[Federal Register Volume 75, Number 194 (Thursday, October 7, 2010)]
[Rules and Regulations]
[Pages 62258-62293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25179]



[[Page 62257]]

-----------------------------------------------------------------------

Part III





Small Business Administration





-----------------------------------------------------------------------



13 CFR Parts 121, 124, 125, et al.



Women-Owned Small Business Federal Contract Program; Final Rule

Federal Register / Vol. 75 , No. 194 / Thursday, October 7, 2010 / 
Rules and Regulations

[[Page 62258]]


-----------------------------------------------------------------------

SMALL BUSINESS ADMINISTRATION

13 CFR Parts 121, 124, 125, 126, 127, and 134

RIN 3245-AG06


Women-Owned Small Business Federal Contract Program

AGENCY: Small Business Administration.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The U.S. Small Business Administration (SBA) is issuing this 
Final Rule to amend its regulations governing small business 
contracting procedures. This Final Rule amends part 127, entitled ``The 
Women-Owned Small Business Federal Contract Assistance Procedures,'' 
and implements procedures authorized by the Small Business Act (Pub. L. 
85-536, as amended) to help ensure a level playing field on which 
Women-Owned Small Businesses can compete for Federal contracting 
opportunities.

DATES: This rule is effective February 4, 2011.

FOR FURTHER INFORMATION CONTACT: Dean Koppel, Assistant Director, 
Office of Policy and Research, Office of Government Contracting, U.S. 
Small Business Administration, 409 Third Street, SW., Washington, DC 
20416.

SUPPLEMENTARY INFORMATION: 

I. Background

    On December 21, 2000, Congress enacted the Small Business 
Reauthorization Act of 2000, Public Law 106-554. Section 811 of that 
Act added a new section 8(m), 15 U.S.C. 637(m), authorizing Federal 
contracting officers to restrict competition to eligible Women-Owned 
Small Businesses (WOSBs) or Economically Disadvantaged Women-Owned 
Small Business (EDWOSBs) for Federal contracts in certain industries. 
The purpose of this authority, referred to as the WOSB Program, is to 
enable contracting officers to identify and establish a sheltered 
market for competition among WOSBs or EDWOSBs for the provision of 
goods and services to the Federal Government. H.R. Rep. No. 106-879, at 
2 (2000) (publicly available at http://thomas.loc.gov/cgi-bin/cpquery/T?&report=hr879&dbname=106&).
    Section 8(m) of the Small Business Act (Act) sets forth certain 
criteria for the WOSB Program. Specifically, the Act provides the 
following requirements in order for a contracting officer to restrict 
competition for EDWOSBs or WOSBS under this program:
    <bullet> An eligible concern must be not less than 51 percent owned 
by one or more women who are ``economically disadvantaged'' (i.e. an 
EDWOSB). However, SBA may waive this requirement of economic 
disadvantage for procurements in industries in which WOSBs are 
``substantially underrepresented.''
    <bullet> A WOSB is a small business concern owned and controlled by 
women, as defined in section 3(n) of the Act. Section 3(n) of the Act 
defines a women owned business as one that is at least 51 percent owned 
by one or more women and the management and daily business operations 
of the concern is controlled by one or more women. 15 U.S.C. 632(n).
    <bullet> The contracting officer must have a reasonable expectation 
that, in industries in which WOSBs are underrepresented, two or more 
EDWOSBs will submit offers for the contract or, in industries where 
WOSBs are substantially underrepresented, two or more WOSBs will submit 
offers for the contract.
    <bullet> The anticipated award price of the contract must not 
exceed $5 million in the case of manufacturing contracts and $3 million 
in the case of all other contracts.
    <bullet> In the estimation of the contracting officer, the contract 
can be awarded at a fair and reasonable price.
    <bullet> Each competing concern must be duly certified by a Federal 
agency, a State government, or a national certifying entity approved by 
SBA, as an EDWOSB or WOSB, or must certify to the contracting officer 
and provide adequate documentation that it is an EDWOSB or WOSB. The 
statute imposes penalties for a concern's misrepresentation of its 
status.
    <bullet> The contract must be for the procurement of goods or 
services with respect to an industry identified by SBA pursuant to a 
statutorily mandated study as one in which EDWOSBs are underrepresented 
or substantially underrepresented or WOSBs are substantially 
underrepresented with respect to Federal procurement contracting.
    The SBA has issued several rulemakings concerning this program. 
Most recently, SBA issued a proposed rule on March 4, 2010 (75 FR 
10029) that proposed amending 13 CFR part 127, which had been 
promulgated in a Final Rule on October 1, 2008 (entitled ``The Women-
Owned Small Business Federal Contract Assistance Procedures,'' RIN 
3245-AF40). In particular, the proposed rule: Identified 83 industries 
by four digit North American Industry Classification System (NAICS) 
codes in which WOSBs are underrepresented or substantially 
underrepresented; removed the requirement that each Federal agency must 
certify that it had engaged in discrimination against WOSBs in order 
for the program to apply to that agency; allowed WOSBs and EDWOSBs to 
self-certify their status as long as adequate documents were provided 
to support the certification; allowed WOSBs or EDWOSBs to be certified 
by approved third-party certifiers, including Federal agencies; and 
expanded the eligibility examination process to ensure the eligibility 
of WOSBs or EDWOSBs for the program. The proposed rule also set forth 
the eligibility criteria for the program, as well as the protest and 
appeal process for WOSB and EDWOSB status protests.
    In the proposed rule, SBA stated several times that it was seeking 
comments on any and all aspects of the rule. In particular, though, SBA 
sought comments on the data used to identify the 83 industries, as well 
as the proposed new certification procedures. SBA stated that comments 
were due on May 3, 2010, which provided interested parties 60 days to 
submit these comments. SBA received a total of 998 comments on the 
rule. Many of these comments contained the same or similar remarks and 
virtually all of the comments supported the rule, commended SBA for its 
efforts, and urged the agency to expeditiously promulgate final 
regulations since WOSBs have been waiting eleven years for the program.
    Many of the comments supported the proposed rule on the grounds 
that: Women are underrepresented in Federal contracting; the new 
program will level the playing field for WOSBs; the new program will 
help businesses to grow; and it will be beneficial to the economy. Few 
comments did not support the proposed rule on the grounds that the 
scope was too restrictive in its application to WOSBs, and that they 
opposed gender based set asides, believed that the program creates an 
artificial advantage for a certain group, or that the program was 
merely a token to WOSBs. All comments can be viewed on the Federal 
rulemaking portal at http://www.regulations.gov.
    The comments relating to specific sections of the rule are 
discussed in further detail below.
    In addition, the SBA notes that although this is a final rule, it 
is not effectively immediately. The SBA is in the process of working 
with the Federal Acquisition Regulatory Council to implement this 
program in the Federal Acquisition Regulations (FAR). In addition, the 
SBA is working with the Integrated Acquisition Environment to

[[Page 62259]]

make changes to the various Federal procurement data systems, which 
will be affected by this rule. As a result, the SBA believed it was 
necessary to publish the rule as final, but to also acknowledge that 
there are additional measures that need to be taken to fully implement 
the program.

II. Summary of Comments and Agency Response to Comments

A. Eligible industries

a. General Comments on the Eligible Industries
    SBA's proposed rule identified 83 NAICS codes that would be 
eligible for Federal contract assistance under the WOSB Program. Most 
comments received on the proposed rule's identification of the 83 NAICS 
codes were overwhelmingly supportive. In fact, SBA received hundreds of 
comments which supported the identification of 83 NAICS categories. For 
example, many comments stated they are ``extremely pleased'' that all 
83 NAICS categories have been selected. Other comments applauded SBA's 
``efforts to increase women-owned business participation in federal 
contracting.'' Additional comments stated that the ``rule is a 
significant improvement over the rule proposed in 2007.''
    SBA also received dozens of comments that, while supporting the 83 
eligible NAICS codes, sought the inclusion of additional NAICS 
categories. Some of the comments stated that all NAICS categories 
should be eligible, while other comments identified specific additional 
NAICS categories for eligibility.
    The comments which requested eligibility of all NAICS codes 
asserted that SBA's other programs are not limited to certain NAICS 
codes. In addition, some of these comments stated that no court has 
required a study prior to establishing a program that provided 
contracting assistance on the basis of gender and SBA's requirement of 
such a study limits the eligibility of NAICS categories.
    The comments which requested the addition of specific NAICS 
categories based their requests on various viewpoints, including the 
belief that WOSBs in a NAICS code received few contracts or a small 
dollar amount of contracts, or that only a few WOSBs participate in a 
NAICS code, or that WOSBs sought contracts in a NAICS code, but did not 
receive the contract.
    While SBA acknowledges the concerns expressed in these comments 
relating to the need to increase WOSB participation in Federal 
contracting, section 8(m) of the Act sets forth certain statutory 
requirements for this program that specify the manner in which SBA is 
to identify included NAICS categories. In particular, section 8(m) 
instructs SBA to conduct a study to identify industries in which WOSBs 
are underrepresented with respect to Federal procurement contracting. 
See 15 U.S.C. 637(m)(4). Therefore, SBA must identify the program's 
eligible industries based on a study which analyzes WOSBs' 
underrepresentation in a specific industry.
    Shortly after section 8(m) was enacted, and pursuant to the 
requirement of paragraph (4) of the law, SBA, using its own internal 
resources, conducted a study to identify the industries in which WOSBs 
are underrepresented with respect to Federal procurement contracting. 
SBA initially completed its study in September 2001, and contracted 
with the National Academy of Sciences (NAS) to review the study before 
publication. In March of 2005, the National Research Council, which 
functions under the auspices of the NAS and other National Academies, 
issued an independent evaluation concluding that SBA's study was flawed 
and offering various recommendations for a revised study.
    In response to this evaluation, SBA issued a solicitation in 
October 2005 seeking a contractor to perform a revised study in 
accordance with the NAS recommendations. In February 2006, SBA awarded 
a contract to the Kauffman-RAND Institute for Entrepreneurship Public 
Policy (RAND) to complete a revised study of the underrepresentation of 
WOSBs in Federal prime contracts by industry code. The resulting 
study--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 RAND Report explains more fully, underrepresentation is 
typically referred to as a disparity ratio. A ``disparity ratio'' is a 
measure comparing the utilization of WOSBs in Federal contracting in a 
particular NAICS code to their availability for such contracts in a 
particular NAICS code. A disparity ratio of 1.0 suggests that firms of 
a particular type are awarded contracts in the same proportion as their 
representation in the industry--that is, there is no disparity. A 
disparity ratio of less than 1.0 suggests that the firms are 
underrepresented in Federal contracting, and a ratio greater than 1.0 
suggests that they are overrepresented. This disparity ratio provides 
an estimate of the extent to which WOSBs that are available for Federal 
contracts in specific industries are actually being utilized to perform 
such contracts. One of the recommendations made by the NAS Review was 
to create four disparity ratios of underrepresentation using a 
combination of different databases and different measures. The four 
disparity ratios recommended by the NAS Review were the following: (1) 
Use contract dollars with the Survey of Business Owners (SBO) database; 
(2) use contract dollars with the Central Contractor Registry (CCR) 
database; (3) use number of contracts with the SBO database; and (4) 
use the number of contracts with the CCR database.
    The RAND Report, in accordance with the NAS recommendations, 
created various disparity ratios to identify the NAICS codes which 
showed underrepresentation based on a disparity ratio. Using the RAND 
Report, SBA identified a viable and appropriate methodology of 
identifying industries in which WOSBs are underrepresented or 
substantially underrepresented. SBA did this in accordance with the 
statute.
    Accordingly, in view of the statute's explicit requirements, SBA 
cannot simply deem a NAICS code eligible under the WOSB Program based 
solely on a request set forth in the public comments.
b. Methodology: Dollars and Numbers
    In the proposed rule, SBA identified 83 NAICS categories as 
eligible under the WOSB Program. The RAND Report found these 83 NAICS 
categories to be underrepresented or substantially underrepresented 
using the numbers and dollars approaches. That is, the industry was 
identified as eligible if the industry was underrepresented or 
substantially underrepresented using either the numbers or the dollars 
approach. SBA explained in the proposed rule that, for purposes of 
section 8(m), both the dollars and numbers approaches are viable and 
appropriate means of identifying industries in which WOSBs are 
underrepresented or substantially underrepresented. A previous version 
of the proposed regulations identified only 4 NAICS as eligible because 
it used only the dollars approach and not the number approach to 
identify eligible industries.
    SBA received hundreds of comments which expressed general support 
for the identification of 83 NAICS codes, which relied upon the use of 
both the numbers and dollars approaches. In addition, SBA received 
hundreds of comments which agreed specifically with the use of both the 
dollars and numbers approaches identifying the eligible

[[Page 62260]]

