program that SBA maintains.8 Required submissions include copies of 

citizenship papers (birth or naturalization certificates or passports) and, 

depending on business type, items including copies of partnership 

agreements or articles of incorporation. Businesses must submit a signed 

certification on which the owners attest that the documents and 

information provided are true and accurate. Moreover, businesses must 

register and attest to being a WOSB in the System for Award 

Management (SAM), the primary database of vendors doing business 

with the federal government.9 Businesses also must make 

representations about their status in SAM before submitting an offer on a 

WOSB or EDWOSB solicitation.

For third-party certification, businesses submit documentation to 

approved certifiers. According to third-party certifiers we interviewed, they 

review documents (and some may conduct site visits to businesses) and 

make determinations of eligibility. If approved, businesses will receive a 

document showing receipt of third-party certification. Business then can 

upload the certificate to the WOSB program repository along with 

 8

According to the WOSB program regulation 13 C.F.R. § 127.300(e), documents required 

of self-certified WOSBs include copies of birth certificates, naturalization papers, or 

unexpired passports; joint venture agreement, if applicable; for a sole proprietorship, an 

assumed/fictitious name certificate; signed WOSB program certification (an attestation by 

the business of its program eligibility); if a limited liability company, articles of organization 

and operating agreement; if a corporation, articles of incorporation, bylaws, and any 

amendments, all issued stock certificates, stock ledger, voting agreements, if any; and if a 

partnership, partnership agreements and amendments. Self-certified EDWOSBs also 

must provide a personal financial statement for each woman claiming economic 

disadvantage (SBA Form 413) and a signed EDWOSB program certification.

9

Federal Acquisitions Regulations require all prospective vendors to be registered in SAM 

before the award of a contract, basic agreement, basic ordering agreement, or blanket 

purchase agreement. SAM, which is maintained by the General Services Administration, 

replaced the Central Contractor Registration database.

Businesses Can Use 

Two Methods to 

Certify Eligibility for 

WOSB Program
Page 8 GAO-15-54 Women-Owned Small Business Program

documents supporting their EDWOSB or WOSB status.10 SBA does not 

track the number of businesses that self certify and could not provide 

information on how many self-certified businesses obtained contracts 

under the WOSB program. While SBA can look at an individual business 

profile—which lists the documents the business has uploaded to support 

its eligibility—in the repository to determine if a certificate from a thirdparty certifier is present, it has no corresponding mechanism to determine 

if a business lacking such a certificate was self-certified.11 That is, there 

are no data fields for certification type in any of the systems used in the 

program and SBA cannot generate reports to isolate information on 

certification type by business. According to SBA officials, such information 

on certification type is not needed because both certification options are 

treated equally under the program and, because all businesses make an 

attestation of status as a WOSB whether or not the business uses a thirdparty certifier. Therefore, SBA considers this a self-certification program.

Contracting officers obtain a solicitation and conduct market research to 

identify businesses potentially capable of filling contract requirements. 

Once a contracting officer has determined that a solicitation can be set 

aside under the WOSB program, the officer obtains bids and selects an 

awardee for the contract. Only after selecting an awardee, does the 

agency obtain access to the business’s profile in the WOSB program 

repository, which lists the documents the business has uploaded to 

support its eligibility (the business must grant the contracting agency 

access). SBA’s Contracting Officer’s Guide to the WOSB Program states 

that contracting officers must determine that specified documents have 

been uploaded by the business to the program repository, but the guide 

does not require contracting officers to assess the validity of those 

documents. Only after viewing the uploaded documents would the 

contracting officer be able to determine if the business was likely selfcertified or had a certificate from a third-party certifier. Two groups we 

 10According to the WOSB program regulation, 13 C.F.R. § 127.300(d), documents 

required of third-party certified WOSBs and EDWOSBs include a copy of the third-party 

certification; joint venture agreement, if applicable; and signed WOSB or EDWOSB 

program certification (an attestation by the business of its program eligibility). 

11If the business had uploaded a third-party certificate, SBA could determine that the 

business had used third-party certification to establish its eligibility for the program. If a 

given business had not uploaded a third-party certificate but uploaded all required 

documents for self-certification, SBA might then presume the business to have self 

certified. 
Page 9 GAO-15-54 Women-Owned Small Business Program

interviewed that represent the interests of WOSBs said that contracting 

officers prefer third-party over self-certified businesses when selecting an 

awardee. A representative of one organization thought that contracting 

officers tended to select businesses with third-party certifications because 

they did not have to review as many documents in the program repository 

as for self-certified businesses. However, the certification method does 

not appear to influence contract awards. According to officials from all 

contracting agencies with whom we spoke and SBA officials, contracting 

staff are unaware of the certification method used by a business until after 

an awardee is selected.

SBA generally has not overseen third-party certifiers and lacks 

reasonable assurance that only eligible businesses receive WOSB setaside contracts. SBA has not put in place formal policies to review the 

performance of third-party certifiers, including their compliance with a 

requirement to inform businesses of the no-cost, self-certification option. 

The agency has not developed formal policies and procedures for 

reviewing required monthly reports submitted to SBA by certifiers or 

standardized reporting formats for the certifiers, or addressed most issues 

raised in the reports. Although SBA examinations have found high rates 

of ineligibility among a sample of businesses that previously received setaside contracts, SBA has not determined the causes of ineligibility or 

made changes to its oversight of certifications to better ensure that only 

eligible businesses participate in the program.

To date, SBA generally has not conducted performance reviews of thirdparty certifiers and does not have procedures in place for such reviews. 

According to federal standards for internal control, agencies should 

conduct control activities such as performance reviews and clearly 

document internal controls.12 Third-party certifiers agree to be subject to 

performance reviews by SBA at any time to ensure that they meet the 

requirements of the agreement with SBA and program certification 

regulations—including requirements related to the certification process, 

obtaining supporting documents, informing businesses about the no-cost 

 12See GAO, Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).

SBA’s Oversight of 

Certifiers Has Been 

Minimal and Does 

Not Provide 

Reasonable 

Assurance That Only 

Eligible Businesses 

Obtain Set-Aside 

Contracts

SBA Generally Has Not 

Reviewed Certifier 

Performance
Page 10 GAO-15-54 Women-Owned Small Business Program

option for WOSB program certification, and reporting to SBA on certifier 

activities.

