[Federal Register Volume 73, Number 191 (Wednesday, October 1, 2008)]
[Proposed Rules]
[Pages 57014-57017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23139]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 121, 125, 127, and 134


The Women-Owned Small Business Federal Contract Assistance 
Procedures

AGENCY: Small Business Administration.

ACTION: Proposed rule; request for comments.

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SUMMARY: The U.S. Small Business Administration (SBA) is seeking 
comments on a data issue involving the Women-Owned Small Business 
(WOSB) Federal Contract Assistance Procedures authorized under Section 
8(m) of the Small Business Act. Specifically, SBA is seeking comments 
on two data sets: the Central Contractor Registration (CCR) data set 
which was used in the RAND report and the proposed rule for the WOSB 
Federal Contract Assistance Procedures to determine the representation 
of WOSBs in Federal procurement in the various industries and a non-
public Survey of Business Owners (SBO) data set from the Economic 
Census, which was not previously used in the RAND report or the 
proposed rule to determine the representation of WOSBs in Federal 
procurement in the various industries. This request for comments is 
intended to stimulate dialogue on available data sets and the comments 
will be evaluated to determine which data set will provide the soundest 
basis to identify industries in which WOSBs are underrepresented in 
Federal procurement.

DATES: The SBA must receive comments on or before October 31, 2008.

ADDRESSES: You may submit comments by any of the following methods:

[[Page 57015]]

    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Mail, Hand Delivery/Courier: Linda Korbol, Assistant 
Administrator for Women's Procurement, Office of Government 
Contracting, Small Business Administration, 409 Third Street, SW., 
Washington, DC 20416.
    All comments will be posted on http://www.regulations.gov. If you 
wish to submit confidential business information (CBI) as defined in 
the User Notice at http://www.regulations.gov, please submit the 
comments to Linda Korbol and highlight the information that you 
consider to be CBI and explain why you believe this information should 
be held confidential. SBA will make a final determination as to whether 
the comments will be published.

FOR FURTHER INFORMATION CONTACT: Linda Korbol, Assistant Administrator 
for Women's Procurement, Office of Government Contracting, (202) 205-
7341.

SUPPLEMENTARY INFORMATION:

Background

    On December 27, 2007, the U.S. Small Business Administration (SBA 
or Agency) issued a proposed rule, in the Federal Register (72 FR 
73285), that would implement procedures to increase procurement 
opportunities for Women-Owned Small Businesses (WOSBs), as authorized 
under Section 8(m) of the Small Business Act (Act). Today, the SBA has 
published the Final Rule setting forth these procedures. According to 
the Final Rule, however, the SBA must designate the industries to be 
included in the WOSB Procedures by publishing a Notice in the Federal 
Register and posting a list of the designated industries on its 
Internet Web site. The SBA has determined that additional comment is 
needed in order to ensure that the most accurate available data is 
utilized to determine underrepresentation by WOSBs in Federal 
procurement and designate the industries that will be included in the 
WOSB Procedures.
    Section 8(m) of the Act (15 U.S.C. 637(m)) authorizes contracting 
officers to restrict competition to eligible WOSBs for certain Federal 
contracts in certain industries. The Final Rule authorizes set-asides 
for industries in which WOSBs are determined to be underrepresented or 
substantially underrepresented in Federal procurement when the 
procuring agency has determined that the set-aside would satisfy 
constitutional requirements. Section 8(m) of the Act required SBA to 
conduct a study to identify the industries in which WOSBs are 
underrepresented and substantially underrepresented in Federal 
procurement and requires the head of any department or agency to 
provide SBA with any information that SBA deems necessary to conduct 
the study. SBA initially completed the required study in September 
2001. However, in March 2005, the National Academy of Sciences (NAS) 
issued an independent evaluation determining that SBA's original study 
was ``fatally flawed.'' In response to the NAS's findings, SBA issued a 
solicitation in October 2005 seeking a contractor to perform a revised 
study in accordance with the NAS report. In February 2006, SBA awarded 
a contract to the Kauffman-RAND Institute for Entrepreneurship Public 
Policy (RAND) to complete a revised study of the availability and 
utilization of WOSBs in prime contracts. The RAND report was published 
in April 2007 and is available to the public at http://www.rand.org/pubs/technical_reports/TR442/.
    As the study explains, WOSB representation in the industries is 
generally described by a ``disparity ratio,'' which is a measure 
comparing the utilization of WOSBs to their availability in Federal 
contracting. Utilization is measured by comparing the presence of WOSBs 
in Federal contracting to an overall measure of Federal contracting. 
Availability is measured by comparing the presence of WOSBs among firms 
available for Federal contracting to an overall measure of available 
firms.
    In the study, RAND computed disparity ratios in twenty-eight 
different ways (for further information about these approaches see 72 
FR 73285, Dec. 27, 2007). All of these approaches used procurement data 
from the Federal Procurement Data System--Next Generation (FPDS/NG) to 
compute the utilization component of the disparity ratio. FPDS/NG, 
which is publicly available at http://www.fpds.gov, is a Federal 
government database that provides information about the overall Federal 
acquisition process and the contracts awarded by the many Federal 
agencies. FPDS/NG contains information on individual contract actions 
on prime contracts valued above a certain dollar amount. In the 
proposed rule, SBA determined the best measure of underrepresentation 
was using a disparity ratio that measures utilization by computing the 
contract dollars awarded to WOSBs relative to the total contract 
dollars awarded.\1\ That determination was the subject of comments on 
the proposed rule, and additional comment is not sought in this notice.
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    \1\ The statutory procurement goal for small business concerns 
owned and controlled by women states that: ``The Government-wide 
goal for participation by small business concerns owned and 
controlled by women shall be established at not less than 5 percent 
of the total value of all prime contract and subcontract awards for 
each fiscal year.'' 15 U.S.C. 644(a). Congress authorized the 
contracting assistance procedures in Section 8(m) as a result of the 
Federal Government's persistent deficiencies in achieving this goal. 
Thus, the disparity measure based on contract dollars is consistent 
with the five percent goal, which is also based on contract dollars.
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    For the availability component of the disparity ratio, in twenty of 
the twenty-eight calculations, RAND utilized the Central Contractor 
Registration (CCR) database to measure availability (gross receipts for 
WOSBs relative to gross receipts for all firms) and to define a group 
of firms that are ready, willing, and able to compete for Federal 
contracts. CCR is the primary registrant database for the Federal 
government. Thus, both current and potential Federal government 
registrants are required to register in CCR, which can be found at 
http://www.ccr.gov, in order to be awarded contracts by the Federal 
agencies. Vendors reporting in CCR must provide information concerning 
its type of business, relevant North American Industry Classification 
System (NAICS) codes in which it does business, business address, 
annual employment, three year average annual business revenue and 
socio-economic status.
    For the remaining eight of the twenty-eight calculations of the 
availability component of the disparity ratio, RAND utilized data from 
the publicly available 2002 Survey of Business Owners (SBO) from the 
five-year Economic Census. The public-use Economic Census data includes 
aggregate information about business owners' demographic 
characteristics, type of business, and gross receipts. In the proposed 
rule, the SBA rejected the disparity measures based on SBO data for 
three reasons: (1) Publicly-available SBO data does not distinguish 
between WOSBs and women-owned businesses of all sizes, (2) SBO data is 
gathered every five years and is generally not available for two years 
after the survey, which impacts its timeliness, and (3) the publicly 
available SBO cannot identify industry grouping in more detail than the 
two-digit NAICS level (the NAS recommended using the most detailed 
measure possible, specifying either 3- or 4-digit NAICS codes). 
Finally, the SBO