industries under the WOSB Program. For example, one comment stated that 
the use of both the numbers and dollars approaches is a better 
mechanism ``to measure underrepresentation and performance of WOSBs.''
    As explained in the proposed rule, the dollars approach compares 
the proportion of the dollar value of contracts in a particular NAICS 
code awarded to WOSBs with the proportion of gross receipts (revenues) 
in that NAICS code earned by WOSBs. The numbers approach compares the 
proportion of contracts (calculated in terms of number of contracts) 
awarded to WOSBs in a particular NAICS code with the number of WOSBs in 
that particular NAICS code.
    SBA determined that both approaches represent legitimate and 
complementary interpretations of the statutory term 
``underrepresentation.'' Specifically, underrepresentation can occur 
when WOSBs are not being awarded Federal contracting dollars in 
proportion to their economic representation (measured by their gross 
receipts) in an industry. But underrepresentation can also occur where 
there is disparity in the number of contracts being awarded to WOSBs, 
even if there is no measured disparity in contract dollars, due to a 
handful of WOSBs winning large-dollar contracts. SBA also stated in the 
proposed rule that applying the section 8(m) program in these 
industries would reduce the effects of the discrimination affecting 
women-owned small businesses, consistent with Congress's goals, and 
that both numbers and dollars approaches are substantially related to 
the purpose of the WOSB Program.
    Based on the reasons set forth herein and in the proposed rule, as 
well as the support SBA received from the public comments on this 
issue, SBA has promulgated the proposed rule as final and will apply 
both the numbers and dollars approach to identify eligible industries.
c. Methodology: Central Contractor Registry (CCR) and Survey of 
Business Owners (SBO) Databases
    For the availability component of the disparity ratio, RAND used 
two different databases: The 2002 Survey of Business Owners (SBO) from 
the five-year Economic Census, and the FY 2006 Central Contractor 
Registration (CCR) registration database. The proposed rule used the 
CCR database rather than the SBO database to identify the 83 eligible 
industries under the WOSB Program. The proposed rule explained that SBA 
selected the CCR database for various reasons, including the fact that 
the CCR database, as compared with the SBO database as currently 
constituted, is more likely to capture those firms ready, willing and 
able to compete for Federal contracts.
    SBA received hundreds of comments which addressed the CCR and SBO 
databases used in the RAND Report. The overwhelming majority of these 
comments supported the proposed methodology used to identify eligible 
industries under the WOSB Program. Specifically, SBA received dozens of 
comments which supported the use of the CCR database to identify the 
eligible industries. Several of these comments supported the use of CCR 
because it is a more comprehensive and complete database.
    SBA also received several comments that not only supported the use 
of the CCR database, but urged SBA to use the SBO database from the 
RAND Report in addition to the CCR database to identify eligible 
industries. Specifically, these comments stated that SBA should deem as 
underrepresented those industries that appear underrepresented in two 
or more of the four approaches identified in the report issued by the 
National Academy of Sciences (NAS) recommendations.
    Additional comments received by SBA supported the use of only the 
SBO database (and not the CCR) from the RAND Report to identify the 
eligible industries. Some of these comments stated that the use of CCR 
undercuts utilization and perpetuates discrimination because not all 
WOSBs register in CCR due to their belief that there is no meaningful 
competition in Federal procurement for women-owned businesses.
    As explained in the proposed rule, SBA decided not to use the SBO 
database used in the RAND Report and concluded that the CCR database 
used in the RAND report is currently the best available database to use 
to determine the availability component of the disparity ratios because 
of certain limitations in the existing SBO dataset. SBA proposed not to 
use the 2002 SBO database used in the RAND Report for the following 
reasons:
    <bullet> The SBO data in the RAND Report do not disaggregate 
industry groupings beyond the two-digit NAICS level. In the NAS 2005 
report examining SBA's 2002 internal study, NAS criticized SBA's use of 
the two-digit Major Group Standard Industrial Classification (SIC) 
industry codes as inadequate. The two-digit Major Group SIC designation 
corresponds to the current three-digit Subsector NAICS designation. 
Thus, while NAS criticized SBA's use of two-digit SIC information, the 
SBO two-digit NAICS data are even less precise than the two-digit SIC 
data. Both the CCR and the FPDS/NG, in contrast, provide the capability 
to use four-digit NAICS classifications.
    <bullet> The SBO database in the RAND Report generally considers 
all firms in the economy, and not simply the number of firms that have 
explicitly indicated that they are ready, willing, and able to perform 
Federal contracts. In contrast, because firms are generally required to 
register on the CCR database prior to bidding on a Federal contract, a 
firm's presence in the CCR specifically reflects its willingness to bid 
on a Federal contract. SBA recognized, however, that its reliance on 
the CCR database could understate the availability of women-owned 
firms, since a firm's inability to bid on Federal contracts, and 
therefore its reluctance to register on the CCR could itself result 
from gender discrimination.
    <bullet> The SBO database in the RAND Report does not distinguish 
between WOSBs and women-owned businesses in general, large and small. 
The CCR, in contrast, contains self-reported information on whether a 
business is small. And the procedures authorized by section 8(m) are 
specifically targeted towards only small businesses owned by women.
    <bullet> The SBO database in the RAND Report is generally not 
available for two years after the survey is completed. CCR data, in 
contrast, are updated continuously and made available immediately. 
Thus, in this instance, the SBO data available to RAND at the time of 
the study was less recent than the CCR data. SBA recognized, however, 
that the degree to which data regarding business ownership and economic 
size change from year to year is unclear, and therefore that it was not 
clear how much weight this distinction should carry.
    As detailed in the proposed rule, SBA notes that the Census Bureau 
provided SBA with a data set for the availability component of the 
disparity ratio which came from the 2002 Survey of Business Owners 
(SBO) collected through the 5-year Economic Census for firms with 
employees (hereinafter referred to as ``Census SBO data''). SBA elected 
not to use this dataset because that data addresses all firms across 
the economy as a whole, and does not select for firms which are ready, 
willing and able to engage in federal procurement contracting. For this 
reason, SBA is of the view that it is not a viable alternative data set 
for accurately measuring disparity.
    After a review of the comments, for these reasons, SBA continues to 
support the use of the CCR for the availability component of the 
disparity ratio to

[[Page 62261]]

identify the eligible industries. In so doing, however, SBA does not 
suggest that use of SBO data would never be appropriate to calculate 
availability.
    While the comments correctly stated that the NAS recommended in 
their report the designation of an industry as eligible under the WOSB 
Program if the industry appears underrepresented in two or more of the 
four approaches, the NAS also recommended estimating disparity ratios 
at a disaggregated level. In other words, the SBO database used in the 
RAND Report provides data only at the two-digit level. In contrast, 
both the CCR and the FPDS/NG provide the capability to use four-digit 
NAICS classifications. Thus, SBA had to reconcile these recommendations 
and, based on the above limitations of the SBO data set from the RAND 
Report, SBA elected to use the four-digit CCR dataset for the 
availability component.
    In response to the comments which stated that not all WOSBs 
register in CCR thus resulting in an undercounting of underutilization, 
SBA notes that courts have looked at the appropriateness of the 
``availability'' component, also known as the ``ready, willing, and 
able'' component, in evaluating the accuracy of disparity studies. See 
e.g., Eng'g Contractors Ass'n of S. Fla., Inc. v. Metro. Dade County, 
122 F.3d 895, 907 (11th Cir. 1997); Concrete Works of Colorado, Inc. v. 
City and County of Denver, 321 F.3d 950, 980 (10th Cir. 2003). The CCR 
and SBO databases are different means of measuring the ``availability'' 
component.
    Although not all firms or WOSBs have registered in CCR, the firms 
in the CCR database have at least indicated by registering to submit an 
offer on Federal prime contracts that they are ``willing'' to perform 
work on such contracts and have self-identified as firms that are ready 
and able to perform such work. Further, the SBO database used in the 
RAND Report generally considers all firms in the economy so it is 
possible that it may actually overestimate the number of firms that are 
ready, willing and able to perform Federal contracts, thus potentially 
overestimating underrepresentation. SBA recognizes that this is a 
conservative approach to calculating availability, but believes its use 
is appropriate in this instance, particularly in light of the other 
advantages of the CCR database.
    Other comments which SBA received supported the SBO database and 
addressed the fact that the CCR does not allow the disparity ratio to 
include specific amounts earned by that business in that NAICS code and 
thus may lead to over counting of earnings.
    As stated in the proposed rule, this concern does not render 
unreliable the disparity ratios calculated using the dollars component 
of the CCR database. The dollars-based disparity ratios are themselves 
based on a comparison between two different ratios: The value of the 
government contracts awarded to WOSBs in a particular industry compared 
to the value of all government contracts awarded in that industry, on 
the one hand; and the gross receipts (in the economy at large) of WOSBs 
registered in the CCR database for that industry compared to the gross 
receipts for all businesses registered for that industry, on the other 
hand. The numerator of this ratio-the value of government contracts 
awarded to WOSBs and to industries in general within a given industry 
code-is not calculated using the CCR database.
    In addition, with respect to the denominator, SBA believes that it 
is reasonable to assume that WOSBs and non-WOSBs register in the CCR 
database and identify industries for which they are available in a 
similar manner. Thus, if a WOSB in a particular kind of business 
registers in (and effectively restates its total revenues in) three 
distinct NAICS codes, a non-WOSB in the same kind of business is likely 
to register in (and restate its total revenues in) each of the same 
three NAICS codes. And because the denominator of the dollars-based 
disparity ratio is calculated based on a comparison between gross 
receipts earned by WOSBs and non-WOSBs, rather than the absolute values 
of those receipts, the potential duplicative re-reporting of revenue in 
each NAICS code does not raise serious concerns in SBA's view, about 
the reliability of the dollars analysis of the RAND study. For these 
reasons, SBA disagrees with the comments that are concerned with the 
viability of the CCR data because the CCR does not allow the disparity 
ratio to include specific amounts earned by a business in a particular 
NAICS code.
    Lastly, SBA received comments which argued that since only 1.8 
percent of women-owned businesses have receipts larger than $1 million 
the fact that SBO doesn't distinguish between large and small WOSBs 
should not be a determining factor. SBA notes that SBO's failure to 
distinguish between large and small businesses is only one factor SBA 
considered in deciding to use the CCR data. In addition, the existence 
of a few large WOSBs or other businesses would potentially skew the SBO 
data, resulting in an unreliable disparity ratio using the SBO data. 
The effect is unknown but outliers on both the large and small ends of 
the spectrum may affect the reliability of the SBO data used in the 
RAND Report.
    Accordingly, for the reasons stated in the proposed rule, SBA will 
use the CCR database to identify eligible industries.
d. Methodology: FPDS Database
    In the proposed rule, SBA explained that the RAND Report used the 
Fiscal Year (FY) 2005 Federal Procurement Data System/Next Generation 
(FPDS/NG) for the utilization component of the disparity ratio that 
resulted in the identification of 83 eligible NAICS categories.
    SBA received hundreds of comments which supported the use of the 
FPDS database to identify the eligible industries; however, one comment 
expressed concern with this database, stating that contract revenues in 
the database (presumably FPDS) may not reflect actual money earned 
(e.g., multi award contracts) and contract award values do not equate 
to company revenues.
    SBA agrees with the comment that stated a company's revenues do not 
equal contract award values. In the RAND Report, company revenues are 
obtained from the CCR database, while contract award values are 
obtained from the FPDS.
    In addition, while SBA understands the concern with the accuracy of 
the FPDS procurement database, SBA maintains that this database is a 
viable and appropriate means of identifying eligible industries. In 
addition, the FPDS is the best source of information on Federal 
contracts. See RAND Report at 7. Lastly, in some instances where 
relevant data was available, RAND made adjustments to deal with the 
limitations in the FPDS. See id. at 7-9.
    For example, RAND considered the fact that, in some cases, 
individual actions refer to multi-year contracts or are revisions to 
earlier contracts. RAND stated in the Report that this could lead to 
errors in summing to the contract level, such as negative dollar 
amounts or very large contract values. In order to examine the 
sensitivity of the disparity ratios to these outliers, RAND calculated 
``trimmed'' results. The trimmed results reflect calculations where 
RAND trimmed the top and bottom 0.5 percent of contract awards after 
rolling up the data to the contract level. However, RAND found that 
their ``comparisons from FY02 through FY05 also indicate that very 
large contracts and larger negative values are awarded each year, 
suggesting that they are not outliers'' and ``without a compelling 
reason to delete these contracts, we are inclined to put more weight on 
the full-sample

[[Page 62262]]

results'' as opposed to the trimmed results See id. at 8.
    For the reasons stated above, SBA's Final Rule will use the FPDS 
database as proposed.
e. The Eligible Industry Codes
    For the reasons stated here and in the proposed rule, this Final 
Rule designates 83 NAICS codes as eligible for Federal contracting 
under the WOSB Program. There are forty-five NAICS codes in which WOSBs 
are underrepresented and thirty-eight NAICS codes in which WOSBs are 
substantially underrepresented.
    The forty-five NAICS codes in which WOSBs are underrepresented are:
    1. 2213--Water, Sewage and Other systems;
    2. 2361--Residential Building Construction;
    3. 2371--Utility System Construction;
    4. 2381--Foundation, Structure, and Building Exterior Contractors;
    5. 2382--Building Equipment Contractors;
    6. 2383--Building Finishing Contractors;
    7. 2389--Other Specialty Trade Contractors;
    8. 3149--Other Textile Product Mills;
    9. 3159--Apparel Accessories and Other Apparel Manufacturing;
    10. 3219--Other Wood Product Manufacturing;
    11. 3222--Converted Paper Product Manufacturing;
    12. 3321;--Forging and Stamping;
    13. 3323--Architectural and Structural Metals Manufacturing;
    14. 3324--Boiler, Tank, and Shipping Container Manufacturing;
    15. 3333--Commercial and Service Industry Machinery Manufacturing;
    16. 3342--Communications Equipment Manufacturing;
    17. 3345--Navigational, Measuring, Electromedical, and Control 
Instruments Manufacturing;
    18. 3346--Manufacturing and Reproducing Magnetic and Optical Media;
    19. 3353--Electrical Equipment Manufacturing;
    20. 3359--Other Electrical Equipment and Component Manufacturing;
    21. 3369--Other Transportation Equipment Manufacturing;
    22. 4842--Specialized Freight Trucking;
    23. 4881--Support Activities for Air Transportation;
    24. 4884--Support Activities for Road Transportation;
    25. 4885--Freight Transportation Arrangement;
    26. 5121--Motion Picture and Video Industries;
    27. 5311--Lessors of Real Estate;
    28. 5413--Architectural, Engineering, and Related Services;
    29. 5414--Specialized Design Services;
    30. 5415--Computer Systems Design and Related Services;
    31. 5416--Management, Scientific, and Technical Consulting 
Services;
    32. 5419--Other Professional, Scientific, and Technical Services;
    33. 5611--Office Administrative Services;
    34. 5612--Facilities Support Services;
    35. 5614--Business Support Services;
    36. 5616--Investigation and Security Services;
    37. 5617--Services to Buildings and Dwellings;
    38. 6116--Other Schools and Instruction;
    39. 6214--Outpatient Care Centers;
    40. 6219--Other Ambulatory Health Care Services;
    41. 7115--Independent Artists, Writers, and Performers;
    42. 7223--Special Food Services;
    43. 8111--Automotive Repair and Maintenance;
    44. 8113--Commercial and Industrial Machinery and Equipment (except 
Automotive and Electronic) Repair and Maintenance; and
    45. 8114--Personal and Household Goods Repair and Maintenance.
    The thirty-eight NAICS codes in which WOSBs are substantially 
underrepresented are:
    1. 2372--Land Subdivision;
    2. 3152--Cut and Sew Apparel Manufacturing;
    3. 3231--Printing and Related Support Activities;
    4. 3259--Other Chemical Product and Preparation Manufacturing;
    5. 3328--Coating, Engraving, Heat Treating, and Allied Activities;
    6. 3329--Other Fabricated Metal Product Manufacturing;
    7. 3371--Household and Institutional Furniture and Kitchen Cabinet 
Manufacturing;
    8. 3372--Office Furniture (including Fixtures) Manufacturing;
    9. 3391--Medical Equipment and Supplies Manufacturing;
    10. 4841--General Freight Trucking;
    11. 4889--Other Support Activities for Transportation;
    12. 4931--Warehousing and Storage;
    13. 5111--Newspaper, Periodical, Book, and Directory Publishers;
    14. 5112--Software Publishers;
    15. 5171--Wired Telecommunications Carriers;
    16. 5172--Wireless Telecommunications Carriers (except Satellite);
    17. 5179--Other Telecommunications;
    18. 5182--Data Processing, Hosting, and Related Services;
    19. 5191--Other Information Services;
    20. 5312--Offices of Real Estate Agents and Brokers;
    21. 5324--Commercial and Industrial Machinery and Equipment Rental 
and Leasing;
    22. 5411--Legal Services;
    23. 5412--Accounting, Tax Preparation, Bookkeeping, and Payroll 
Services;
    24. 5417--Scientific Research and Development Services;
    25. 5418--Advertising, Public Relations, and Related Services;
    26. 5615--Travel Arrangement and Reservation Services;
    27. 5619--Other Support Services;
    28. 5621--Waste Collection;
    29. 5622--Waste Treatment and Disposal;
    30. 6114--Business Schools and Computer and Management Training;
    31. 6115--Technical and Trade Schools;
    32. 6117--Educational Support Services;
    33. 6242--Community Food and Housing, and Emergency and Other 
Relief Services;
    34. 6243--Vocational Rehabilitation Services;
    35. 7211--Traveler Accommodation;
    36. 8112--Electronic and Precision Equipment Repair and 
Maintenance;
    37. 8129--Other Personal Services; and
    38. 8139--Business, Professional, Labor, Political, and Similar 
Organizations.
f. Examples of When Contracting Officers Can Use WOSB Program
    SBA received one comment which urged SBA to provide examples of 
when a contracting officer can apply the WOSB Program to a contract. In 
response to this request, SBA provides the following examples.
    <bullet> If the requirement is assigned a six digit NAICS code 
under NAICS 5313--Activities Related to Real Estate, the contracting 
officer may not set aside the procurement under the WOSB Program 
because the contract is not for the procurement of goods or services 
with respect to an industry as one in which EDWOSBs are 
underrepresented or substantially underrepresented or WOSBs are 
substantially underrepresented with respect to Federal procurement 
contracting.
    <bullet> If the requirement is assigned a six digit NAICS code 
under NAICS 8129--Other Personal Services, then, assuming all other 
requirements are met, the contracting officer may set aside the 
procurement under the WOSB Program