Before beginning the certification process, SBA requires third-party 

certifiers to inform businesses in writing (on an SBA-developed form) that 

they can self certify under the program at no cost. Certifiers, a WOSB 

advocacy group, and WOSBs had perspectives on fees for third-party 

certification. Representatives of all three certifiers with whom we spoke 

stated that fees their organization charged for certifications were 

reasonable and affordable for a small business. Staff from one WOSB 

advocacy organization told us that such fees could deter some 

businesses from participating in the program, but owners of WOSBs with 

which we spoke generally did not concur with this view. Certifiers with 

whom we spoke told us that they inform businesses about their option to 

self certify, but SBA does not have a method in place to help ensure that 

certifiers are providing this information to businesses and agency officials 

told us that they do not monitor whether certifiers fulfilled the requirement. 

SBA officials said that they believe that the no-cost option ameliorates the 

risk of excessive fees charged to businesses or the risk that fees would 

deter program participation and that because all certifiers must provide 

national coverage, businesses can seek lower fees. Officials also told us 

that they believed that businesses and advocacy groups would inform the 

agency if certifiers were not providing this information. However, they 

were not able to describe how SBA would learn from businesses that 

certifiers had failed to provide this information. The requirement is part of 

SBA’s agreement with third-party certifiers, but SBA has not described 

the requirement on the program web-site or made it part of informational 

materials to businesses. Thus, businesses may not know of this 

requirement without being informed by the certifier or know to inform SBA 

if the certifier had not fulfilled the requirement.

The largest certifier, WBENC, has delegated the majority of certification 

activity to other entities that SBA also has not reviewed. WBENC has 

conducted about 76 percent of third-party certifications through May 

2014. However, WBENC delegates WOSB certification responsibilities to 

14 regional partner organizations. SBA neither maintains nor reviews 

information about standards and procedures at WBENC, including a 

compliance review process for each of its 14 partner organizations that 

WBENC told SBA it uses. SBA officials told us that they rely on 

information available on public websites to determine the fee structures 

set by WBENC’s partner organizations. SBA also does not have copies of 

compliance reviews that WBENC told SBA it annually conducts for each 

partner organization. SBA requested documents from WBENC, which 
Page 11 GAO-15-54 Women-Owned Small Business Program

included information about WBENC’s oversight of its 14 partner 

organizations. WBENC’s response was incomplete; WBENC referenced 

but did not provide its standards and procedures to oversee partner 

organizations. SBA told us it recognized that WBENC’s response was 

incomplete, and indicated it had not followed up on WBENC’s response. 

Without this information SBA cannot determine how WBENC has been 

overseeing the 14 entities to which it has delegated certification 

responsibilities.

Although SBA has not developed or conducted formal performance 

reviews of certifiers, officials described activities they consider to be 

certifier oversight. For example, when a business is denied third-party 

certification but wishes to self-certify, it must subject itself to an eligibility 

examination by SBA before doing so. In this case, or during a bid protest, 

SBA conducts its own review of documentation the business submitted to 

the certifier. SBA officials stated that these reviews were not intended as 

a form of certifier oversight but described them as de facto reviews of 

third-party certifier performance. However, such reviews do not involve a 

comprehensive assessment of certifiers’ activity or performance over 

time. An SBA official acknowledged that the agency could do more to 

oversee certifiers. SBA plans to develop written procedures for certifier 

oversight to be included in the standard operating procedure (SOP) for 

the program, which remains under development. But SBA has not yet 

estimated when it would complete written procedures for certifier 

oversight or the SOP.

Without ongoing monitoring and oversight of the activities and 

performance of third-party certifiers, SBA cannot reasonably ensure that 

certifiers have fulfilled the performance requirements of their agreement 

with SBA—including informing businesses about no-cost certification.

SBA has not yet developed written procedures to review required monthly 

reports from certifiers and does not have a consistent format for reports. 

In SBA’s agreement with third-party certifiers, the agency requires each 

certifier to submit monthly reports that must include

• the number of WOSB and EDWOSB applications received, approved, 

and denied;

• identifying information for each certified business, such as the 

business name;

• concerns about fraud, waste, and abuse; and

SBA Lacks Procedures for 

Reviewing Certifiers’

Reports and Has Not 

Followed Up on Issues 

Reports Raised
Page 12 GAO-15-54 Women-Owned Small Business Program

• a description of any changes to the procedures the organizations 

used to certify businesses as WOSBs and EDWOSBs.

Internal control should include documented procedures and monitoring or 

review activities that help ensure that review findings and deficiencies are 

brought to the attention of management and resolved promptly.13

Based on our review of each monthly report submitted from August 2011 

through May 2014 (135 in total), not all reports contained consistent 

information. Some monthly reports were missing the owner names and 

contact information for businesses that had applied for certification. One 

certifier regularly identified potential fraud among businesses to which it 

had denied certification, about one or two per month for 16 of the 34 

reporting months included in our review. This certifier provided detailed 

narrative information in its reports to SBA about its concerns. The 

reporting format and level of detail reported also varied among certifiers. 

One certifier listed detailed information on its activities in a spreadsheet. 

Another described its activities using narrative text and an attached list of 

applicants for certification. One certifier included dates for certification, 

recertification, and the expiration of a certification, while other certifiers 

did not include this information.

According to SBA officials, the agency did not have consistent procedures 

for reviewing monthly reports, including procedures to identify and resolve 

discrepancies in reports or oversee how certifiers collect and compile 

information transmitted to the agency. SBA officials said that one official, 

who recently retired, was responsible for reviewing all certifier monthly 

reports. Current officials and staff were not able to tell us what process 

this official used to assess the reports.

Finally, with one person responsible for reviewing monthly reports until 

recently, SBA generally has not followed up on issues raised in reports. 