[[Page 57016]]

data provide a broader perspective on availability. Because the SBO 
data set generally considers all firms in the economy, it may 
overestimate the amount of firms that are clearly ``ready, willing, and 
able'' to perform Federal contracts. CCR and SBO were the only data 
sources identified in the NAS report and the RAND study with respect to 
the availability component of the disparity ratio.
    As noted above, RAND measured utilization to availability to 
determine a disparity ratio, where utilization is the contract dollars 
awarded to WOSBs divided by the contract dollars awarded to all firms 
in a specific industry, and availability is the revenue of WOSBs 
divided by the revenue of all firms in that industry. Using the FY05 
FPDS/NG data for the utilization component and the October 2006 CCR 
data for the availability component, RAND identified four industries 
where WOSBs are underrepresented or substantially underrepresented: 
NAICS codes 9281--National Security and International Affairs, 3328--
Coating, Engraving, Heat Treating, and Allied Activities, 3371-- 
Household and Institutional Furniture and Kitchen Cabinet 
Manufacturing, and 4412--Other Motor Vehicle Dealers. These were the 
eligible industries identified in the proposed rule.
    During its review of comments on the proposed rule, SBA reviewed 
again the CCR data utilized by RAND in its study. Specifically, SBA 
reviewed the CCR data. As noted above, vendors input information into 
CCR relating to the firm's revenues and NAICS codes, which are a method 
for classifying business establishments. Vendors must supply at least 
one NAICS code for registration into CCR to be complete, but can supply 
more than one. Vendors do not input the business's revenues for each 
NAICS code listed, or for each NAICS code in which it does business; 
rather, vendors input total revenues for the firm. Thus, CCR does not 
provide information concerning the revenue of a firm in each of the 
NAICS codes, or industries, it sets forth in its CCR registration.
    When RAND computed the disparity ratio, however, the total revenues 
set forth by WOSBs in CCR were used to calculate the total receipts of 
WOSBs in each NAICS code listed in the CCR profile. Likewise, the 
revenues set forth by all firms in CCR were used to calculate the total 
revenue of all firms in each NAICS code listed in CCR. For a firm 
reporting more than one NAICS code, the reported revenue was counted in 
full for each NAICS code reported by the firm in the CCR. This has 
resulted in firms' total revenue being counted for multiple NAICS 
codes, overstating the aggregate revenue figures. However, because the 
disparity ratio defined availability of WOSBs in Federal contracting by 
measuring the revenue of WOSBs divided by the revenue of all firms in 
that industry using this CCR data, and because both the WOSB and total 
revenue figures in a given industry may or may not be equally impacted 
by this limitation in the CCR data, SBA currently has no evidence 
whether or not the revenue overstatement affects the availability and 
disparity ratios in any specific industry.
    Although the CCR dataset was publicly available along with the RAND 
report at http://www.rand.org/pubs/technical_reports/TR442/ during the 
public comment period on the proposed rule, this CCR dataset limitation 
was not specifically discussed in the RAND study and SBA did not 
receive public comments on this issue during the public comment period 
for the proposed rule.
    After this issue was discovered, SBA contacted the Census Bureau to 
determine the availability of an alternative data set that did not 
include the revenue overstatements identified in CCR. The Census Bureau 
provided SBA with a non-public data set for the availability component 
of the disparity ratio. The data consists of non-public data from the 
2002 Survey of Business Owners collected through the 5-year Economic 
Census for firms with employees. Although this data set was not used in 
the RAND report results, it was mentioned in the RAND report as 
restricted data which would be available to the SBA at a more 
disaggregated NAICS code level than the public data. This non-public 
SBO data set does distinguish between WOSBs, as defined by the final 
rule, and women-owned businesses of all sizes. In addition, the data 
set is disaggregated to the 4-digit NAICS code level. However, the new 
SBO data is not without its own limitation. The Census Bureau collected 
the non-public SBO data on an establishment basis, such that each 
firm's location is a separate establishment for data collection 
purposes. Each establishment is assigned to a single 6-digit NAICS 
code, and establishments with more than one NAICS code are classified 
into their principal NAICS code. Therefore, for establishments that 
reported revenue in multiple sectors, this could result in an 
overstatement of the revenue in some NAICS code industries and an 
understatement in others. SBA currently has no evidence whether or not 
the revenue overstatement or understatement affects the availability 
and disparity ratios in any specific industry. As noted earlier, these 
data also have the limitation that they are from 2002. However, changes 
to the underlying economy occur relatively gradually, so it is possible 
to conclude that this data provides an adequate picture of the 
ownership and relative sizes of firms over the next few years. Also, as 
noted earlier, the SBO data provide a very broad perspective on 
availability. SBA limited the analysis to firms with employees to 
improve the reliability of the estimate of firms that would be 
genuinely ready, willing and able to perform Federal contracts. 
However, the availability of both WOSBs and all firms in a sector to 
perform Federal contracts may still be overstated by these data.
    Using the non-public SBO data for the availability component of the 
disparity ratio and the FY05 FPDS/NG data from RAND study results for 
the utilization component, thirty-one of the 140 NAICS codes analyzed 
in the RAND study were identified as underrepresented or substantially 
underrepresented: 2361--Residential Building Construction, 3149--Other 
Textile Product Mills, 3152--Cut and Sew Apparel Manufacturing, 3231--
Printing and Related Support Activities, 3259--Other Chemical Product 
and Preparation Manufacturing, 3323--Architectural and Structural 
Metals Manufacturing, 3324--Boiler, Tank and Shipping Container 
Manufacturing, 3328--Coating, Engraving, Heat Treating, and Allied 
Activities, 3369--Other Transportation Equipment Manufacturing, 3371--
Household and Institutional Furniture and Kitchen Cabinet 
Manufacturing, 4412--Other Motor Vehicle Dealers, 4461--Health and 
Personal Care Stores; 4543--Direct Selling Establishments, 4841--
General Freight Trucking, 4931--Warehousing and Storage, 5179--Other 
Telecommunications, 5312--Offices of Real Estate Agents and Brokers, 
5413--Architectural, Engineering, and Related Services; 5414--
Specialized Design Services, 5417--Scientific Research and Development 
Services, 5419--Other Professional, Scientific, and Technical Services, 
5614--Business Support Services, 5615--Travel Arrangement and 
Reservation Services, 5619--Other Support Services; 5622--Waste 
Treatment and Disposal, 5629--Remediation and Other Waste Management 
Services, 6114--Business Schools and Computer and Management Training, 
6115--Technical and Trade Schools, 6116--Other Schools and Instruction; 
6214--Outpatient Care Centers, 8112--Electronic and Precision