[[Page 62263]]

to all eligible WOSBs because the industry is one in which WOSBs are 
substantially underrepresented.
    <bullet> If the requirement is assigned a six digit NAICS code 
under NAICS 5614--Business Support Services, then, assuming all other 
requirements are met, the contracting officer may set aside the 
procurement under the WOSB Program to all eligible EDWOSBs because the 
industry is one in which WOSBs are underrepresented.
    Furthermore, as required by the Small Business Regulatory 
Enforcement Act (SBREFA) (Pub. L. 110-28, section 212), SBA will 
publish a small entity compliance guide to assist small businesses with 
the WOSB Contract Program. The guide will be posted, at the time the 
rule is published, on the SBA Web site (http://www.sba.gov) and 
distributed to known industry contacts. The guide will be in easily 
understood language as to what is required to participate in the new 
program.
g. Updates to the RAND Report
    Hundreds of the comments SBA received that supported the 
identification of the 83 eligible NAICS categories also stated that the 
RAND Report data is outdated and should be updated. In particular, the 
comments suggested the creation of a regular timeline for updates to 
the RAND Report, with some comments specifically recommending updating 
the RAND Report every five years.
    Most of these comments also suggested that SBA find additional data 
sources for the disparity ratios calculated in the RAND Report and 
perform additional data analysis to the data. In particular, one 
comment stated that it ``generally supports the methodology but SBA has 
not sufficiently examined the market where several large companies are 
dominant and controlling over 95 percent of the market share in NAICS 
codes 3119, 3121 and 325412.'' The comments also suggested that SBA 
gather bid data, all data on WOSBs in Federal contracting, data from 
state governments and third-party certifiers, as well as any other data 
sources that allow for a more complete picture of availability.
    Another comment suggested that SBA include in its calculation the 
potential availability of WOSBs had there been no discrimination. The 
comments also stated that additional data will provide a ```gold 
standard' by which to judge whether our companies or programs are 
successful.'' Another comment suggested that a ``special committee'' 
should be appointed to review government purchases on an objective 
basis, without having knowledge of the demographics of the bidding 
companies' ownership.
    The CCR data used in the RAND Report are from October 2006. One of 
the cited benefits of the CCR database is that it is updated 
continuously and made available promptly. Therefore, it provides SBA 
the flexibility needed to access this data and readily update the 
eligible industries. The SBO data from the five-year Economic Census is 
from 2002. The next SBO was taken in 2007, and the results are not yet 
available.
    SBA understands the concerns presented in these comments. The data 
relied upon in the RAND Report is determinative of the resulting 
disparity ratios. Obtaining the most accurate and timely data possible 
is of paramount importance to SBA. SBA is committed to making an on-
going effort to obtain accurate and timely data to use in the 
anticipated updates to the list of eligible industries. In addition, 
SBA is considering available options in obtaining new and better data 
sources that are viable and appropriate means of measuring disparity of 
WOSBs in Federal contracting. Rather than limiting itself to a 
particular timetable for updating the eligible industries, SBA believes 
it is more prudent to update the study and list of eligible industries 
as accurate and timely data become available to SBA for analysis and 
the analysis is completed.
    SBA also received comments which stated that, in examining data 
about underrepresentation, ``fronts'' may be skewing calculations, and 
therefore, SBA should dedicate resources to site visits to ensure 
accurate calculations.
    The SBA believes that its regulations, which permit protests and 
robust eligibility examinations, will not only aid in preventing fraud, 
waste and abuse in the WOSB program, but as ``fronts'' are weeded out 
of the WOSB Program and denied contract opportunities under the program 
through the protests and eligibility examinations, the accuracy of the 
WOSB data in CCR and FPDS will improve. In addition, under SBA's 
eligibility examinations, SBA reserves the right to conduct a site 
visit without prior notification to the concern. SBA will conduct such 
examinations of WOSBs as a way to combat fraud and abuse of the WOSB 
Program.
h. Appeal Right
    SBA received several comments which suggested that businesses 
should have the right to appeal if their NAICS code was not identified 
as an eligible industry for Federal contracting under the WOSB Program.
    Section 8(m) of the Act sets forth certain criteria for the WOSB 
Program. Specifically, the Act provides that the contract being set 
aside must be for the procurement of goods or services with respect to 
an industry identified by SBA pursuant to a study. Therefore, Congress 
expressly limited application of the WOSB Program to the industries 
identified by SBA pursuant to a study.
    SBA contracted with RAND to complete a study in order to fulfill 
this statutory obligation. As explained in the proposed rule, the RAND 
Report, using various combinations of data sources and methods, 
identified twenty-eight possible approaches to measuring the 
underrepresentation and substantial underrepresentation of WOSBs in 
Federal procurement contracting. SBA had to identify a reasonable means 
for evaluating, reconciling and applying these methodologies. As 
detailed in the proposed rule, SBA determined that the methodology 
using the CCR and FPDS databases, along with both the dollars and 
numbers approaches, is a viable and appropriate means of identifying 
industries in which WOSBs are underrepresented or substantially 
underrepresented.
    Because SBA is required to identify the industries pursuant to a 
study, SBA disagrees with the comments received on this issue and will 
not implement an appeal process for the NAICS categories found 
ineligible for Federal contracting under the WOSB Program. However, SBA 
is committed to reevaluating the list of eligible industries as viable 
and appropriate data become available to analyze and SBA will provide 
for the eligibility of additional or fewer industries in accordance 
with the requirements of the congressional mandate and where indicated 
by analysis of the viable and appropriate data.
i. Agency-by-Agency Requirement
    In the proposed rule, SBA explained it was eliminating the 
requirement for an agency-by-agency determination of discrimination. 
SBA received dozens of comments which supported this proposal. SBA did 
receive a few comments that disagreed with the removal of this 
requirement because the commentators believed the RAND Report is flawed 
and therefore the agency-by-agency requirement is necessary.
    As stated in the proposed rule, SBA believes the methodology used 
to identify the 83 eligible industries is a viable and appropriate 
means of identifying industries in which WOSBs are underrepresented or 
substantially underrepresented. Based on this assessment, SBA believes 
that the RAND Report is sufficient to satisfy the

[[Page 62264]]

intermediate scrutiny standard that applies to the WOSB Program.
    The equal protection requirements of the Fifth Amendment to the 
United States Constitution establish that programs that use gender as a 
factor in distributing benefits to individuals must meet the 
intermediate scrutiny standard. This standard requires the program to 
further important governmental objectives and employ means that are 
substantially related to the achievement of those objectives. See 
United States v. Virginia, 518 U.S. 515, 533 (1996). In applying this 
standard to the WOSB Program, the government has a sufficiently 
important objective: To redress the effects of past discrimination 
against women in contracting and to ensure that the effects of that 
discrimination do not serve to limit WOSBs' opportunities to 
participate in Federal contracting opportunities. See City of Richmond 
v. Croson Co., 488 U.S. at 492; Califano v. Webster, 430 U.S. 313, 318 
(1977). More specifically, the Court has repeatedly upheld as an 
important government objective the reduction of disparities in 
condition or treatment between men and women caused by the long history 
of discrimination against women. See Califano, 430 U.S. at 317; Miss. 
Univ. for Women v. Hogan, 458 U.S. 718, 728 (1982); Schlesinger v. 
Ballard, 419 U.S. 498 (1975); Kahn v. Shevin, 416 U.S. 351 (1974).
    Moreover, the means chosen by Congress to implement the WOSB 
Program ensure that the Program is substantially related to its goals. 
Congress expressly limited application of the WOSB Program only to 
industries in which women are substantially underrepresented or 
underrepresented in contracting. The RAND Report is a detailed analysis 
of WOSBs which identifies the disparity ratio of WOSBs in Federal prime 
contracting by 4-digit NAICS code and is a sufficient basis for 
implementing the rule. The Supreme Court has rejected the contention 
that government may adopt a race-conscious contracting program only 
``to eradicate the effects of its own prior discrimination,'' and this 
conclusion also applies to gender-conscious contracting programs. 
Croson, 488 U.S. at 486.
    Accordingly, based on the comments that supported the proposed rule 
and for the reasons set forth in the proposed rule, SBA will not 
require the procuring agency to make a finding of discrimination prior 
to setting aside a contract in one of the eligible NAICS categories as 
currently required in 13 CFR 127.501(b).

B. Ownership and Control

    The SBA received several comments which were concerned with the 
ownership and control of an EDWOSB or WOSB. In the proposed rule, Sec.  
127.201 addressed ownership and states that the EDWOSB/WOSB must be 
unconditionally and directly owned at least 51 percent by women. The 
ownership could not be subject to any conditions, executory agreements, 
voting trusts, or other arrangements that cause or potentially cause 
ownership benefits to go to another. Several comments supported the 
regulation, and one comment specifically agreed that a WOSB should not 
be 51 percent owned and controlled by another business entity even if 
that business entity is owned and controlled by women. However, one 
comment recommended that SBA increase ownership by women to 67 percent, 
or at least something higher than 51 percent, because this commenter 
has witnessed husbands running companies that are 51 percent owned by 
the wife. SBA notes that the 51 percent ownership and control 
requirement is statutory and cannot be changed in the regulations. In 
addition, SBA believes that the regulations set forth sufficient 
requirements that the woman control the business, and also sufficient 
checks to ensure that only truly eligible businesses receive the 
benefits of the WOSB Program.
    Another comment agreed that there should be unconditional and 
direct ownership that is unencumbered by conditions or agreements and 
believed that if there are instances of a pledge or encumbrance of 
stock, SBA should ensure such pledges or encumbrances follow normal 
commercial practices. The final regulation specifically explains that 
the ownership must be direct (13 CFR 127.201). Further, the final 
regulation explains that the pledge or encumbrance of stock or other 
ownership interest as collateral does not affect the unconditional 
nature of the ownership if the terms of the agreement follow normal 
commercial practices and the owner retains control absent violations of 
the terms. SBA believes this Final Rule provides flexibility to the 
WOSB while at the same time ensuring that the business is owned and 
controlled by women.
    The proposed regulation also addressed unexercised stock options 
with respect to ownership of a corporation. One comment agreed with the 
proposed regulation that any unexercised stock options held by a woman 
will be disregarded while the unexercised stock options held by any 
other individual or entity will be treated as having been exercised. 
SBA notes that this final regulation is consistent with SBA's other 
contracting program regulations addressing the treatment of unexercised 
stock options.
    One comment recommended that SBA establish a minimum amount of time 
that the business has to be owned by women in order to be eligible for 
the WOSB Program and another comment questioned why SBA does not 
require the WOSB to have a minimum amount of experience. SBA does not 
believe these requirements are necessary in light of the fact they are 
not required by statute and could be detrimental to start[dash]up 
companies. In addition, imposing these requirements may only perpetuate 
discriminatory barriers. Further, there are many industries and 
contracts in which age and size are irrelevant to ability to perform.
    The SBA also received several comments which supported the portion 
of the proposed rule which addressed control of the EDWOSB/WOSB. 
Specifically, Sec.  127.202 of the Final Rule explains that the 
management and daily business operations of the concern must be 
controlled by one or more women. At least two comments supported the 
requirement that one or more women must make the long term decisions 
and have the day-to-day management of the company to ensure that the 
spouse or another person is not really running the company.
    One comment also supported the proposed rule that the women owners 
cannot have outside employment if it prevents them from devoting 
sufficient time and attention to the daily operations and management of 
the company. However, one comment believed that the rule was too 
stringent concerning the limitation on outside employment. According to 
this comment, many small business owners have two jobs in the first few 
years of starting a company and it may take years for the business to 
grow. The comment stated that this requirement is not consistent with 
the Service-Disabled Veteran-Owned Small Business, HUBZone or 8(a) 
Business Development (BD) Programs.
    The final regulation states that the woman who holds the highest 
officer position of the concern must manage it on a full-time basis and 
devote full-time to the business concern during the normal working 
hours of business concerns in the same or similar line of business. The 
final regulation also states that the woman who holds the highest 
officer position may not engage in outside employment that prevents her 
from devoting sufficient time and attention to the daily affairs of the

[[Page 62265]]

concern to control its management and daily business operations. 
Therefore, the final regulation does not necessarily limit outside 
employment. It permits outside employment as long as it does not 
prevent the business owner from managing the EDWOSB or WOSB. Although 
such limitations may not be expressly set forth in the SDVO or 8(a) BD 
regulations, the same policy is applied to those programs because 
essentially, if an individual upon whom eligibility is based is 
devoting full-time to one business, it is difficult to prove that same 
individual is devoting full-time to the SDVO or 8(a) business and 
meeting the eligibility criteria for those programs.
    One comment noted that it supported the rule that the women 
business owners do not necessarily have to have the technical expertise 
or possess the required license while another comment requested that 
SBA reconsider this regulation and preclude ``nonprofessionals'' or 
unlicensed individuals from owning professional businesses. Another 
comment believed that SBA should have more stringent rules to ensure 
WOSBs are actually 51 percent owned by women that are active in the 
daily management of the business.
    The Final Rule provides that although the women manager need not 
have the technical expertise or license required, she must nonetheless 
demonstrate that she has the ultimate managerial and supervisory 
control over those possessing the required licenses or technical 
expertise. This is consistent with the 8(a) BD regulations concerning 
control and SBA believes it provides flexibility to the company while 
still ensuring that the woman controls the company. In addition, SBA 
will be monitoring EDWOSBs and WOSBs via eligibility examinations and 
protests and appeals to ensure that the women owners are actively 
engaged in the daily management of the business.