Agency officials told us that early in the program they found problems with 

the monthly report of one of the certifiers that indicated that the certifier 

did not understand program requirements and they contacted the certifier 

to address the issue. We found additional issues that would appear to 

warrant follow up from SBA. For example, two businesses were denied 

certification by one third-party certifier and approved shortly after by 

another. SBA stated that it had not identified these potential 

 13See GAO/AIMD-00-21.3.1.
Page 13 GAO-15-54 Women-Owned Small Business Program

discrepancies but that it was possible for businesses to be deemed 

ineligible, resolve the issue preventing certification, and become eligible 

soon after. However, according to the program regulation, if a business 

was denied third-party certification and the owner believed the business 

eligible, the owner would have to request that SBA conduct an 

examination to verify its eligibility to represent the business as a WOSB. 

According to SBA officials, the agency was unaware of this business or its 

certification. And, as discussed previously, one certifier regularly identified 

potential fraud among businesses to which it had denied certification. 

SBA officials told us that they had not identified or investigated this 

certifier’s concerns about potential fraud. When we asked SBA officials 

how the agency addressed such concerns, an official responded that 

fraudulently entering into a set-aside contract was illegal and the business 

would be subject to prosecution. However, without SBA following up on 

these types of issues, it is unclear how businesses committing fraud in 

the program would be prosecuted.

According to an SBA official, the agency has been developing written 

procedures to review the monthly reports, but has not yet estimated when 

the procedures would be completed. The procedures will be included in 

SBA’s SOP for the program, which also remains under development. As 

noted earlier, SBA could not estimate when it would complete the SOP. 

Without procedures in place to consistently review monthly reports and 

respond to problems identified in those reports, SBA lacks information 

about the activities and performance of third-party certifiers and leaves 

concerns raised by certifiers unaddressed.

SBA’s methods to verify the eligibility of businesses in its WOSB program 

repository include annual examinations of businesses that received setaside contracts. SBA’s program responsibilities include conducting 

eligibility examinations of WOSBs and EDWOSBs, according to SBA’s 

compliance guide for the WOSB program and its regulation. Section 8(m) 

SBA Found High Rates of 

Ineligibility among 

Businesses but Has Not 

Developed Controls to 

Help Ensure Only Eligible 

Businesses Receive 

Awards

Methods to Assess the 

Eligibility of Set-Aside Contract 

Recipients
Page 14 GAO-15-54 Women-Owned Small Business Program

of the Small Business Act sets forth eligibility criteria businesses must 

meet to receive a contract under the WOSB program set-aside. SBA 

examines a sample of businesses with a current attestation in SAM and 

that received a contract during SBA’s examination year. SBA does not 

include in its sample businesses that had not yet obtained a WOSB 

program contract. According to SBA officials, staff conducting the 

eligibility examination review the documents each business owner 

uploaded to the WOSB program repository to support the representation 

in SAM of eligibility for WOSB or EDWOSB status. For example, agency 

officials said that reviewers ensure that all documents required have been 

uploaded and review the contents of the documents to ensure that a 

business is eligible. SBA said staff conducting the examination then 

determine that the business has met the requirements to document its 

status as a WOSB, or determine that information is missing or not 

consistent with the program requirements and the business is not eligible 

at the time of SBA’s review to certify itself as a WOSB. SBA officials said 

the agency also uses the same process to investigate the eligibility of 

businesses on an ad hoc basis in response to referrals from contracting 

agencies or other parties, such as other businesses, that question the 

eligibility of a business.

If a business has not sufficiently documented its eligibility representation, 

SBA sends a letter directing the business to enter required information or 

documents into the repository or remove its attestation of program 

eligibility in SAM within 15 days. If SBA receives no response after 15 

days, it sends a second letter instructing the business to remove its 

WOSB attestation in SAM within 5 days. In 2012 and 2013, SBA sent final 

5-day letters to 44 businesses identified through annual examinations or 

examinations following a referral. If the business does not do so, it may 

be subject to enforcement actions including suspension or debarment 

from federal contracting or criminal penalties, according to SBA officials. 

An SBA official said that the agency is unaware of any such enforcement 

actions as part of the WOSB program.

SBA also decides protests from contracting agency staff or any other 

interested parties relating to a business’s eligibility. SBA considers 

protests if there is sufficient, credible evidence to show that the business 

may not be at least 51 percent owned and controlled by one or more 

women, or if the business has failed to provide documents required to 

establish eligibility for the program. Once SBA has obtained a protest, it 

examines documents submitted in the case, makes a determination of 

program eligibility based on the content of these documents and notifies 

relevant parties—typically, the contracting officer, protester (if not the 
Page 15 GAO-15-54 Women-Owned Small Business Program

same), and the business—of the determination. If eligible for the setaside, the contracting officer may make an award to the business. 

Otherwise, the contracting officer may not award a contract to the 

business in question. From program implementation in April 2011 through 

July 2, 2014, SBA responded to 27 protests, and in 7 protests the 

businesses involved were found to be ineligible for the WOSB program. In 

the remaining protests, the businesses were found eligible, the party that 

filed the protest withdrew it, or SBA dismissed the protest.14

As described earlier in the report, contracting officers check for the 

presence of documents in the repository when making a WOSB program 

award. This could be considered part of SBA’s framework to oversee 

certifications, but the requirement for contracting officers to review 

documents is limited to ensuring that businesses have uploaded 

documents listed in the regulation. Representatives from some of the 

contracting offices we interviewed believed that they had to assess the 

validity of the documents or did not think they had the necessary 

qualifications to assess the documents. However, program guidance does 

not require contracting officers to assess the validity of these documents, 

and SBA officials told us contracting officers are not expected to evaluate 

the eligibility of businesses.

SBA activities relating to eligibility verifications, particularly examinations, 

have several weaknesses. For instance, SBA

• has not yet developed procedures to conduct annual eligibility 

examinations although such efforts are in process, according to 

officials;

• has not evaluated the results of the eligibility examinations in the 

context of how the actions of businesses, contracting agencies, and 

third-party certifiers may have contributed to the high levels of 

incomplete and inaccurate documentations found in examinations;

and

• has not assessed its internal controls or made procedural changes in 

response to the findings of its eligibility examinations.

 14SBA dismisses protests under the WOSB program for various reasons. For example, in 

one case the party that submitted the protest was not eligible to do so because no specific 

solicitation was involved in the case. Therefore, SBA dismissed the protest without 

determining whether the business in question would have been eligible for the program. 