[[Page 57017]]

Equipment Repair and Maintenance, 8129--Other Personal Services. The 
Census Bureau report and associated data are available at http://www.sba.gov/tools/resourcelibrary/lawsandregulations/index.html. In 
order to protect firm confidentiality, revenues at the 4-digit NAICS 
level are disclosed only in ranges.

Request for Comments

    In light of the foregoing, input from the public is required prior 
to using a data set to identify the eligible industries. In providing 
comments, please specify which of the following issues you are 
addressing (e.g., ``Response to issue 1.''). Please be industry 
specific. Comments should be as precise as possible. SBA is 
specifically requesting comments addressing the following: (1) The 
impact, if any, the limitation in the CCR data has on the disparity 
ratio in specific industries; (2) the impact, if any, the limitation in 
the non-public SBO data has on the disparity ratio in specific 
industries; (3) other data that can be utilized to measure the 
availability of WOSBs (i.e., gross receipts for WOSBs relative to gross 
receipts for all firms) in the various NAICS codes at the 4-digit 
level; (4) the availability of this other data, advantages and 
disadvantages of the use of such data, and the reliability of such data 
(responses should be as specific as possible about the improvements 
other data sets could offer over the CCR or SBO data, judging by the 
standards laid out in the RAND report and NAS study); (5) reasons, for 
the purpose of calculating WOSB revenue and all firms' revenue in a 
given industry, the limitation in the CCR data may outweigh the 
limitation in the non-public SBO data that is described in this Notice; 
and (6) whether, for the availability component of the disparity ratio, 
SBA should use the CCR data from the RAND report, the public SBO data 
from the RAND report, the non-public SBO data described in this Notice, 
or some other specified data set.

    Authority: 15 U.S.C. 637(m).

    Dated: September 26, 2008.
Calvin Jenkins,
Deputy Associate Administrator for Government Contracting and Business 
Development.
[FR Doc. E8-23139 Filed 9-26-08; 4:15 pm]
BILLING CODE 8025-01-P