C. Economic Disadvantage

    As discussed above, the statute states that a contracting officer 
may set aside a requirement for EDWOSBs in industries that are 
underrepresented or substantially underrepresented. SBA may waive the 
requirement that the WOSB be economically disadvantaged and permit a 
contracting officer to set aside a requirement for WOSBs in industries 
that are substantially underrepresented. The Final Rule implements 
these statutory provisions and sets forth the criteria for determining 
economic disadvantage.
    One comment specifically supported the waiver of the economic 
disadvantage requirement if the industry is substantially 
underrepresented. However, SBA received several comments which opposed 
any economic disadvantage component to the WOSB Program and one comment 
specifically opposed any preference provided to EDWOSBs. Some comments 
noted that there were no similar economic disadvantage requirements for 
the HUBZone or SDVO Programs and one comment stated that if there are 
economic disadvantage requirements, then those meeting the requirements 
should receive the same benefits afforded to 8(a) BD Program 
Participants. SBA also received some comments which requested the 
removal of the distinction between substantially underrepresented and 
underrepresented industries.
    Although SBA understands the concerns expressed by these comments, 
the agency is bound by the requirements set forth in the statute for 
the WOSB Program. As such, SBA cannot eliminate the economic 
disadvantage component of the WOSB Program or afford WOSBs or EDWOSBs 
the same benefits afforded 8(a) BD Program Participants since the 
statute provides different benefits for each program. For the same 
reason, it cannot eliminate the distinction between substantially 
underrepresented and underrepresented industries.
    However, upon further review, SBA agrees that there should not be a 
priority for EDWOSBs for contracts assigned a NAICS code in an industry 
that has SBA determined is substantially underrepresented. The Small 
Business Act provides the Administrator authority to waive the economic 
disadvantage requirement in industries where women are substantially 
underrepresented. 15 U.S.C. 637(m)(3). With these regulations, the 
Administrator is waiving this requirement in those industries. 
Therefore, in industries where WOSBs are substantially 
underrepresented, as identified in this rule, the contracting officer 
may set aside the requirement for WOSBs without first determining 
whether the rule of two for EDWOSBs can be met. The regulation has been 
amended accordingly. We note that because an EDWOSB is by definition a 
WOSB, EDWOSBs can obviously submit offers for a procurement set-aside 
for WOSBs.
    The SBA also received over 160 comments addressing the specific 
economic disadvantage criteria set forth in the proposed rule in Sec.  
127.203. One comment believed that the proposed rule was inconsistent 
with the regulations concerning economic disadvantage in the 8(a) BD 
Program while another comment expressed concern with using the 8(a) BD 
criteria because they are two different programs and it is not clear 
there are sufficient WOSBs in the 8(a) BD Program to support use of the 
same economic disadvantage criteria.
    Along those same lines, one comment supported SBA's efforts to 
simplify the economic disadvantage analysis while another comment 
recommended that SBA simplify the economic disadvantage criteria 
further by simply stating that a woman is economically disadvantaged if 
the fair market value of all her assets is less than $6 million, 
excluding her retirement, any loans to her company and any inheritance. 
Some comments opposed any requirements concerning total assets when 
determining economic disadvantage.
    In the proposed rule, SBA explained that when drafting the WOSB 
Program rule, it relied on certain interpretations and policies that 
have been followed by SBA with respect to the 8(a) BD Program that SBA 
believes should be applied to the WOSB Program as well. This included 
certain interpretations and policies SBA had set forth in a rule 
proposing to amend the 8(a) BD regulations, 74 FR 55694 (Oct. 28, 
2009), that SBA withdrew on March 4, 2010. SBA believes that the 8(a) 
BD Program has decades of experience in reviewing cases based on 
economic disadvantage and has created a body of law and policy that 
encompasses this experience. SBA believes it would be fair and prudent 
to use this experience and body of law when determining economic 
disadvantage for the WOSB Program.
    The SBA's experience with the 8(a) BD Program is that it must 
review income, personal net worth and the fair market value of the 
total assets of the woman because any other test would not demonstrate 
economic disadvantage. For example, it could be that a woman with low 
net worth has a large income or large assets, which should be pertinent 
to a claim of economic disadvantage. Therefore, SBA has not changed the 
proposed rule in this respect and continues to follow the policy and 
regulations for economic disadvantage for the 8(a) BD Program.
    One comment stated that failure to get a line of credit should be 
an indicator of economic disadvantage. SBA agrees and believes that the 
objective criteria set forth in the rule are indicators of economic 
disadvantage and demonstrate that a woman's ability to compete in the 
free enterprise system has been impaired due to diminished capital and 
credit opportunities as compared to others in the same or similar line 
of

[[Page 62266]]

business. This means that failure to get a line of credit because the 
business is owned by a woman, while male owned businesses can readily 
obtain such credit, is encompassed in the objective criteria set forth 
in the rule.
    Numerous comments stated that the overall economic disadvantage 
figures are too low and should be updated for inflation, adjusted per 
the Consumer Price Index, or adjusted for geographical reasons. Other 
comments noted that business owners must have a certain amount of 
assets to obtain bonding and show stability of the company. For these 
reasons, the comments stated that it would be difficult to meet the 
personal net worth or income requirements set forth in the proposed 
rule.
    SBA also received a few comments which stated that it should use 
specific guidelines based on median regional incomes like Internal 
Revenue Service Publication 1542 (publicly available at http://www.irs.gov/formspubs), which details per diem rates based on local 
expense averages, peg location and inflation. SBA received numerous 
comments which argued that it should not use a two year adjusted gross 
income when determining economic disadvantage because it is unfair to S 
corporations, sole proprietorships, and partnerships which are 
corporate structures used by a vast majority of small businesses and it 
would be more reliable to use the personal net worth guidelines set by 
the U.S. Department of Transportation, (publicly available at http://osdbuweb.dot.gov/DBEProgram), as long as the threshold was increased, 
and personal residences, retained earnings, and retirement assets are 
excluded.
    Similarly, several comments opposed the $200,000 income cap because 
it limits a woman's ability to secure financing (line of credit) and 
bonding. Several comments believed that the salary should vary 
depending on the type of business and location of the firm. One comment 
noted that SBA should consider specifically what $200,000 means to 
other industries and consider other factors. Another comment 
recommended the income be raised to $400,000.
    SBA notes that when determining what dollar thresholds to propose, 
it sought to create an objective standard by which a woman may or may 
not qualify as economically disadvantaged and reviewed information 
available as it relates to the 8(a) BD Program. The SBA believed that a 
straight line numerical figure would be more understandable, easier to 
implement, and avoid any appearance of unfair treatment.
    When determining the threshold for fair market value of total 
assets, SBA reviewed SBA Office of Hearings and Appeals (OHA) decisions 
on the matter. For example, OHA upheld as reasonable a determination 
that an individual was not economically disadvantaged with total asset 
levels of $4.1 million and $4.6 million. See Matter of Pride 
Technologies, SBA No. 557 (1996), and SRS Technologies v. U.S., 843 F. 
Supp. 740 (D.D.C. 1994). Alternatively, and again with respect to the 
8(a) BD Program, SBA's finding that an individual was not economically 
disadvantaged with total assets of $1.26 million was overturned. See 
Matter of Tower Communications, SBA No. 587 (1997).
    Upon further review, however, SBA agrees that the thresholds for 
fair market value of the total assets are too low and therefore in the 
Final Rule, states that an individual will not be considered 
economically disadvantaged if the fair market value of all her assets 
(with no reduction for the dollar amount of any liens or mortgages that 
may exist against such assets) exceeds $6 million. Unlike the net worth 
analysis, SBA does not exclude the value of the business concern in 
determining economic disadvantage in the total asset analysis, nor does 
SBA exclude the fair market value of the primary residence. Therefore, 
SBA believes it would be reasonable to increase that threshold.
    In addition, SBA agrees with the comments and believes that the 
threshold set forth in the proposed rule for income should be 
increased. SBA had proposed to provide that it would presume that a 
woman is not economically disadvantaged if her yearly income averaged 
over the past three years exceeds $200,000. SBA proposed an income 
level of $200,000 because that figure closely approximates the income 
level corresponding to the top two percent of all wage earners, which 
has been upheld as a reasonable indicator of a lack of economic 
disadvantage. SBA believed that to some, the $200,000 income would seem 
unduly high as a benchmark, but noted that exceeding this amount is 
being used only to presume, without more information, that the woman is 
not economically disadvantaged.
    In all cases, SBA's determination of economic disadvantage is based 
on the totality of the circumstances, not merely income. Nonetheless, 
income is a relevant factor, and those whose income is above a certain 
threshold should not, in most circumstances, be considered to be 
economically disadvantaged.
    Since the time SBA issued the proposed rule, the IRS has issued 
statistical data on U.S. wage earners that show that the vast majority 
of individuals have an adjusted gross income of less than $350,000 and 
that the top 2% of wage earners had an adjusted gross income of 
$261,000 or more. SBA believes it would be reasonable to raise the 
threshold to this $350,000 amount to align it with the new IRS 
statistical data. Further, increasing the personal income threshold to 
$350,000 will accomplish two important goals. First, it will allow the 
EDWOSB to attract and retain higher skilled employees, since the woman 
owners/manager must be the highest compensated individual in the 
business concern. Second, many EDWOSBs will be actual or potential 
participants in the SBA's 8(a) Business Development Program as well as 
Department of Transportation's Disadvantaged Business Entity Program; 
and SBA will accept the certification of economic disadvantage 
applicable to all 8(a) program participants as conclusive evidence of 
economic disadvantage for the WOSB program.
    Under this approach, income in excess of $350,000 would generally 
be used to presume that the individual is not economically 
disadvantaged. It would not, however, be presumed that those with 
income below $350,000 are economically disadvantaged. SBA will consider 
income in connection with other factors (such as overall assets, net 
worth, changes in income, and other indicia of access to credit and 
capital) when determining economic disadvantage.
    In addition, the Final Rule permits applicants to rebut the 
presumption of lack of economic disadvantage upon a showing that the 
income attributed to the individual that is in excess of the threshold 
amount is not indicative of lack of economic disadvantage. For example, 
the presumption could be rebutted by a showing that the income was 
unusual (inheritance) and is unlikely to occur again. At least one 
comment supported the ability of a business to be able to rebut the 
presumption of lack of economic disadvantage if the income was unusual 
or unlikely to occur again. Another comment thought it was confusing as 
to when inheritance is counted as income and when it is not. Yet 
another comment believed that if someone inherits over $5 million, that 
person should not be considered economically disadvantaged even if it 
is a one-time only event.
    The proposed and Final Rule explain that when considering a woman's 
personal income, a presumption of a lack of economic disadvantage can 
be

[[Page 62267]]

rebutted by a showing that a certain income level was unusual and 
unlikely to occur again. However, that same money could be counted as 
part of an individual's total assets. Thus, an inheritance of $6 
million, for example, may be atypical income and excluded from SBA's 
determination of economic disadvantage based on income, but it would 
not be excluded from SBA's determination of economic disadvantage based 
on total assets. In such a case, a $6 million inheritance would render 
the woman not economically disadvantaged based on total assets.
    We note that although SBA has raised the thresholds for fair market 
value of total assets and income, it does not agree that the thresholds 
for personal net worth should be raised. The Final Rule specifically 
excludes the following from the personal net worth calculation: (1) The 
woman's ownership interest in the business concern; (2) equity interest 
in her primary residence; (3) income received from an S corporation, 
limited liability company or partnership where the income was 
reinvested in the business or used to pay taxes arising in the normal 
course of operations of the business concern; and (4) funds invested in 
IRAs and retirement accounts that are unavailable until retirement age 
without a significant penalty for early withdrawal. As a result of 
these exclusions, SBA believes the personal net worth threshold of 
$750,000 should remain as proposed.
    SBA received numerous comments that supported the proposed 
regulation to exclude community property interests of the spouse when 
looking at personal net worth. In the preamble to the proposed rule, 
SBA explained that it proposed not taking community property laws into 
account when determining economic disadvantage if the woman has no 
ownership interest. This means that property that is legally in the 
name of the one spouse would be considered wholly that spouse's, 
whether or not the couple lived in a community property state. Since 
community property laws are usually applied when a couple separates, 
and since spouses in community property states generally have the 
freedom to keep their property separate while they are married, SBA 
proposed to treat property owned solely by one spouse as that spouse's 
property for economic disadvantage determinations. However, if both 
spouses own the property, SBA would attribute a half interest in such 
property to the woman claiming economic disadvantage, unless there is 
evidence to show that the interest in such property is greater or 
lesser. SBA believes that this policy results in equal treatment for 
applicants in community and non-community property states and therefore 
has not changed the rule as proposed. By statute, community property 
laws will also not be applied for purposes of determining ownership of 
an EDWOSB or WOSB.
    In addition, and along the same lines, SBA proposed to provide that 
it may consider a spouse's financial situation in determining an 
individual's access to capital and credit. One comment stated that it 
was unclear as to how a spouse's salary and portfolio value would be 
treated with respect to economic disadvantage. Two comments argued that 
the spouse's income and access to capital should not be counted if the 
spouse is not involved in the business.
    After careful review, SBA agrees and has determined that a spouse's 
financial condition should not be attributed to the individual claiming 
disadvantaged status in every case. Instead, SBA will consider a 
spouse's financial condition only when the spouse has a role in the 
business (e.g., an officer, employee or director) or has lent money to, 
provided credit support to, or guaranteed a loan of the business. In 
those cases, SBA must consider a spouse's financial situation when 
determining a woman's access to capital and credit because it is unfair 
to consider a woman economically disadvantaged when she can rely on her 
spouse to obtain capital and credit which other women business owners 
cannot obtain. In addition, the Final Rule explains that SBA may also 
consider the spouse's financial condition if the spouse's business is 
in the same or similar line of business as the EDWOSB or WOSB. SBA has 
seen instances in the past where the spouse and WOSB share similar 
names, Web sites, or employees. In those instances, it would be 
reasonable for SBA to look at the spouse's financial condition since it 
is apparent that the spouse is providing support to the EDWOSB/WOSB.
    The proposed rule also explained that SBA would exempt from the 
calculation of personal net worth and fair market value of total assets 
funds invested in an Individual Retirement Account (IRA) or other 
official retirement account that are unavailable until retirement age 
without a significant penalty. The basis for this proposal stems from 
SBA's experience with the 8(a) BD Program, where it has found that 
including IRAs and other retirement accounts in the calculation of an 
individual's net worth does not serve to disqualify wealthy 
individuals. Instead, such an exclusion has worked to make individuals 
ineligible to the extent they have invested prudently in accounts to 
ensure income at a time in their lives when they are no longer working.
    Several comments supported these exemptions; however, two comments 
opposed the provision that the retirement accounts be included once the 
woman can withdraw at retirement age because this prevents mature women 
who still want to work from being eligible for the WOSB Program. These 
two comments recommended that SBA merely count the withdrawals as 
income. SBA believes that retirement accounts are held for purposes of 
ensuring future income when an individual is no longer working and 
should not count the funds as current assets if they are not currently 
being enjoyed. However, if the individual has reached retirement age 
and has access to the retirement account, or has incurred a significant 
penalty and acquired access to the account, the funds are current 
assets and must be included as part of the individual's personal net 
worth, total assets, and income. However, if the individual invests 
funds from the retirement account into the EDWOSB or WOSB, those funds 
would be excluded from the net worth analysis as part of the exclusion 
of business equity. The EDWOSB or WOSB may be required to submit 
evidence that the funds were invested into the business. SBA has issued 
the Final Rule as it had proposed.
    In addition, the proposed rule explained that in order for SBA to 
determine whether funds invested in a specific account labeled a 
``retirement account'' may be excluded from a woman's net worth 
calculation, the woman must provide to SBA information about the terms 
and conditions of the account. SBA asked for comments on what specific 
information might be helpful. One comment stated that SBA should use 
Internal Revenue Service (IRS) Form 5498 to identify yearly 
contributions to such retirement accounts. SBA has determined that in 
order for it to determine whether funds invested in a specific account 
labeled a ``retirement account'' may be excluded from an individual's 
net worth calculation, the individual must provide to SBA information 
about the terms and conditions of the account and certify in writing 
that the ``retirement account'' is legitimate. SBA notes that as part 
of its document collection to verify eligibility, it will obtain income 
tax information that can also be used to verify whether an account is a 
retirement account.
    SBA has also proposed exempting income from a corporation taxed 
under Subchapter S of Chapter 1 of the Internal Revenue Code (S 
corporation)