SBA’s Approach to Eligibility 

Verification and Enforcement 

Has Weaknesses
Page 16 GAO-15-54 Women-Owned Small Business Program

According to federal standards for internal control, agencies should have 

documented procedures, conduct monitoring, and ensure that any review 

findings and deficiencies are brought to the attention of management and 

are resolved promptly.15 Corrective action is to be taken or improvements 

made within established time frames to resolve the matters brought to 

management’s attention. Also, management needs to comprehensively 

identify risks the agency faces from both internal and external sources, 

and management should consider all significant interactions between the 

agency and all other parties.

SBA conducted annual eligibility examinations in 2012 and 2013 on a 

sample of businesses that received contracts under the WOSB program 

and found that 42 percent of businesses in the 2012 sample were 

ineligible for WOSB program contract awards on the date of its review, 

and 43 percent in the 2013 sample were ineligible.

16 According to SBA

officials, both self- and third-party certified businesses were found 

ineligible at the time of review. SBA staff reviewed the documents that 

each business in its sample had posted to the program repository to 

ensure the businesses had sufficiently supported their attestations as 

required in program regulations. However, SBA could not provide 

documentation of a consistent procedure to examine each business. SBA 

staff reviewing documentation in the repository did not have guidelines 

describing how to conduct each review. SBA officials told us that they 

have been developing written procedures to conduct annual eligibility 

examinations, estimated a completion date that the agency did not meet, 

and that the agency does not have an estimation of completion.

SBA officials explained that they determined the eligibility of businesses 

on a given date after the business received a contract. According to SBA 

officials, a finding of ineligibility does not mean the business was ineligible 

at the time of contract award because the status of the business might 

have changed. Although SBA officials did not know whether businesses 

examined were eligible at the time of award, the high rate of ineligibility it 

found raises questions about whether contracts may have been awarded 

 15See GAO/AIMD-00-21.3.1.

16In 2012, SBA included 113 businesses in its annual eligibility examination, and in 2013 it 

included 119 businesses in its examination. SBA has statutory authority to conduct 

program eligibility examinations at any time for any firm asserting eligibility to receive a 

WOSB program contract.
Page 17 GAO-15-54 Women-Owned Small Business Program

to ineligible businesses. According to SBA officials, information in its 

repository constantly changes and SBA has yet to determine how or if a 

business was eligible when it received a WOSB set-aside contract. SBA 

officials told us that they believe they may be able to make such a 

determination but could not describe exactly how they would conduct the 

review or confirm that the business was an eligible WOSB or EDWOSB at 

the time of award. As part of its annual examination, SBA only examines 

businesses at some time after the business received a contract and, 

therefore, SBA’s examination is limited in its ability to identify potentially 

ineligible businesses prior to a contract award.

SBA officials said that after the annual examinations they did not institute 

new controls to guard against ineligible businesses receiving program 

contracts because they described the examinations and the results as a 

method to gain insight about the program—specifically, that WOSBs may 

lack understanding of program eligibility requirements—and not a basis 

for change in oversight procedures. According to SBA officials, the levels 

of ineligibility found during the examinations were similar to those found in 

examinations of its other socioeconomic programs. SBA officials said 

businesses were deemed ineligible because they did not understand the 

documentation requirements for establishing eligibility and also attributed 

the ineligibility of third-party certified businesses to improper uploading of 

documents by the businesses themselves. SBA officials said they needed 

to make additional efforts to train businesses to properly document their 

eligibility. However, SBA officials could not explain how they had 

determined lack of understanding was the cause of ineligibility among 

businesses and have not made efforts to confirm that this was the cause.

As a result, they have missed opportunities to obtain meaningful insights 

into the program.

SBA regarded the bid protest as means of identifying ineligibility. SBA 

officials referred to the program as a self-policing program, because of 

the bid protest function through which competing businesses, contracting 

officers, or SBA can protest a business’s claim to be a WOSB or 

EDWOSB and eligible for contract awards under the program. In addition, 

an SBA official stated that business owners affirm their status when 

awarded a contract and are subject to prosecution if they had done so 

and later were found to have been ineligible at the time of contract 

award—which the official considered a program safeguard.

However, without (1) developing program eligibility controls that include 

procedures for conducting annual eligibility examinations; (2) analyzing 

the results of the examinations to understand the underlying causes of 
Page 18 GAO-15-54 Women-Owned Small Business Program

ineligibility; (3) developing new procedures for examinations, including 

expanding the sample of businesses to be examined to include those that 

did not receive contracts; and (4) investigating businesses based on 

examination results, SBA may continue to find high rates of ineligibility 

among businesses registered in the WOSB program repository. In turn, 

this would continue to expose the program to the risk that ineligible 

businesses may receive set-aside contracts. Also, by reviewing the 

eligibility of businesses that have not received program contracts, SBA 

may improve the quality of the pool of potential program award recipients.

Set-asides under the WOSB program to date have had a minimal effect 

on overall contracting obligations to WOSBs and attainment of WOSB 

contracting goals. WOSB program set-aside obligations increased from 

fiscal year 2012 to fiscal year 2013. The Department of Defense (DOD), 

the Department of Homeland Security (DHS), and the General Services 

Administration (GSA) accounted for the majority of these obligations. The 

WOSB program set-asides represented less than 1 percent of total 

federal awards to women-owned small businesses. Contracting officers, 

WOSBs, and others with whom we spoke suggested a number of 

program changes that might increase use of the WOSB program, 

including increasing awareness, allowing for sole-source awards, and 

expanding the list of eligible industries for the set-aside program.

Program Set-Asides 

Have Had Minimal 

Effect on WOSB 

Contracting
Page 19 GAO-15-54 Women-Owned Small Business Program

WOSB program set-aside obligations increased from fiscal year 2012 to 

fiscal year 2013.17 Obligations to WOSBs under the WOSB set-aside 

program increased from $33.3 million in 2012 to $39.9 million in 2013, 

and obligations to EDWOSBs increased from $39.2 million in 2012 to 

$60.0 million in 2013. The National Defense Authorization Act for Fiscal 

Year 2013 removed the dollar cap on contract awards eligible under the 

WOSB set-aside program, which may account for some of the increase in 

obligations from 2012 to 2013.18 SBA officials told us that they expect 

increased use of the program in the future as a result of this change.

As shown in table 2, three federal agencies—DOD, DHS, and GSA—

collectively accounted for the majority of the obligations awarded under 

the set-aside program. DOD (Air Force, Army, Navy, and all other 

defense agencies) accounted for 62.2 percent of obligations, DHS for 

10.7 percent, and GSA for 4.0 percent of obligations. No other individual 

agency accounted for more than 3.4 percent of obligations awarded 

under the program.

 17The program awarded the first contract in April 2011. Fiscal year 2011 was not a full 

fiscal year for the program and full fiscal year 2014 data were not available at the time of 

our review.

18Beginning in 2000, the Small Business Act set forth statutory thresholds of $5 million for 

manufacturing and $3 million for all other contracts for set-aside awards under the WOSB 

program. In an interim final rule published on April 1, 2011, the Federal Acquisition 

Regulatory Council (FAR Council) adjusted the statutory threshold so that the anticipated 

award price of contracts awarded under WOSB Program must not exceed $6.5 million in 

the case of manufacturing contracts and $4 million in the case of all other contracts.

WOSB Program Set-Aside 

Obligations Increased 

from Fiscal Year 2012 to 

Fiscal Year 2013, with 

Three Agencies 

Accounting for the Majority 

of Set-Asides
Page 20 GAO-15-54 Women-Owned Small Business Program

Table 2: Top Contracting Departments and Agencies, by Total Obligations under the WOSB Program, from April 2011 through 

May 2014

Agency

Economically 

disadvantaged womenowned small business 

set-aside ($)

Women-owned small 

business set-aside ($)

Total program set -

aside ($)

Percentage of 

program

Department of Defense (DOD) 62.2%

U.S. Army (DOD) $34,720,817 $26,900,145 $61,620,962 26.9

U.S. Air Force (DOD) 42,935,173 15,513,431 58,448,604 25.5

Other defense agencies (DOD) 5,259,021 6,356,298 11,615,318 5.1

U.S. Navy (DOD) 5,854,874 4,853,875 10,708,748 4.7

Department of Homeland Security 17,863,601 6,571,815 24,435,416 10.7

General Services Administration 5,259,176 3,879,886 9,139,063 4.0

All other agencies 11,258,193 41,683,849 52,942,043 23.1

Total $123,150,855 $105,759,299 $228,910,154 100%

Source: GAO analysis of Federal Procurement Data System-Next Generation data. | GAO-15-54

Note: No other individual agency accounted for more than 3.4 percent of total obligations awarded 

through the program. These figures do not include the last 4 months of fiscal year 2014. According to 

SBA officials, the last quarter of each fiscal year is the part of the year when most federal contracts 

are awarded
Page 21 GAO-15-54 Women-Owned Small Business Program

From April 2011 through May 2014, WOSB program set-asides 

constituted a very small percentage (0.44 percent) of all the contracting 

obligations awarded to WOSBs (see fig. 1). The majority of obligations 

awarded to WOSBs were made under other, longer-established set-aside 

programs. For example, if eligible, a WOSB could receive a contracting 

award under the 8(a), HUBZone, or SDVOSBC programs, or through a 

general small business set-aside.19 WOSBs also can obtain federal 

contracts without set-asides (through open competition).

Figure 1: Percentage of Obligations for Contracts (Set-Aside and Not Set-Aside) 

Awarded to Women-Owned Small Businesses (WOSB), from April 2011 through 

May 2014

 19To participate in the 8(a) program, a business must be certified as meeting several 

criteria, including being a small business as defined by SBA; being unconditionally owned 

and controlled by one or more socially and economically disadvantaged individuals who 

are U.S. citizens; and showing potential for success. Under the HUBZone program, 

contracting preferences are available to qualified small businesses located in an area 

designated by SBA as a historically underutilized business zone. The SDVOSBC program 

provides veterans who incurred or aggravated disabilities in the line of duty with certain 

sole-source and set-aside contracting opportunities. Finally, contracting officers can set 

aside contracts to small businesses (generally for contracts worth $3,000–$150,000 or for 

contracts worth more than $150,000) as long as at least two small businesses are likely to 

compete for the contract. 

WOSB Program SetAsides Accounted for Less 

Than 1 Percent of 

Obligations Awarded to 

WOSBs
Page 22 GAO-15-54 Women-Owned Small Business Program

Based on our analysis of FPDS-NG data of federal contracting agencies, 

contract obligations awarded through the WOSB set-aside totaled $228.9 

million, or 0.44 percent, of the $52.6 billion in contract obligations 

awarded to WOSBs from April 2011 through May 2014.

Additionally, the WOSB set-aside has had relatively little impact on 

federal agency achievement of goals for contracting to WOSBs, because 

the program set-asides represent a very small percentage of all 

contracting awards to WOSBs. Since 2011, the overall percentage of 

contracting obligations awarded to WOSBs (through any program or open 

competition) has remained below the government-wide goal of 5 percent 

(see table 3). Goal achievement by the three contracting agencies with 

the highest amount of obligations through the set-aside program varied. 

For example, DOD did not meet its 5 percent goal for contracting 

obligations to WOSBs in any of the 3 years. DHS and GSA met their 

goals in all 3 years. Excluding obligations made by DOD, about 5.7 

percent of total federal contracting obligations to small businesses

included in SBA’s fiscal year 2013 Small Business Goaling Report were 

awarded to WOSBs.20 For the 24 agencies subject to the Chief Financial 

Officers Act listed in SBA’s scorecards, 19 met their WOSB contracting 

goal in fiscal year 2012 and 20 met their goal in fiscal year 2013.21 One 

agency missed its goal in fiscal year 2012 but met its goal in fiscal year 

2013. Four agencies (the same four each year) did not meet their goal for 

either year.

 20SBA’s FY2013 Small Business Goaling Report includes federal contracting dollars 

obligated to small businesses, with some exclusions including contracts that are funded 

with agency generated sources; acquisitions by agencies on behalf of foreign 

governments, entities, or international organizations; and contracts that are performed 

outside of the United States or its territories.