[[Page 62268]]

from the calculation of both income and net worth to the extent such 
income is reinvested in the firm or used to pay taxes arising from the 
normal course of operations of an S corporation. Although the income of 
an S corporation flows through and is taxed to individual shareholders 
in accordance with their interest in the S corporation for Federal tax 
purposes, SBA will take such income into account for economic 
disadvantage purposes only if it is not reinvested in the business or 
used to pay the taxes. This proposal would result in equal treatment of 
corporate income for corporations taxed under Subchapter C of Chapter 1 
of the Internal Revenue Code (C corporations) and S corporations. In 
cases where that income is reinvested in the firm or used to pay taxes 
arising from the normal course of operations of the S corporation and 
not retained by the woman, SBA believes it should be treated the same 
as C corporation income for purposes of determining economic 
disadvantage. In order to be excluded, the owner of the S corporation 
would be required to clearly demonstrate that the S corporation 
distribution was used to pay taxes or was reinvested back into the S 
corporation within 12 months of the distribution of income.
    Three comments supported SBA's proposal to exempt income received 
from an S corporation from the calculation of personal net worth and 
income and strongly agree that S corporations and C corporations should 
be treated similarly in this respect. One comment, however, stated that 
the requirement that the owner demonstrate that money was received and 
reinvested in the business is burdensome. SBA notes that the small 
business bears the burden to prove its eligibility for the WOSB Program 
and therefore, must be able to demonstrate in these cases that the S 
corporation distribution was used to pay taxes or was reinvested back 
into the S corporation within 12 months of the distribution of income.
    One comment agreed with this provision but recommended that SBA 
treat limited liability companies the same. SBA agrees and believes 
limited liability companies and partnerships are taxed similar to S 
corporations. With all of these entities, the income flows through and 
is taxed to individual partners, members, or shareholders in accordance 
with their interest in the company for Federal tax purposes. Therefore, 
SBA has amended the Final Rule from what it initially proposed.
    In addition, SBA has decided it would be best to set forth the 
clarification contained in the supplementary information--that 
corporation/partnership/limited liability losses are losses only to the 
company, and not losses to the individual--specifically in the 
regulatory text to clear up any confusion on this issue. In addition, 
the Final Rule has clarified that the treatment of corporation/
partnership/limited liability income applies to both determinations of 
an individual's net worth and personal income.
    One comment recommended that SBA eliminate any regulation 
permitting the transfer of assets to an immediate family member while 
another comment supported the careful examination of asset transfer to 
immediate family members within 2 years of the transfer because the 
women may be transferring the assets to family members for their 
support. SBA agrees that there are valid reasons for transferring 
assets to an immediate family member as identified in the rule (e.g. 
medical expenses, education and birthdays) and a woman should not be 
penalized for this when determining economic disadvantage. As such, SBA 
has adopted the proposed provision in the Final Rule.
    One comment expressed confusion as to when a personal residence 
would be excluded and questioned if the residence could be excluded if 
it were used to guarantee a company line of credit. The Final Rule 
explain that when determining personal net worth, SBA will exclude the 
woman's equity interest in the primary personal residence. In addition, 
when determining the fair market value of the assets, SBA will include 
the value of the primary residence in the calculation (without 
deduction for any liens on the assets). SBA is not excluding the 
residence as an asset even if it is used to guarantee the company line 
of credit because the residence is still an asset to that individual, 
as evidenced by the fact it can be used to secure a line of credit.
    In sum, based upon the comments received, SBA has amended some of 
the proposed regulations in this Final Rule. Specifically, SBA has 
increased the dollar thresholds for income and fair market value of 
assets for purposes of determining economic disadvantage, and has 
clarified certain issues as they relate to S corporations, limited 
liability companies and partnerships.

D. Certification

    In the proposed rule, SBA proposed permitting EDWOSBs and WOSBs to 
either self-certify their status or provide evidence of certification 
from an approved third-party certifier. Of the almost 1,000 comments 
received overall on the rule, most of them commented on the 
certification procedures for a total of almost 1,900 specific comments 
concerning the certification requirements.
    We note that many of the comments confused the CCR and Online 
Representations and Certifications Application (ORCA) databases and 
believed that ORCA or CCR would serve as the document repository for 
the WOSB Program or supported the use of the CCR ``questionnaire''. 
Some comments stated that WOSBs should be required to register in CCR. 
A few comments acknowledged some confusion and suggested clarification 
or a guide on how this process would work. There seems to be some 
public confusion concerning the different Federal databases and SBA 
would like to provide some clarification on that as well as the WOSB 
Program certification process.
    CCR is an online government-maintained database of companies 
wanting to do business with the Federal government available at 
ccr.gov. The Federal Acquisition Regulation (FAR) at 48 CFR 4.1102(a) 
requires that most prospective contractors be registered in the CCR 
database prior to award of a contract or agreement, with certain 
exceptions. Agencies search the database for prospective vendors. After 
registering, you may enter your small business profile information on 
the Dynamic Small Business Search page. Creating a profile in CCR and 
the Dynamic Small Business Search, and keeping it current, helps 
provide access to Federal contracting opportunities.
    Thus, the EDWOSB or WOSB must register in CCR first. Next, it must 
provide documents supporting its EDWOSB or WOSB status to an online 
document repository, called that the WOSB Program Repository, that SBA 
is planning to establish. The documents submitted would include those 
verifying that the concern has received a third-party certification. 
The business concern will be placing these documents in a secure, Web-
based environment that would be accessible to the individual WOSBs and 
EDWOSBs, the contracting officer community and SBA. The contracting 
officer would be able to access the documents prior to contract award 
to review the submitted documents. SBA proposed this approach so that 
the WOSBs and EDWOSBs would not have to submit documents each time they 
receive a WOSB or EDWOSB contract.
    In addition, the WOSB or EDWOSB will have to provide a 
certification to the repository that will serve as a verification that 
the concern meets the eligibility requirements and is signed by an 
authorized officer of the WOSB. In

[[Page 62269]]

the proposed rule, SBA had proposed that this certification be part of 
ORCA. However, upon further reflection, the SBA believes that it would 
be best if this document were signed and submitted directly to the 
repository. A copy of the certification is set forth in Tables 1 and 2.
    Until the repository is completed, or if the system is otherwise 
unavailable, then SBA explained that the WOSB or EDWOSBs must submit 
the documents directly to the contracting officer prior to each WOSB or 
EDWOSB award. Although one comment thought this was burdensome, SBA 
notes that the statute requires the submission of supporting documents 
to the contracting officer and until or unless the repository is 
established, this appears to be the sole alternative that meets this 
statutory requirement. The contracting officer must retain these 
documents in the contract file so that SBA may later review the file 
for purposes of a status protest or eligibility examination. However, 
the WOSB or EDWOSB will also be required to post the documents to the 
WOSB Program Repository within thirty (30) days of the repository 
becoming available.
    Finally, after registering in CCR and submitting the required 
document to the repository, the EDWOSB or WOSB must represent its 
status in the ORCA at https://orca.bpn.gov. The FAR at 48 CFR 2.101 
explains that ORCA is the primary Government repository for contractor-
submitted representations and certifications required for the conduct 
of business with the Government. This database does not collect 
documents, but collects the representations and certifications required 
for Federal contracts. As stated above, the SBA had proposed a specific 
and detailed ORCA representation. That detailed representation will now 
be a certification, signed by an officer of the company, which will be 
submitted to the WOSB Program Repository. The representation contained 
in ORCA, as drafted by the FAR Councils, will be set forth in the FAR.
    Of the hundreds of comments received concerning this certification 
process, several stated that SBA should not accept self-certifications 
for the WOSB Program. The comments stated that this would increase the 
risk of fraud. However, other comments stated that self-certification 
would be reasonable as long as documents were provided to verify 
eligibility and there were no protests or credible information calling 
into question the eligibility of a business. At least one comment 
stated that it was good that SBA recognized the cost of certification 
and provided alternative compliance requirements, such as the self-
certification. Another comment stated that it supported the stringent 
certification requirements to ensure the credibility of the WOSB 
Program and its ultimate success. Some comments expressed concern with 
the burden of the process and additional paperwork and forms required, 
believing it will discourage WOSBs from using the WOSB Program and 
required additional costs that are not minimal, while numerous comments 
supported the innovative approach and believed the repository would 
minimize paperwork burden and increase oversight and program monitoring 
capabilities. One comment believed that self-certification would not be 
fair to those that paid already for a third-party certification.
    Many comments also stated that SBA should not have a certification 
program, similar to 8(a) or HUBZone, but should use its resources 
instead for enforcement and monitoring. Two comments recommended that 
SBA create a stringent certification process or program similar to the 
one it has for 8(a).
    The SBA explained in the proposed rule that the Small Business Act 
sets forth the certification criteria for the WOSB Program. 
Specifically, the Act states that a WOSB or EDWOSB must: (1) Be 
certified by a Federal agency, a State government, or a national 
certifying entity approved by the Administrator, as a small business 
concern owned and controlled by women; or, (2) certify to the 
contracting officer that it is a small business concern owned and 
controlled by women and provide adequate documentation, in accordance 
with standards established by SBA, to support such certification. The 
supporting legislative history stated that there was no intent that SBA 
create a certification program similar to the one it has for the 8(a) 
BD Program. As a result of the statutory provision, and the supporting 
legislative history, the Final Rule permits both self-certification and 
third-party certification and requires supporting documents to verify 
eligibility. The supporting documents will be provided to a repository 
(which is not necessarily part of ORCA) or, if the repository is 
unavailable, to the contracting officer. In addition, SBA believes that 
although the certification document and document requirement may seem 
burdensome to some small businesses, this is required to meet the 
statutory provisions, reduce fraud in the WOSB Program, and ensure that 
only eligible concerns receive the benefits of the WOSB Program.
    In addition to the comments on self-certification, SBA received 
over 600 comments which supported the use of third-party 
certifications, although many of these comments supported the use of 
both third-party certifications and self-certification. In general, the 
comments stated the following: SBA should accept all third-party 
certifiers to ensure a wide range of options for WOSBs; SBA should 
document the process for approving third-party certifiers; the 
guidelines for third-party certifiers must comply with the regulations; 
and the third-party certifications should require yearly 
recertifications and site visits. In addition, a large number of 
comments stated that there should be an abridged process or no 
requirement for the representations for those with a third-party 
certification because it is counterproductive and redundant and WOSBs 
that have a third-party certification should not have to submit any 
additional documents.
    The SBA agrees that it should approve all qualified third-party 
certifiers to ensure a wide range of options for EDWOSBs and WOSBs. 
However, that does not necessarily mean that every entity interested in 
being a third-party certifier will meet SBA's requirements. SBA also 
agrees that it must document the process for approving third-party 
certifiers. SBA plans to post online to the public the documented 
process at http://www.sba.gov/. In addition, SBA agrees that the 
guidelines for third-party certifiers must comply with the regulations. 
The final regulations set forth the eligibility requirements for this 
Federal program. There cannot be exceptions regarding the eligibility 
for the WOSB Program to these regulations, and there is no reason to 
create exceptions for third-party certifications as compared to self-
certifications. Because the final regulations do not require site 
visits in every instance and yearly recertifications, it is not clear 
at this time that SBA can make those requirements for third-party 
certifiers, although we agree it would reduce fraud in the WOSB 
Program.
    We understand the concern expressed by the comments that support an 
abridged process or no requirement for the representations for those 
with a third-party certification. Many of these individuals believe 
that because they have undergone a rigorous third-party certification, 
it would be redundant and burdensome for the EDWOSB or WOSB to submit 
additional documents or further represent its status.
    However, the SBA believes that such a certification is necessary to 
ensure the integrity of the WOSB Program and that

[[Page 62270]]

only those eligible small businesses receive the WOSB Program's 
benefits. Therefore, all EDWOSBs and WOSBs will be required to complete 
the certification and submit it to the WOSB Program Repository. In 
addition, each EDWOSB and WOSB will be required to provide a 
representation in ORCA. As noted above, ORCA is the primary Government 
repository for contractor submitted representations and certifications 
required for the conduct of business with the Government. Therefore, it 
will be necessary for the EDWOSB or WOSB, even if they have a third-
party certification, to make ORCA representations to the Federal 
Government.
    We also disagree that EDWOSBs or WOSBs that have received a third-
party certification should not be required to submit documents to SBA 
or the contracting to verify eligibility. The Final Rule requires that 
those businesses with a third-party certification submit only a limited 
number of documents--specifically, a copy of the third-party 
certification, the certification, the joint venture agreement if 
applicable, and in some cases, other documents to verify they meet the 
requirements of the WOSB Program. If there is a status protest or 
eligibility examination, then SBA will have to collect all documents 
necessary to verify eligibility since it is SBA, and not a third-party 
certifier, which would make this decision concerning eligibility.
    The SBA also received several comments which were concerned with 
identifying specific third-party certifiers. For example, we received 
comments which stated that all certifications issued by the 50 States 
should be accepted by SBA, as well as all current other third-party 
certifications. As discussed above, SBA cannot accept all current 
third-party certifications, including a certification issued by a 
State, without first determining whether the third-party certifier's 
eligibility criteria are the same as those of SBA's for the WOSB 
program.
    The SBA received one comment which recommended that we provide a 
list of agencies whose certifications will be accepted and two comments 
stating that we should immediately accept U.S. Department of 
Transportation (DOT) certifications and not require that agency to 
enter into a third-party agreement.
    Under DOT's Disadvantage Business Enterprise (DBE) Program, 
recipients, which are state or local entities as defined by DOT 
regulations at 49 CFR 26.5, perform the certifications for DOT's DBE 
Program. Recipients are the DOT's DBE Program certifiers. Pursuant to 
DOT regulations, these certifiers must submit to DOT for approval an 
agreement establishing a Unified Certification Program (UCP), which 
identifies a plan for certification as a certifier for the DOT DBE 
Program. Once the UCP is approved by DOT, the certifier can certify 
participants for the DBE Program. In other words, the certification for 
the DOT DBE Program is not done by a central office, but rather various 
state and local certifiers perform the certifications.
    DOT requires every UCP to meet all of the requirements of the DOT 
DBE Program, but every UCP for the DOT DBE Program is not required to 
have all of the same requirements. Therefore, without examining the 
state or local entity's UCP, it is unknown if it will satisfy all the 
requirements of the WOSB Program regulations. For example, SBA's WOSB 
Program regulation at 13 CFR 127.201(f) states that in determining 
unconditional ownership of the concern, any unexercised stock options 
or similar agreements held by a woman will be disregarded. The 
regulations also states that any unexercised stock option or other 
agreement, including the right to convert non-voting stock or 
debentures into voting stock, held by any other individual or entity 
will be treated as having been exercised. DOT DBE regulations do not 
discuss how unexercised stock options or similar agreements will be 
treated under the DBE Program. As a result, state and local entities 
that have an approved UCP for DOT DBE Program certification may or may 
not be consistent with this requirement. There are additional areas in 
which it is uncertain whether SBA requirements would be met with a DOT 
DBE Program certification.
    The Final Rule sets forth the eligibility requirements for this 
Federal program. SBA has determined that there cannot be exceptions 
regarding the eligibility for the WOSB Program to these regulations, 
and there is no reason to create exceptions for DOT DBE certifications 
as compared to self-certifications. Every WOSB or EDWOSB must satisfy 
the regulatory requirements in 13 CFR part 127, whether through private 
third party certification, 8(a) certification, DOT DBE certification, 
or any other certification. As a result and as SBA does with all other 
third party certifiers, SBA has determined that it will evaluate a DOT 
DBE certifier on an individual basis. SBA will review the state and 
local entity's UCP to determine if the WOSB Program requirements can be 
met with the UCP.
    Therefore, the Final Rule will not accept all DOT DBE 
certifications for the WOSB Program at this time. Once SBA approves a 
DOT DBE Program certifier, SBA will maintain a list of approved state 
and local entities from which it will accept DOT DBE certifications on 
SBA's Internet Web site at http://www.sba.gov. Any interested person 
may also obtain a copy of the list from the local SBA district office 
or SBA Area Office for Government Contracting.
    Several comments recommended that SBA and DOT work together to 
create a list of businesses indicating the woman owned status of all 
certified businesses or requiring DOT to provide certifications showing 
that the business is owned and controlled by women. We agree that the 
two agencies can continue to work together in furtherance of this 
program. However, as explained above, SBA must examine a specific UCP 
prior to accepting the certification from that certifier as a 
certification of WOSB or EDWOSB status.
    One comment stated that third-party certifications sometimes list 
NAICS codes on the certifications. The comment believed that SBA must 
therefore make it clear that such a listing does not limit the 
business' ability to submit an offer for a contract outside that NAICS 
code. The comment suggested that SBA clarify the regulations or ORCA. 
SBA does not believe it must clarify the regulations on this point. The 
Final Rule is clear that a contracting officer must assign a NAICS code 
to a contract and that a business concern must be small for the size 
standard corresponding to that NAICS code. In addition, the contracting 
officer can only reserve the contract opportunity for EDWOSBs if the 
NAICS code is in an underrepresented industry and for WOSBs if the 
NAICS code is in a substantially underrepresented industry.
    The SBA received a few comments which addressed the specific 
representations we had set forth in the preamble to the proposed rule, 
and which will now be a separate certification that must be submitted 
to the WOSB Program Repository, and the responsibilities of contracting 
officers. One comment stated that it believed the representations are 
clearly worded but that the contracting officer needs to know what 
should be checked for award. Two comments stated that contracting 
officers need more guidance on what specific documents must be 
provided. Similarly, SBA received one comment which suggested the 
agency establish a defined method of signoff by a contracting officer 
that they have