21The Chief Financial Officer and Federal Financial Reform Act of 1990, among other 

measures, created the position of Chief Financial Officer in each executive department 

and in each major executive agency in the federal government. Chief Financial Officer Act 

agencies are defined in 31 U.S.C. § 901(b).
Page 23 GAO-15-54 Women-Owned Small Business Program

Table 3: Percentage of Contract Obligations Awarded to Women-Owned Small 

Businesses, Fiscal Years 2011-2013 

2011 (%) 2012 (%) 2013 (%)

Government-Wide 3.98% 4.00% 4.32%

Department of Defense 3.43 3.38 3.57

Department of Homeland Security 5.95 6.43 7.04

General Services Administration 9.15 9.06 7.75

Source: SBA goaling reports (fiscal years 2011-2013). | GAO-15-54

Selected federal contracting officials, businesses that received a WOSB 

or EDWOSB set-aside, third-party certifiers, and a WOSB advocacy 

organization with which we spoke gave their perspectives on existing 

challenges and possible changes to increase program usage.

Complexity and burdensome requirements. Contracting officers 

described challenges to using the WOSB set-aside. Some contracting 

officers noted that generally, all contracts awarded to WOSBs count for 

the purposes of meeting agencies’ 5 percent goal and that from their 

perspective it does not matter whether a contract is awarded to a WOSB 

using the WOSB program, another set-aside program, or open 

competition. Some contracting officers said that WOSB program 

requirements were burdensome or complex relative to other SBA 

programs with set-asides. Unlike the other programs, the WOSB program 

requires the use of a separate electronic repository, maintained by SBA, 

to collect and store certification documents. One contracting officer noted 

that the contracting process slowed when officials had to seek information 

from the repository. Another contracting officer told us the role of the 

contracting officer included confirming that businesses had uploaded 

required documents in the SBA repository based on a list of required 

documents in the program regulation—but noted this task was not 

required under other contracting programs.

Lack of awareness and agency commitment. Representatives from 

advocacy groups also identified awareness of and commitment to the 

program as another area for improvement. An advocacy group 

representative told us that some of their member WOSBs had 

encountered confusion and reluctance on the part of contracting officers 

to use the program. Another advocacy group said that SBA should 

engender more commitment to the program among contracting officers 

and agencies. Another representative noted that there are no 

Contracting Officers, 

WOSBs, and Others 

Suggested Program 

Changes That Might 

Increase Use of the SetAside
Page 24 GAO-15-54 Women-Owned Small Business Program

consequences for agency leaders for failure to meet contracting goals for 

WOSBs or use the set-aside program. SBA officials described to us 

consequences that included a low rating in the publicly available SBA 

contracting scorecard, which may draw negative attention to the agency. 

Also, the National Defense Authorization Act for Fiscal Year 2013 

includes the extent to which agencies meet contracting goals as a 

competency by which members of the senior executive service are rated. 

All of the businesses we interviewed that received WOSB program 

contracts cited the need for increased agency outreach or awareness of 

the program. For example, one participant advocated increasing 

contracting officer awareness and understanding of how an agency could 

benefit from using the WOSB set-aside program.

Changes to increase use of program. Contracting officers also 

identified changes they believe could increase use of the WOSB setaside. For example, some noted that allowing sole-source contracts could 

increase program use. Currently, contract officers can establish a setaside only if there is a reasonable expectation that at least two eligible 

WOSBs will submit a bid for the contract. Some contracting officers 

suggested expanding the list of North American Industry Association 

Classification System (NAICS) codes eligible for use under the WOSB 

set-aside. For example, one contracting office said that the designated 

NAICS for the set-aside program did not meet their procurement needs. 

One representative pointed out that SBA had designated some NAICS 

codes just for EDWOSB and others for WOSBs. SBA officials told us the 

agency does not have the authority to change the list of industry sectors 

eligible for program set-asides without conducting a study of industries in 

which WOSBs were underrepresented or substantially underrepresented.

Representatives from all of the WOSB advocacy groups, three of which 

are also third-party certifiers, said that expanding the NAICS codes would 

improve the program. For example, one advocacy group said that certain 

WOSBs would like to obtain WOSB or EDWOSB set-asides but did not 

have NAICS codes that were listed as eligible. Another said that they 

would not limit the number of eligible industries under the program. 

Finally, the businesses we interviewed also believed that allowing solesource awards or adding more NAICS codes would increase program 

use. Six participants commented on the limitations for awarding solesource contracts through the WOSB set-aside. Five participants felt that 
Page 25 GAO-15-54 Women-Owned Small Business Program

the NAICS codes under the program were limited.22 One program 

participant mentioned that she felt that limiting set-asides for the WOSB 

program to certain NAICS codes was inconsistent with other SBA 

programs with set-asides, such as 8(a), HUBZone, and SDVOSBC. She 

gave an example of an agency that issued a draft solicitation that sought 

to award two contracts each to WOSB set-asides, HUBZone, and 

SDVOSBC businesses. However when it became clear that the contract 

was not in an eligible NAICS code for the WOSB program, the agency 

converted the two contracts intended for WOSB set-aside to a general 

small business category.

Some program participants also mentioned positive aspects of the 

program. Five participants believed that the program provided greater 

opportunities for their businesses and WOSBs in general. Furthermore, 

five of the six businesses with whom we spoke that received only one or 

two contracts felt that the program improved their ability to compete for a 

federal contract. For example, one participant noted that while she has 

not seen many set-aside solicitations for the NAICS code under which her 

business primarily operates, the existence of the program prompted her 

to bid on set-asides under other NAICS codes. 

As the only federal procurement set-aside specifically for women-owned 

businesses, the WOSB program could play an important role in limiting 

competition to certain federal contracts for WOSBs and EDWOSBs that 

are underrepresented in their industries. However, weaknesses in 

multiple areas of SBA’s management of the program hinder effective 

oversight of the WOSB program. Specifically, SBA has limited information 

about the performance of its certifiers and does not use what information 

is available to help ensure certifiers adhere to program requirements, a 

 22Before changing the list, SBA officials stated that the agency interprets the statutory 

requirements to mandate that the agency first must conduct a study to identify industries 

in which EDWOSBs are underrepresented and WOSBs are substantially 

underrepresented. A study could indicate the need for either an increase or a decrease in 

eligible WOSB program industries, and SBA will continue to base their NAICS list on such 

studies. In SBA’s final rule implementing the program and establishing the NAICS codes, 

SBA addressed a number of comments that advocated expanding the number of NAICS 

codes beyond the 83 that SBA determined based on its industry study of WOSB 

underrepresentation. In the final rule, SBA explained that section 8(m) of the Small 

Business Act instructs SBA to conduct a study to identify industries in which WOSBs are 

underrepresented in federal procurement contracting. Therefore, the only way SBA could 

expand the list of eligible NAICS was to conduct a new study.