[[Page 62271]]

certified the EDWOSB or WOSB meets the eligibility criteria and provide 
a contracting guide that would include a checklist for the contracting 
officer that includes all items to be completed or verified. SBA agrees 
that this would be helpful to contracting officers and plans to work on 
a guide for contracting officers that contains a checklist.
    In addition, two comments believed that contracting officers may 
not be in the best position to review the submitted documents and make 
an accurate determination. In addition, one comment stated that self-
certification places an undue burden on contracting officers and opens 
the door for different levels of application of the rules. We note that 
the rule does not require the contracting officer to necessarily 
determine eligibility of the EDWOSB or WOSB. Rather, the contracting 
officer is to check to ensure that the requisite documents, as set 
forth in the regulations, are provided and that the ORCA 
representations have been made. If any of the documents are missing 
from the repository (including the certification), or if the 
contracting officer believes the concern is not eligible, he/she must 
file a status protest with SBA. SBA, not the contracting officer, will 
make the final determination regarding eligibility.
    One comment recommended that SBA eliminate the representation 
concerning the ability of an EDWOSB to obtain capital and credit 
because it only complicates the process. The same comment questioned 
why there should be a representation that ``no males or other entity 
exercise actual control or have the power to control the concern'' when 
there appear to be other questions in the representation that already 
address this.
    The SBA agrees that the representation concerning the ability to 
obtain capital and credit is not necessary because that issue is 
addressed with the other questions, especially those concerning the 
specific objective criteria for economic disadvantage. SBA has deleted 
this representation from the Final Rule.
    However, SBA disagrees with the comment concerning whether males 
exercise control over the business concern. There is a specific 
requirement for an EDWOSB or WOSB in the regulations that no male or 
other entity exercises control or the power to control the concern. 
Therefore, this representation is required.
    The SBA received one comment that recommended having a place in CCR 
to acknowledge current certifications and transferring this information 
to ORCA. SBA agrees that CCR should be amended and will work with the 
appropriate agency to implement these changes to the extent 
practicable.
    One comment recommended that SBA share information common to other 
certification processes when a person is a member of more than one 
group. In other words, if a WOSB is also a SDVO SBC, the comment 
recommended that the processes be streamlined. Unfortunately, this is 
not possible. The SDVO SBC Program is a self-certification program with 
different statutory and regulatory requirements than the WOSB Program. 
When creating the WOSB Program, SBA sought to align this program with 
others as much as possible. For example, SBA has stated that it will 
accept 8(a) BD certifications, if the business was certified into the 
8(a) BD Program as a women owned business, as evidence that the 
business is a WOSB.
    Some comments recommended that SBA conduct site visits and check 
financial information on all WOSBs. Two comments supported the use of 
an outside company to manage the certification and perform site visits. 
SBA explained in the proposed rule that it does intend to conduct site 
visits on those certifying as EDWOSBs or WOSBs and believes that its 
regulations, which permit protests and robust eligibility examinations, 
will aid in preventing fraud, waste and abuse in the WOSB program.
    The SBA has reviewed all of these comments thoroughly and believes 
that it is not necessary to change the proposed regulations concerning 
certifications except to amend the ORCA representations to address 
changes made to the criteria for economic disadvantage. SBA therefore 
has implemented the proposed rule as final, with respect to the 
certification requirements. SBA is setting forth a final copy of the 
certification that each WOSB or EDWOSB must submit to verify status 
(Table 1, Women-Owned Small Business Program Certification--WOSB; Table 
2, Women-Owned Small Business Program Certification--EDWOSB).

Table 1--Women-Owned Small Business Program Certification--WOSB.

    (i) It is certified as a WOSB by a certifying entity approved by 
SBA, the certifying entity has not issued a decision currently in 
effect finding that the concern does not qualify as a WOSB, and there 
have been no changes in its circumstances affecting its eligibility 
since its certification.

[squ] Yes [squ] No [squ] N/A

    (ii) It is certified by the U.S. Small Business Administration as 
an 8(a) BD Program Participant and the 51% owner is a woman (or women).

[squ] Yes [squ] No [squ] N/A

    (iii) If a corporation, the stock ledger and stock certificates 
evidence that at least 51% of each class of voting stock outstanding 
and 51% of the aggregate of all stock outstanding is unconditionally 
and directly owned by one or more women. In determining unconditional 
ownership of the concern, any unexercised stock options or similar 
agreements held by a woman will be disregarded. However, any 
unexercised stock option or other agreement, including the right to 
convert non-voting stock or debentures into voting stock, held by any 
other individual or entity will be treated as having been exercised.

[squ] Yes [squ] No [squ] N/A

    (v) If a partnership, the partnership agreement evidences that at 
least 51% of each class of partnership interest is unconditionally and 
directly owned by one or more women.

[squ] Yes [squ] No [squ] N/A

    (iv) If a limited liability company, the articles of organization 
and any amendments, and operating agreement and amendments, evidence 
that at least 51% of each class of member interest is unconditionally 
and directly owned by one or more women.

[squ] Yes [squ] No [squ] N/A

    (v) The birth certificates, naturalization papers, or passports for 
owners who are women show that the business concern is at least 51% 
owned and controlled by women who are U.S. citizens.

[squ] Yes [squ] No

    (vi) The ownership by women is not subject to any conditions, 
executory agreements, voting trusts, or other arrangements that cause 
or potentially cause ownership benefits to go to another.

[squ] Yes [squ] No

    (vii) The 51% ownership by women is not through another business 
entity (including employee stock ownership plan) that is, in turn, 
owned and controlled by one or more women.

[squ] Yes [squ] No

    (viii) The 51% ownership by women is held through a trust, the 
trust is revocable, and the woman is the grantor, a trustee, and the 
sole current beneficiary of the trust.

[squ] Yes [squ] No [squ] N/A

    (ix) The management and daily business operations of the concern 
are

[[Page 62272]]

controlled by one or more women. Control means that both the long-term 
decision making and the day-to-day management and administration of the 
business operations are conducted by one or more women.

[squ] Yes [squ] No

    (x) A woman holds the highest officer position in the concern and 
her resume evidences that she has the managerial experience of the 
extent and complexity needed to run the concern.

[squ] Yes [squ] No

    (xi) The woman manager does not have the technical expertise or 
possess the required license for the business but has ultimate 
managerial and supervisory control over those who possess the required 
licenses or technical expertise.

[squ] Yes [squ] No [squ] N/A

    (xii) The woman who holds the highest officer position of the 
concern manages it on a full-time basis and devotes full-time to the 
business concern during the normal working hours of business concerns 
in the same or similar line of business.

[squ] Yes [squ] No

    (xiii) The woman who holds the highest officer position does not 
engage in outside employment that prevents her from devoting sufficient 
time and attention to the daily affairs of the concern to control its 
management and daily business operations.

[squ] Yes [squ] No

    (xiv) If a corporation, the articles of incorporation and any 
amendments, articles of conversion, by-laws and amendments, shareholder 
meeting minutes showing director elections, shareholder meeting minutes 
showing officer elections, organizational meeting minutes, all issued 
stock certificates, stock ledger, buy-sell agreements, stock transfer 
agreements, voting agreements, and documents relating to stock options, 
including the right to convert non-voting stock or debentures into 
voting stock evidence that one or more women control the Board of 
Directors of the concern. Women are considered to control the Board of 
Directors when either: (1) One or more women own at least 51% of all 
voting stock of the concern, are on the Board of Directors and have the 
percentage of voting stock necessary to overcome any super majority 
voting requirements; or (2) women comprise the majority of voting 
directors through actual numbers or, where permitted by state law, 
through weighted voting.

[squ] Yes [squ] No [squ] N/A

    (xv) If a partnership, the partnership agreement evidences that one 
or more women serve as general partners, with control over all 
partnership decisions.

[squ] Yes [squ] No [squ] N/A

    (xvii) If a limited liability company, the articles of organization 
and any amendments, and operating agreement and amendments evidence 
that one or more women serve as management members, with control over 
all decisions of the limited liability company.

[squ] Yes [squ] No [squ] N/A

    (xviii) No males or other entity exercise actual control or have 
the power to control the concern.

[squ] Yes [squ] No

    (xix) SBA, in connection with an examination or protest, has not 
issued a decision currently in effect finding that this business 
concern does not qualify as a WOSB.

[squ] Yes [squ] No

    (xx) All required documents verifying eligibility for a WOSB 
requirement have been submitted to the WOSB Program Repository, 
including any supplemental documents if there have been changes since 
the last representation, or will be submitted to the contracting 
officer if the repository is unavailable and then posted to the WOSB 
Program Repository within thirty (30) days of the repository becoming 
available.

[squ] Yes [squ] No

    [squ] All the statements and information provided in this form and 
any documents submitted are true, accurate and complete. If assistance 
was obtained in completing this form and the supporting documentation, 
I have personally reviewed the information and it is true and accurate. 
I understand that these statements are made for the purpose of 
determining eligibility for a WOSB Program contract.
    [squ] I understand that the information submitted may be given to 
Federal, State and local agencies for determining violations of law and 
other purposes. The certifications in this document are continuing in 
nature. Each WOSB prime contract for which the WOSB submits an offer/
quote or receives an award constitutes a restatement and reaffirmation 
of these certifications. I understand that the WOSB may not 
misrepresent its status as a WOSB to: (1) Obtain a contract under the 
Small Business Act; or (2) obtain any benefit under a provision of 
Federal law that references the WOSB Program for a definition of 
program eligibility.
    [squ] I am an officer of the WOSB authorized to represent it and 
sign this certification on its behalf.

Table 2--Women-Owned Small Business Program Certification--EDWOSB

    (i) It is certified as an EDWOSB by a certifying entity approved by 
SBA, the certifying entity has not issued a decision currently in 
effect finding that the concern does not qualify as a EDWOSB, and there 
have been no changes in its circumstances affecting its eligibility 
since its certification.

[squ] Yes [squ] No [squ] N/A

    (ii) It is certified by the U.S. Small Business Administration as 
an 8(a) BD Program Participant and the 51% owner is an economically 
disadvantaged woman (or women).

[squ] Yes [squ] No [squ] N/A

    (iii) If a corporation, the stock ledger and stock certificates 
evidence that at least 51% of each class of voting stock outstanding 
and 51% of the aggregate of all stock outstanding is unconditionally 
and directly owned by one or more women who are economically 
disadvantaged. In determining unconditional ownership of the concern, 
any unexercised stock options or similar agreements held by an 
economically disadvantaged woman will be disregarded. However, any 
unexercised stock option or other agreement, including the right to 
convert non-voting stock or debentures into voting stock, held by any 
other individual or entity will be treated as having been exercised.

[squ] Yes [squ] No [squ] N/A

    (iv) If a partnership, the partnership agreement evidences that at 
least 51% of each class of partnership interest is unconditionally and 
directly owned by one or more economically disadvantaged women.

[squ] Yes [squ] No [squ] N/A

    (v) If a limited liability company, the articles of organization 
and any amendments, and operating agreement and amendments, evidence 
that at least 51% of each class of member interest is unconditionally 
and directly owned by one or more economically disadvantaged women.

[squ] Yes [squ] No [squ] N/A

    (vi) The birth certificates, naturalization papers, or passports 
show that the business concern is at least 51% owned and controlled by 
economically disadvantaged women who are U.S. citizens.

[squ] Yes [squ] No

    (vii) The ownership by economically disadvantaged women is not 
subject to any conditions, executory agreements, voting trusts, or 
other arrangements that

[[Page 62273]]

cause or potentially cause ownership benefits to go to another.

[squ] Yes [squ] No

    (viii) The 51% ownership by economically disadvantaged women is not 
through another business entity (including employee stock ownership 
plan) that is, in turn, owned and controlled by one or more 
economically disadvantaged women.

[squ] Yes [squ] No

    (ix) The 51% ownership by economically disadvantaged women is held 
through a trust, the trust is revocable, and the economically 
disadvantaged woman is the grantor, a trustee, and the sole current 
beneficiary of the trust.

[squ] Yes [squ] No [squ] N/A

    (x) The management and daily business operations of the concern are 
controlled by one or more economically disadvantaged women. Control 
means that both the long-term decision making and the day-to-day 
management and administration of the business operations are conducted 
by one or more economically disadvantaged women.

[squ] Yes [squ] No

    (xi) An economically disadvantaged woman holds the highest officer 
position in the concern and her resume evidences that she has the 
managerial experience of the extent and complexity needed to run the 
concern.

[squ] Yes [squ] No

    (xi) The economically disadvantaged woman manager does not have the 
technical expertise or possess the required license for the business 
but has ultimate managerial and supervisory control over those who 
possess the required licenses or technical expertise.

[squ] Yes [squ] No [squ] N/A

    (xiii) The economically disadvantaged woman who holds the highest 
officer position of the concern manages it on a full-time basis and 
devotes full-time to the business concern during the normal working 
hours of business concerns in the same or similar line of business.

[squ] Yes [squ] No

    (xiv) The economically disadvantaged woman who holds the highest 
officer position does not engage in outside employment that prevents 
her from devoting sufficient time and attention to the daily affairs of 
the concern to control its management and daily business operations.

[squ] Yes [squ] No

    (xv) If a corporation, the articles of incorporation and any 
amendments, articles of conversion, by-laws and amendments, shareholder 
meeting minutes showing director elections, shareholder meeting minutes 
showing officer elections, organizational meeting minutes, all issued 
stock certificates, stock ledger, buy-sell agreements, stock transfer 
agreements, voting agreements, and documents relating to stock options, 
including the right to convert non-voting stock or debentures into 
voting stock evidence that one or more economically disadvantaged women 
control the Board of Directors of the concern. Economically 
disadvantaged women are considered to control the Board of Directors 
when either: (1) One or more economically disadvantaged women own at 
least 51% of all voting stock of the concern, are on the Board of 
Directors and have the percentage of voting stock necessary to overcome 
any super majority voting requirements; or (2) economically 
disadvantaged women comprise the majority of voting directors through 
actual numbers or, where permitted by state law, through weighted 
voting.

[squ] Yes [squ] No [squ] N/A

    (xvi) If a partnership, the partnership agreement evidences that 
one or more economically disadvantaged women serve as general partners, 
with control over all partnership decisions.

[squ] Yes [squ] No [squ] N/A

    (xvii) If a limited liability company, the articles of organization 
and any amendments, and operating agreement and amendments evidence 
that one or more economically disadvantaged women serve as management 
members, with control over all decisions of the limited liability 
company.

[squ] Yes [squ] No [squ] N/A

    (xviii) No males or other entity exercise actual control or have 
the power to control the concern.