Conclusions
Page 26 GAO-15-54 Women-Owned Small Business Program

deficiency exacerbated by the highest-volume certifier’s—about 76 

percent of third-party certifications—delegation of duties to 14 partner 

organizations. An incomplete response to SBA’s request for information 

on WBENC’s certification process demonstrates the need for an oversight 

framework to ensure that certifiers adhere to agreements with SBA. SBA 

did not follow up on the incomplete response from WBENC, which raises 

questions about SBA’s commitment to oversight of the certifiers. 

Furthermore, the lack of procedures for review and analysis of monthly 

certifier reports means that SBA has forgone opportunities to oversee 

certifiers and pursue concerns about fraud of individual businesses 

identified by one certifier. According to federal standards for internal 

control, agencies should conduct control activities such as performance 

reviews and clearly document internal controls. Formalizing existing ad 

hoc processes (by developing procedures) will help SBA obtain the 

information necessary to better ensure that third-party certifiers fulfill the 

requirements of their agreements with SBA—an effort SBA said it plans to 

undertake, although it has not estimated a completion date. Additionally, 

SBA could use results and insights from reviews of certifier reports—

which are to include concerns about businesses—to inform its processes 

for eligibility verification, particularly examinations.

Weaknesses related to SBA’s examination of program participants and 

approach to enforcement mean that the agency cannot offer reasonable 

assurance that only eligible businesses participate in the program. 

Although the agency’s examinations found high rates of ineligibility, SBA 

has not yet formalized examination guidance for staff or followed up on 

examination results to determine the status of ineligible businesses at the 

time of contract award. SBA also has not focused on identifying factors 

that may be causing businesses to be found ineligible; rather, the agency 

appears to have determined that more training for businesses about 

eligibility requirements could address the issue. However, training alone 

would be a limited response to examination results, and SBA officials 

could not say what analysis determined training to be the relevant 

response. Additionally, the sample of businesses that SBA examines 

includes only those businesses that received WOSB set-aside contracts. 

All these factors limit SBA’s ability to better understand the eligibility of 

businesses before applying for and being awarded contracts. Rather than 

gather and regularly analyze information related to program eligibility, 

SBA relies on other parties to identify potential misrepresentation of 

WOSB status (through bid-protest filings and less formal mechanisms)—a 

reactive and limited approach to oversight. Federal standards for internal 

control state that agencies should have documented procedures, conduct 

monitoring, and ensure that any review findings and deficiencies are 
Page 27 GAO-15-54 Women-Owned Small Business Program

brought to the attention of management and are resolved promptly. 

Additionally, the standards state that management needs to 

comprehensively identify risks the agency faces from both internal and 

external sources. By expanding its examination of firms and analyzing 

and following up on the results, SBA could advance the key program goal 

of restricting competition for set-aside contracts to WOSBs and 

EDWOSBs.

We make the following recommendations to improve management and 

oversight of the WOSB program.

To help ensure the effective oversight of third-party certifiers, the 

Administrator of SBA should establish and implement comprehensive 

procedures to monitor and assess performance of certifiers in accord with 

the requirements of the third-party certifier agreement and program 

regulations.

To provide reasonable assurance that only eligible businesses obtain 

WOSB set-aside contracts, the Administrator of SBA should enhance 

examination of businesses that register to participate in the WOSB 

program, including actions such as:

• promptly completing the development of procedures to conduct 

annual eligibility examinations and implementing such procedures;

• analyzing examination results and individual businesses found to be 

ineligible to better understand the cause of the high rate of ineligibility 

in annual reviews, and determine what actions are needed to address 

the causes; and

• implementing ongoing reviews of a sample of all businesses that have 

represented their eligibility to participate in the program.

We provided a draft of this report to SBA, DHS, DOD, and GSA for review 

and comment. SBA provided written comments that are described below

and reprinted in appendix II. The other agencies—DHS, DOD, and 

GSA—did not provide comments on this report. SBA generally agreed 

with our recommendations and said that the agency is already in the 

process of implementing many of our recommendations. 

While SBA generally agreed with our recommendations, the agency 

stated that the report could be clearer about the program examination 

process. Specifically, SBA stated that the agency has authority to conduct 

eligibility examinations at any time for any firm asserting eligibility to 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
Page 28 GAO-15-54 Women-Owned Small Business Program

receive WOSB program contracts. We have added information to the 

draft to clarify this point. The draft report we sent to SBA for comment 

discussed the agency’s process of conducting annual eligibility 

examinations and provided a description of SBA’s current process. SBA 

also stated that “the report recommends that SBA conduct ongoing 

annual eligibility examinations and implement such procedures.” 

However, our report recommends that SBA complete the development of 

procedures to conduct annual eligibility examinations (which SBA has 

conducted for the past 2 years) and implement such procedures. We 

separately recommend implementing ongoing reviews of a sample of all 

businesses that have represented their eligibility to participate in the 

program. We do not specify that these eligibility reviews, which are 

eligibility examinations, should be annual. SBA could choose to conduct 

these reviews more frequently if deemed appropriate. Whether SBA 

conducts eligibility examinations annually or more frequently, 

examinations should be consistently conducted by following written 

procedures and the results assessed to determine the causes of 

ineligibility.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to appropriate 

congressional committees and members, the Secretary of DOD, the 

Secretary of DHS, the Administrator of GSA, the Administrator of SBA, 

and other interested parties. This report will also be available at no 

charge on our website at http://www.gao.gov.

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-8678 or shearw@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix III.