[squ] Yes [squ] No

    (xix) The economically disadvantaged woman upon whom eligibility is 
based has read the SBA's regulations defining economic disadvantage and 
can demonstrate that her personal net worth is less than $750,000, 
excluding her ownership interest in the concern and her equity interest 
in her primary personal residence.

[squ] Yes [squ] No

    (xx) The personal financial condition of the woman claiming 
economic disadvantage, including her personal income for the past three 
years (including bonuses, and the value of company stock given in lieu 
of cash), her personal net worth and the fair market value of all of 
her assets, whether encumbered or not, evidences that she is 
economically disadvantaged.

[squ] Yes [squ] No

    (xxi) The adjusted gross income of the woman claiming economic 
disadvantage averaged over the three years preceding the certification 
does not exceed $350,000.

[squ] Yes [squ] No

    (xxii) The adjusted gross income of the woman claiming economic 
disadvantage averaged over the three years preceding the certification 
exceeds $350,000; however, the woman can show that this income level 
was unusual and not likely to occur in the future, that losses 
commensurate with and directly related to the earnings were suffered, 
or that the income is not indicative of lack of economic disadvantage.

[squ] Yes [squ] No

    (xxiii) The fair market value of all the assets (including her 
primary residence and the value of the business concern but excluding 
funds invested in an Individual Retirement Account or other official 
retirement account that are unavailable until retirement age without a 
significant penalty) of the woman claiming economic disadvantage does 
not exceed $6 million.

[squ] Yes [squ] No

    (xxiv) The woman claiming economic disadvantage has not transferred 
any assets within two years of the date of the certification.

[squ] Yes [squ] No

    (xxv) The woman claiming economic disadvantage has transferred 
assets within two years of the date of the certification. However, the 
transferred assets were: (1) To or on behalf of an immediate family 
member for that individual's education, medical expenses, or some other 
form of essential support; or (2) to an immediate family member in 
recognition of a special occasion, such as a birthday, graduation, 
anniversary, or retirement.

[squ] Yes [squ] No [squ] N/A

    (xxvi) SBA, in connection with an examination or protest, has not 
issued a decision currently in effect finding that this business 
concern does not qualify as a EDWOSB.

[squ] Yes [squ] No

    (xxvii) All required documents verifying eligibility for the EDWOSB 
requirement have been submitted to the WOSB Program Repository, 
including any supplemental documents if there have been changes since 
the last representation, or will be submitted to the contracting 
officer if the repository is unavailable and then posted to the WOSB 
Program Repository within thirty (30) days of the repository becoming 
available.


[[Page 62274]]


[squ] Yes [squ] No

    [squ] All the statements and information provided in this form and 
any documents submitted are true, accurate and complete. If assistance 
was obtained in completing this form and the supporting documentation, 
I have personally reviewed the information and it is true and accurate. 
I understand that these statements are made for the purpose of 
determining eligibility for a WOSB Program contract.
    [squ] I understand that the information submitted may be given to 
Federal, State and local agencies for determining violations of law and 
other purposes. The certifications in this document are continuing in 
nature. Each EDWOSB or WOSB prime contract for which the EDWOSB submits 
an offer/quote or receives an award constitutes a restatement and 
reaffirmation of these certifications. I understand that the EDWOSB may 
not misrepresent its status as a EDWOSB or WOSB to: (1) Obtain a 
contract under the Small Business Act; or (2) obtain any benefit under 
a provision of Federal law that references the WOSB Program for a 
definition of program eligibility.
    [squ] I am an officer of the EDWOSB authorized to represent it and 
sign this certification on its behalf.

E. Contract File

    The SBA received one comment which recommended that the contracting 
officer document the file to include ``underrepresented industries.'' 
We note that the proposed rule did require the contracting officer to 
document the contract file with the results of the market research and 
the fact that the NAICS code assigned to the contract is for an 
industry that SBA has designated as either underrepresented or 
substantially underrepresented industry with respect to WOSBs.
    In addition, in the proposed rule, we sought comments on whether 
SBA should add the following additional language to proposed Sec.  
127.503(e):

    In addition, the contracting officer must document the contract 
file showing that the apparent successful offeror's ORCA 
certifications and associated representations were reviewed.

    The SBA received two comments which supported this requirement for 
contracting officers to document the contract file. SBA has amended the 
proposed rule to add this requirement.

F. Federal Contract Assistance

    Subpart E of the Final Rule addresses the contracting assistance 
provided to EDWOSBs and WOSBs. For example, this part of the Final Rule 
states that a contracting officer may restrict competition to EDWOSBs 
if the contract is an industry that SBA has designated as 
underrepresented and the contracting officer has a reasonable 
expectation based on market research that two or more EDWOSBs will 
submit offers, the anticipated award price (including options) does not 
exceed $5 million for a contract assigned a NAICS code for 
manufacturing or $3 million for a contract assigned any other NAICS 
code, and the contract may be awarded at a fair and reasonable price. 
The contracting officer may restrict competition for WOSBs in an 
industry that SBA has designated as substantially underrepresented if 
the contracting officer has a reasonable expectation based on market 
research that two or more WOSBs will submit offers, the anticipated 
award price (including options) does not exceed $5 million for a 
contract assigned a NAICS code for manufacturing or $3 million for a 
contract assigned any other NAICS code, and the contract may be awarded 
at a fair and reasonable price.
    The SBA received over 700 comments which stated that the dollar 
value of the contracts available to this program was too low and a few 
comments that recommended SBA apply the $5 million contract threshold 
to contracts with a NAICS code for construction. SBA notes that the 
contract dollar value threshold is specifically set forth in statute, 
and therefore, the regulations cannot be changed to reflect different 
thresholds.
    Other comments that addressed the dollar value of the contract 
available to this program recommended that SBA exclude the cost of 
construction materials from the contract value since the cost of such 
materials generally has nothing to do with the work being performed by 
the WOSB. In addition, two comments recommended that SBA not include 
option years when determining the cost of the contract. We note that 
the Small Business Act specifically states the WOSB Program is limited 
to certain contracts with an ``anticipated award price of the contract 
(including options)'' of $5 million in the case of a contract assigned 
a NAICS code for manufacturing or $3 million for all other contracts. 
We do not believe, at this time, that the cost of materials from the 
anticipated award price and SBA does not make this exclusion for any of 
the contract dollar value limitations for its other procurement 
programs. In addition, the statute clearly includes options, and 
therefore, SBA cannot exclude options from the anticipated award price 
of the contract.
    The SBA also received some comments that recommended that the WOSB 
Program permit sole source awards similar to those available in the 
8(a) BD, HUBZone and SDVO SBC Programs. Likewise, SBA received a few 
comments which questioned why the ``rule of two'' as explained in the 
FAR at 48 CFR 19.502-2(b) was set forth in the regulations. In response 
to these comments, SBA notes that the statutory provision creating the 
WOSB Program does not authorize sole source awards while the statutory 
provisions creating the other programs do. In addition, the statutory 
provisions creating the WOSB Program specifically state that a 
contracting officer may use this program only if the ``rule of two'' is 
met. Therefore, SBA is not amending the regulations as proposed.
    The SBA received one comment which recommended that we cap or limit 
how many awards a particular WOSB can receive in order to ensure that 
the contracts are going to more than a handful of WOSBs. SBA does not 
agree with this recommendation primarily because the statute does not 
provide for such a cap or limitation. In addition, it would not serve 
the purpose of the WOSB Program to prevent qualified EDWOSBs or WOSBs 
from receiving further Federal contracts.
    The SBA also received several comments which supported the parity 
of the WOSB Program with the other small business programs. 
Specifically, in proposed Sec.  127.503 SBA addressed contracting among 
the various SBA small business programs for acquisitions valued above 
and below the simplified acquisition threshold. The regulation proposed 
to provide contracting officers with the discretion to utilize either 
the 8(a) BD, SDVO SBC, HUBZone, small business or WOSB Programs, 
depending on the acquisition history, dollar value of the contract, 
results of the market research, programmatic needs specific to the 
procuring agency, and the need to meet the agency's goals.
    SBA understands that GAO has issued several decisions over the last 
two years stating that agencies must set aside any acquisition for 
HUBZone SBCs if the contracting officer has a reasonable expectation 
that at least two qualified HUBZone SBCs will submit offers and that 
the award can be made at a fair market price (the ``rule of two'' for 
HUBZone small businesses). Thus, under GAO rulings, the contracting 
officer has no discretion to utilize either the 8(a) BD, SDVO SBC, 
small business or the WOSB Program if the HUBZone rule of two is met.
    However, on July 10, 2009, the Director of the Office of Management 
and Budget (OMB) issued a memorandum stating that GAO's

[[Page 62275]]

decisions are not binding on Federal agencies and are contrary to 
regulations promulgated by SBA that provide for ``parity'' among the 
three small business programs (8(a) BD, HUBZone and SDVO SBC Programs). 
See OMB Memorandum M-09-23, publicly available at http://www.whitehouse.gov/omb/assets/memoranda_fy2009/m09-23.pdf. In 
addition, on August 21, 2009, the U.S. Department of Justice's Office 
of Legal Counsel (OLC) concluded its review of the legal basis 
underlying GAO's decisions. OLC issued an opinion stating that SBA's 
regulations governing the interplay among the HUBZone, 8(a) BD and SDVO 
SBC Programs are a permissible construction of the Act and are binding 
on all Executive Branch agencies. See ``Permissibility of Small 
Business Administration Regulations Implementing the Historically 
Underutilized Business Zone, 8(a) Business Development, and Service-
Disabled Veteran-Owned Small Business Concern Programs,'' April 21, 
2009, publicly available at http://www.usdoj.gov/olc/2009/sba-hubzone-opinion082109.pdf.
    In addition, the Court of Federal Claims issued decisions in 
Mission Critical v. U.S., 91 Fed.Cl. 386 (2010), and DGR Associates, 
Inc. v. U.S., No. 10-396C (Fed. Cl.), stating that HUBZone small 
business set asides have priority over 8(a) sole source and set aside 
awards. The U.S. Department of Justice has appealed the Mission 
Critical decision to the Court of Appeals for the Federal Circuit.
    Recently, however, the President enacted Public Law 111-240, known 
as the Small Business Jobs and Credit Act of 2010. In this law, the 
Small Business Act was amended to delete language stating that a 
contracting opportunity ``shall'' be awarded as a HUBZone set-aside if 
the HUBZone ``rule of two'' is met. The new statutory language explains 
that a contracting opportunity ``may'' be awarded as a HUBZone set-
aside if the HUBZone ``rule of two'' is met. Consequently, the HUBZone 
provisions do not unambiguously direct contracting officers to reserve 
every available contract opportunity for HUBZone small businesses 
whenever the rule of two is met. This statutory change further supports 
the SBA's position on parity.
    As a result of the foregoing, the final regulation explains that 
there is parity among the 8(a) BD, SDVO, HUBZone, small business and 
WOSB programs and has implemented the proposed rule as final.

G. Joint Venture Requirements

    In the proposed rule, SBA had proposed amending the current joint 
venture regulation, permitting EDWOSB or WOSB joint ventures for EDWOSB 
or WOSB contracts. The current rule had provided that the EDWOSB or 
WOSB must perform a significant portion of the contract and SBA 
proposed clarifying this requirement.
    SBA received one comment which supported the joint venture 
provisions and five comments suggesting that the language for joint 
ventures should be strengthened to ensure that women are the primary 
beneficiaries of the contract. SBA also received one comment which 
stated that SBA should review all joint ventures to ensure that the 
percentage of work and the distribution of profits are fair because it 
is not possible to assign a fixed percentage of profits to the one WOSB 
joint venturer, such as the stated minimum of 51 percent.
    First, SBA believes that the regulation has been strengthened 
because it requires that not less than 51 percent of the net profits 
earned by the joint venture must be distributed to the EDWOSB or WOSB 
while the former regulation only required that the WOSB joint venturer 
perform a significant portion of the contract, without setting forth a 
specific and objective percentage of work to be performed. Second, SBA 
also clarified that the joint venture agreement must be in writing and 
must set forth the following provisions: The purpose of the joint 
venture, that an EDWOSB or WOSB must be the managing venturer, that an 
employee of the managing venturer must be the project manager 
responsible for the performance of the contract, and the 
responsibilities of the parties with regard to contract performance, 
sources of labor, and negotiation of the EDWOSB or WOSB contract.
    In light of these guidelines, SBA does not believe it is necessary 
to review each joint venture agreement, which can slow down the 
contracting process. In addition, these same guidelines are in place 
for the SDVO SBC Program and there have not been any issues concerning 
the ability of the SDVO SBC joint venture partner to meet the 51 
percent net profit requirement.
    Therefore, SBA does not believe any changes to the proposed rule or 
other clarification is necessary and adopts the provision in the Final 
Rule as proposed.

H. Protests

    In the proposed rule, SBA set forth the procedures by which an 
interested party may protest the status of an EDWOSB or WOSB apparent 
successful offeror. SBA received a few comments which suggested that 
the regulations should state that the contracting officer must file a 
status protest if all the required documents are not received. SBA also 
received one comment which stated that interested parties should only 
be permitted to file a protest if it has credible information calling 
into question the apparent successful offeror's eligibility and one 
comment recommending that SBA ensure that the protest process is not 
abused.
    The SBA notes that the requirement that a contracting officer file 
a status protest if all documents are not received, or if the 
contracting officer has information that calls into question the 
eligibility of the business, is set forth in Sec.  127.301, titled 
``When may a contracting officer accept a concern's self-
certification?''. In addition, this protest process is the same or 
similar to those for SBA's other contracting programs, such as the 
HUBZone and SDVO SBC Programs. The process provides that interested 
parties must file a protest specifying all grounds for the protest and 
cannot merely assert that the protested concern is ineligible without 
setting forth specific facts. This protects the protest process from 
abuse.
    The SBA received another comment which stated that anyone should be 
allowed to file a status protest and not just those businesses 
competing in the procurement. SBA disagrees with this comment. First, 
generally only those businesses competing in the acquisition would know 
who the apparent successful offeror is because they have been notified 
of this fact by the contracting officer. Second, although a business 
that is not competing in the requirement cannot file a status protest, 
the business concern should notify SBA, who can then conduct an 
eligibility examination. Specifically, Sec.  127.400 explains that SBA 
may consider information provided to it by a third party that questions 
the eligibility of an EDWOSB or WOSB that has certified its status in 
ORCA or CCR in determining whether to conduct an eligibility 
examination.
    The SBA received one comment which stated that it disagrees with 
the ability of the contracting officer to continue a contract with a 
business if that business has been found ineligible. The comment 
suggested that the contract should be terminated as soon as possible. 
According to Sec.  127.604(f)(2)(i), if a contracting officer receives 
a protest determination stating that a concern is ineligible after 
contract award, and there has been no appeal filed with OHA, the 
contracting officer shall terminate the contract. If an appeal has been 
filed,

[[Page 62276]]

since the appeal process can be lengthy, the rule explains that the 
contracting officer must consider whether performance can be suspended 
until an appellate decision has been rendered. If OHA affirms that the 
concern is not eligible, then the contracting officer must either 
terminate the contract or not exercise the next option. Therefore, we 
believe this rule sufficiently limits a contracting officer's ability 
to continue a contract with a business found ineligible. SBA has 
implemented the rule as it proposed.