William B. Shear

Director, Financial Markets and

Community Investment
Appendix I: Objectives, Scope, and 

Methodology

Page 29 GAO-15-54 Women-Owned Small Business Program

This report examines the Women-Owned Small Business (WOSB) 

program of the Small Business Administration (SBA). More specifically, 

the report (1) describes how WOSBs and economically disadvantaged 

WOSBs (EDWOSBs) are certified as eligible for the program, (2) 

examines the extent to which SBA has implemented internal control and 

oversight procedures of WOSB program certifications, and (3) discusses 

the effect the program has had on federal contracting opportunities 

available to WOSBs or EDWOSBs.

To describe how businesses are certified as eligible for the program, we 

reviewed SBA policies and procedures to establish program eligibility 

including the responsibilities of businesses, third-party certifiers, 

contracting officers, and SBA. We interviewed SBA officials from the 

Office of Government Contracting. To evaluate how certification 

procedures may affect program participation, we obtained from SBA 

monthly reports (from September 2011 through May 2014) from each of 

the four third-party certifiers. We took steps to develop a dataset we could 

use for our analyses, including creating and merging monthly 

spreadsheets, identifying missing business names, and clearing the list of 

duplicate entries. We compared this dataset with Federal Procurement 

Data System-Next Generation (FPDS-NG) data for businesses that 

received a WOSB program set-aside contract. We determined that the 

data on how many third-party certified businesses received contracts as 

part of the WOSB program were sufficiently reliable for our purposes by 

corroborating a sample of businesses we identified as third-party certified 

with documentation for the businesses in the WOSB program repository. 

We were not able to determine how many self-certified businesses 

obtained contracts under the program, because the format of the 

documentation maintained in the SBA repository does not include a 

record of documents that were present at the time of contract award. We 

also interviewed a sample of contracting officers from selected 

components in the Department of Defense (DOD), Department of 

Homeland Security (DHS), and the General Services Administration 

(GSA). We selected these three agencies to represent a range of 

program participation based on the number and total obligation amounts 

of active set-aside contracts awarded in 2011 through 2013. Within DOD 

and DHS, we selected two components from each that demonstrated 

high- and mid-level program participation (based on number of contracts 

and obligation amounts). For DOD, we selected the U.S. Army and 

Defense Logistics Agency. For DHS, we selected the U.S. Coast Guard, 

and Customs and Border Protection. Within each of the components and 

GSA, we compared FPDS-NG data on program activity by obligation 

amount, contract number, and North American Industry Classification 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 30 GAO-15-54 Women-Owned Small Business Program

System (NAICS) codes for 2011 through 2013. For each, we selected two 

contracting offices using the same criteria we used to select agencies, 

which included identifying a high- and mid-level program obligation 

amount and offices with multiple contracts and under multiple NAICS 

codes. We excluded one Customs and Border Patrol office because only 

one office awarded multiple contracts under multiple NAICS codes.

We also interviewed three of the four SBA-approved third-party certifiers 

(the El Paso Hispanic Chamber of Commerce, the National Women 

Business Owners Corporation, and the U.S. Women’s Chamber of 

Commerce). We were unable to interview the Women’s Business 

National Enterprise Council (WBENC). SBA requested documentation of 

WBENC’s oversight procedures for the certification activity and fee 

structures of its regional partner organizations. WBENC provided a 

written response to SBA, which was not fully responsive to the request, 

as discussed in the report. We conducted semi-structured interviews with 

a sample of 10 businesses that were certified for the program, 9 of which 

had received a set-aside contract.

To evaluate SBA’s oversight of certification, we reviewed the program 

regulation and program documents, agreements with third-party certifiers, 

135 monthly reports submitted by all four third-party certifiers, and letters 

SBA sends to inform businesses when their WOSB or EDWOSB status is 

in question, among other documents. We discussed the agency’s 

procedures to monitor certifiers and ensure participant eligibility with SBA 

officials from the Office of Government Contracting. We compared 

officials’ descriptions of their oversight activities with federal internal 

control standards.1 We inquired about documentation and eligibility 

examinations conducted in 2012 and 2013, and a planned examination 

for 2014, and reviewed reports of the 2012 and 2013 examination results. 

We also inquired about ongoing plans to develop a standard operating 

procedure, and future plans to evaluate the program.

To determine what effect, if any, the WOSB program has had on federal 

contracting opportunities available to WOSBs, we identified set-aside 

contract obligations in FPDS-NG from April 2011 through May 2014 to 

identify trends in program participation by contracting agencies included 

 1

See GAO, Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-15-54 Women-Owned Small Business Program

in both FPDS-NG and SBA goaling reports. Using a review of FPDS-NG 

documentation and electronic edit checks, we deemed these data 

sufficiently reliable for our purposes. We also analyzed SBA goaling 

reports from 2011 through 2013 to describe progress made towards 

meeting the 5 percent goal for federal contracting to WOSBs. We 

conducted semi-structured interviews with a sample of 10 businesses 

there were certified for the program, 9 of which had received a set-aside 

contract. We selected this nongeneralizable sample of businesses to 

reflect whether they had been certified by a third-party entity, or had selfcertified. While the results of these interviews could not be generalized to 

all WOSB program participants, they provided insight into the benefits 

and challenges of the program. We interviewed SBA officials and 

contracting agency officials about the extent to which the program has 

met its statutory purpose of increasing contracting opportunities for 

WOSBs. Finally, we interviewed industry advocates, including three of the 

four third-party certifiers (the El Paso Hispanic Chamber of Commerce, 

the National Women Business Owners Corporation, and U.S. Women’s 

Chamber of Commerce) and one other industry advocate (Women 

Impacting Public Policy) actively involved in promoting the program with 

WOSBs.

We conducted this performance audit from August 2013 to October 2014 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Comments from the Small 

Business Administration

Page 32 GAO-15-54 Women-Owned Small Business Program

Appendix II: Comments from the Small 

Business Administration
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 33 GAO-15-54 Women-Owned Small Business Program

William B. Shear, (202) 512-8678, or shearw@gao.gov

In addition to the contact named above, Andrew Pauline (Assistant 

Director), Julie Trinder-Clements (analyst-in-charge), Pamela Davidson, 

Daniel Kaneshiro, Julia Kennon, Barbara Roesmann, Jessica Sandler, 

and Jena Sinkfield made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact 

Staff 

Acknowledgments

(250754)
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