I. Other Comments

    Several comments stated that the overall size standards for WOSB/
EDWOSBs are too low. SBA notes that this proposed rule did not address 
the size standards for EDWOSBs or WOSBs and therefore, those comments 
are beyond the scope of the rulemaking.
    The SBA also received several comments which suggested that only 
those WOSBs certified by third-party certifiers or with completed ORCA 
certifications should be counted for goaling purposes. SBA also 
received one comment which suggested that the 5 percent goal should be 
increased year by year until the percentage of women owned businesses 
funded are in proportion to the number of women in the population. One 
comment stated that agencies should not be allowed to multiple count 
small business programs in meeting their goals because it limits the 
effectiveness of the small business programs. SBA notes that the 
proposed rule did not specifically address SBA's goaling program and 
therefore these comments are outside the scope of the rulemaking, as 
well.
    In addition, at least one comment suggested that the WOSB Program 
have a Mentor Prot[eacute]g[eacute] Program similar to the one in the 
8(a) BD Program. As discussed above, the President recently enacted 
Public Law 111-240, which authorizes a Mentor-Prot[eacute]g[eacute] 
Program for SBA's small business programs. Because the SBA did not 
propose guidance for such a program in the WOSB proposed rule, and is 
in the process of reviewing the statutory language and determining 
guidance on this for its programs, this final rule does not establish a 
Mentor-Prot[eacute]g[eacute] Program for the WOSB Program.
    The SBA received one comment which stated that there should be a 
similar program for non-profits. Because SBA's government contracting 
programs require that the small business concern be for profit, and SBA 
did not propose changing this requirement for the WOSB Program, we 
believe this comment is outside the scope of the rulemaking.
    The SBA also received one comment which recommended that SBA audit 
prime contractors to ensure that they utilize WOSBs for subcontracts. 
This Final Rule addresses prime contracts only because the WOSB Program 
is a prime contracting program. However, we note that SBA employs 
commercial market representatives to assist small businesses in 
obtaining subcontracts and to help other than small businesses meet 
their subcontracting goals. In addition, these SBA employees perform 
compliance reviews on other than small businesses to determine whether 
such contractors are identifying opportunities for small business as 
subcontractors and to ensure that the subcontracting plan requirements 
are met.
Compliance With Executive Orders 12866, 12988, 13132, the Paperwork 
Reduction Act (44 U.S.C., Chapter 35) and the Regulatory Flexibility 
Act (5 U.S.C. 601-612)
Executive Order 12866
    OMB has determined that this rule is a ``significant'' regulatory 
action under Executive Order 12866. In the proposed rule, SBA set forth 
its initial regulatory impact analysis, which addressed the following: 
Necessity of the regulation; alternative approaches to the proposed 
rule; and the potential benefits and costs of the regulation. SBA did 
not receive any comment which specifically addressed its regulatory 
impact analysis. However, numerous comments agreed that the rule was 
necessary to assist WOSB in obtaining Federal contracts. In addition, 
SBA received numerous comments which supported its proposed approaches, 
especially concerning the use of self-certification, third-party 
certifiers, and the document repository. The specific comments on these 
approaches are discussed above.
    At least one comment noted that SBA's proposed certification 
approach was innovative. Another comment stated that by 2018, small 
businesses will create 9.7 million new jobs with 5 million being 
created by WOSBs. This comment stated that substantial new contract 
opportunities must be found to support this growth in employment and 
the Federal Government must be one of the accessible markets. 
Therefore, it appears this comment believed that the rule will 
potentially benefit not just WOSBs and the Federal Government, but will 
have a beneficial impact on employment.
    For these reasons, and those set forth in the preamble, SBA adopts 
as final its initial regulatory impact analysis.
Executive Order 12988
    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. This action does 
not have retroactive or preemptive effect.
Executive Order 13132
    This rule does not have federalism implications as defined in the 
Executive Order. It will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in Executive Order 13132.
Paperwork Reduction Act (PRA)
    For purposes of the Paperwork Reduction Act, 44 U.S.C. chapter 35, 
SBA has determined that the rule imposes new reporting and 
recordkeeping requirements. The certification process described in 
Subpart C, Sec. Sec.  127.300 to 127.302, is an information collection. 
The certification process requires a concern seeking to benefit from 
Federal contracting opportunities designated for WOSBs or EDWOSBs to 
verify its status by submitting a certification to the WOSB Program 
Repository, submitting other supporting documents to the WOSB Program 
Repository, and by representing its status in an existing electronic 
contracting system (i.e., ORCA).
    Specifically, the WOSB or EDWOSB will be required to submit certain 
documents verifying eligibility at the time of certification in ORCA 
(and every year after). These documents will be submitted to a document 
repository, or until the repository is established, the contracting 
office upon notice of a proposed award. Further, the protest and 
eligibility examination procedures will require the submission of 
documents from those parties subject to a protest and eligibility 
examination. To reduce the burden on the WOSBs or EDWOSBs, the same 
documents submitted at the time of certification will be used for the 
protests and eligibility examinations, except that for protests and 
eligibility examinations, SBA will also request copies of proposals 
submitted in response to a WOSB or EDWOSB solicitation and certain 
other documents and information to verify the status of an EDWOSB.
    Finally, the Final Rule also requires the WOSBs or EDWOSBs to 
retain copies of the documents submitted for

[[Page 62277]]

a period of six (6) years. SBA stated in the proposed rule that it 
believes that any additional burden imposed by this recordkeeping 
requirement would be minimal since the firms would maintain the 
information in their general course of business.
    SBA submitted this information collection to OMB for review and it 
was approved.
    Title and Description of Information Collection: Women-Owned Small 
Business Federal Contract Assistance Program Purpose: The information 
collected is modeled on two currently approved information collections: 
SBA Form 1010, OMB Control 3245-0331, SBA's Application for 8(a) 
Business Development, and SBA Form 413, OMB Control 3245-0188, SBA's 
Application for Personal Financial Statement, which are used to collect 
personal and business information on the businesses and owners applying 
to this program. The information requested for this program includes 
information verifying the WOSB/EDWOSB status of the business concern, 
including tax returns, personal statements, and business documents.
    OMB Control Number:
    Description of and Estimated Number of Respondents: Information 
will be collected from the small business concerns that are not already 
certified by an approved third-party certifier and therefore must self-
certify and verify their status by submitting certain required 
documents to a document repository at the time of ORCA certification. 
This same information must also be collected by the third-party 
certifier when making its certification determination. In addition, 
those with third-party certifications will also be required to submit 
certain documents to the document repository verifying eligibility, 
such as a copy of the third-party certification and the SBA 
certification form.
    Utilizing the RAND FPDS data set for the total number of WOSBs 
(identified by Dun and Bradstreet DUNS number) that received obligated 
funds from awards, contracts, orders and modifications to existing 
contracts for FY 2005, SBA identified approximately 12,000 WOSBs as 
recipients of Federal contracts in the 83 NAICS codes that would be 
eligible under the WOSB Program. SBA did not receive specific comments 
on the estimated number of responses or response times.
    Estimated Number of Responses: In FY 2005, there were 12,000 WOSBs 
that were identified as recipients of Federal contracts in the 83 NAICS 
codes that would be eligible under the WOSB Program. Thus, SBA still 
believes there could be an estimated 12,000 responses. In addition, SBA 
will conduct eligibility examinations and protests and appeals. SBA 
still believes that the total estimated number of responses is 12,200.
    Estimated Response Time: 2 hours. Total Estimated Annual Hour 
Burden: 24,400 hours.
Regulatory Flexibility Act
    SBA has determined that this rule establishing a set-aside 
mechanism for WOSBs may have a significant economic impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act (RFA), 5 U.S.C. 601, et seq. Accordingly, 
SBA set forth an Initial Regulatory Flexibility Analysis (IRFA) 
addressing the impact of the proposed rule in accordance with section 
603, title 5, of the United States Code. The IRFA examined the 
objectives and legal basis for the proposed rule; the kind and number 
of small entities that may be affected; the projected recordkeeping, 
reporting, and other requirements; whether there were any Federal rules 
that may duplicate, overlap, or conflict with the proposed rule; and 
whether there were any significant alternatives to the proposed rule. 
The Agency's final regulatory flexibility analysis (FRFA) is set forth 
below.
1. What are the reasons for, and objectives of, this final rule?
    The Small Business Administration (SBA) is establishing procedures 
pursuant to the SBA Reauthorization Act, Public Law 106-554, enacted 
December 21, 2000, codified at Section 8(m) of the Small Business Act, 
which authorizes the creation and implementation of a new mechanism for 
Federal contracting with WOSBs. The purpose of the Final Rule is to 
create a framework and infrastructure for implementing these 
Procedures, thereby providing a tool for Federal agencies to ensure 
equal opportunity, and thereby increased Federal procurement 
opportunities to WOSBs. SBA is finalizing the Final Rule pursuant to 
section 8(m) of the Small Business Act, 15 U.S.C. 637(m). These 
Procedures will assist Federal agencies in eliminating barriers to the 
participation by WOSBs in Federal contracting, thereby achieving the 
Federal Government's goal of awarding five percent of Federal contract 
dollars to WOSBs, as provided in the Federal Acquisition Streamlining 
Act of 1994.
2. Summary of the Significant Issues Raised by the Public Comments in 
Response to the Initial Regulatory Flexibility Analysis, a Summary of 
the Assessment of the Agency of Such Issues, and a Statement of Any 
Changes Made as a Result of Such Comments
    The SBA received a few comments that addressed the IRFA or the 
subjects discussed in the IRFA. Several comments stated that SBA should 
consider the costs and burdens of the reporting and recordkeeping 
requirements for WOSBs because they could inadvertently discourage 
WOSBs from taking advantage of the program. These reporting and 
recordkeeping requirements include the representations and the 
submission of documents relating to WOSB status to the contracting 
officer if a repository for documents is unavailable.
    The SBA notes that WOSBs have the burden of proving eligibility for 
the program. Although the reporting and recordkeeping requirements may 
seem onerous, they are necessary to reduce fraud in the program and to 
ensure that the benefit of the program--an opportunity to obtain a 
contract through restricted competition--is available to only eligible 
WOSBs. The SBA's rule adopts methods and processes aimed at meeting 
these objectives, while also minimizing, as much as possible, the 
burden on small businesses. Therefore, SBA continues to believe that 
the initial analysis was accurate.
3. What is SBA's description and estimate of the number of small 
entities to which the rule will apply?
    The RFA directs agencies to provide a description, and where 
feasible, an estimate of the number of small business concerns that may 
be affected by the rule. This Final Rule will ultimately establish in 
the Federal Acquisition Regulation (FAR) a new procurement mechanism to 
benefit WOSBs. Therefore, WOSBs that compete for eligible Federal 
contracts are the specific group of small business concerns most 
directly affected by this rule. More specifically, this rule may affect 
EDWOSBs that participate in Federal procurement in industries where SBA 
determines that WOSBs are underrepresented and may affect WOSBs that 
participate in Federal procurement in industries where SBA determines 
that WOSBs are substantially underrepresented. In addition, the rule 
may affect other small businesses, as described below, to the extent 
that small businesses not owned and controlled by women or non-eligible 
WOSBs may be excluded from

[[Page 62278]]

competing for certain Federal contracting opportunities.
    The 2002 Survey of Business Owners published by the U.S. Bureau of 
the Census reported 6,489,493 women-owned businesses in the United 
States. More than 900,000 of these businesses have one or more paid 
employees. Most women-owned businesses, however, do not participate in 
the Federal contracting market. In addition, the SBO database used in 
the RAND Report represents all women-owned business (large and small) 
and only WOSBs are eligible under the regulations. As of January 21, 
2007, approximately 93,000 businesses represented themselves as WOSBs 
in the Federal Government's Central Contractor Registration (CCR) as 
actual or potential Federal contractors. The study conducted by the 
RAND Corporation for SBA narrowed the pool of WOSBs in the CCR to 
approximately 56,000 to more closely approximate the universe of firms 
who are ready, willing, and able to do business with the Government.\1\ 
However, far fewer than 56,000 WOSBs are likely to be affected by this 
Final Rule because only those eligible WOSBs competing for contracts in 
the eligible industries could possibly receive contracts under the 
program. Utilizing the RAND FPDS data set for the total number of WOSBs 
(identified by Dun and Bradstreet DUNS number) that received obligated 
funds from awards, contracts, orders and modifications to existing 
contracts for FY 2005, SBA identified approximately 12,000 WOSBs as 
recipients of Federal contracts in the 83 NAICS codes that would be 
eligible under the WOSB Program. Thus, this rule may affect 
approximately 12,000 WOSBs.
---------------------------------------------------------------------------

    \1\ RAND eliminated firms with less than $1,000 in annual 
revenue; counted a firm only once if they were registered more than 
once for multiple locations; eliminated other apparent duplications; 
and eliminated vendors that were only interested in competing for 
grants (as opposed to contracts).
---------------------------------------------------------------------------

    In addition, WOSBs who are not economically disadvantaged could be 
affected only to the extent that they compete for Federal contracts in 
industries in which WOSBs are determined to be substantially 
underrepresented. For industries in which WOSBs are determined to be 
substantially underrepresented, the potential number of WOSBs that 
could be direct beneficiaries of these Procedures restricting certain 
Federal contracts to WOSBs is also likely to be much fewer than the 
number of WOSBs registered in CCR, since not all WOSBs will satisfy the 
eligibility requirements for EDWOSB status. The CCR currently lists 
only approximately 3,800 SDBs owned and controlled by one or more 
women. This is a useful statistic because the $750,000 net worth 
requirement is the same for SDBs and for WOSBs. While SBA acknowledges 
that there may be other WOSBs in existence besides those listed in the 
CCR as being certified by SBA as SDBs, it is difficult to envision more 
than 6,000 WOSBs that could meet SBA's eligibility criteria and that 
are also ready, willing, and able to bid on Government contracts.
    Moreover, the anticipated benefits of these Procedures may be less 
attractive to many WOSBs than a number of other preferences designed to 
assist small businesses, such as HUBZone, 8(a) BD, and others. Not all 
areas of Federal procurement are likely to be designated as 
underrepresented or substantially underrepresented, and opportunities 
in some of the qualified industries may be limited. Consequently, many 
otherwise-qualified EDWOSBs and WOSBs may not find it advantageous to 
pursue contract opportunities under these Procedures.
    This Final Rule will also affect non-WOSBs (small businesses not 51 
percent owned and controlled by women) seeking Federal contracts for 
which competition has been restricted to participants in these 
Procedures. This could affect the number of future contracts for those 
businesses that derive a significant portion of their business from 
Federal contracting. As of January 2007, the CCR lists approximately 
376,000 small businesses that are not WOSBs. To the extent that 
contracting officers use these Procedures, non-WOSBs may be excluded 
from competing for certain Federal contracting opportunities. However, 
this would occur only in industries in which WOSBs have been found to 
be underrepresented or substantially underrepresented, thus receiving 
fewer contracts than would be expected absent discrimination in the 
marketplace, and where the anticipated dollar value of the procurement 
does not exceed $3 million or $5 million, in the case of manufacturing 
contracts. In addition, we note that industries in which WOSBS are 
underrepresented are ones in which they have gotten less than their 
fair share of contracts and this suggests, at least implicitly, that 
non-WOSBs have therefore been getting more than the share they would 
receive in the absence of discrimination. The number of small 
businesses that would be excluded from eligibility for competing for 
contracts designated for the program under these procurements or from 
future such determinations is not known at this time.
    Additional contracting opportunities identified by Federal agencies 
as candidates to be set aside for WOSBs will come from new contracting 
requirements and contracts currently performed by small and large 
businesses. At this time, SBA cannot accurately predict how the 
existing distribution of contracts by business type may change with 
this rule. However, SBA does not expect a great many of the contracts 
awarded through the 8(a), HUBZone, or SDVOSB Programs ($22.6 billion in 
FY 2006) to be re-competed as WOSB or EDWOSB set-aside contracts 
because those programs also support other statutory goals that agencies 
strive to achieve through their contracting activities. It is 
acknowledged, however, that some redistribution of contracts among the 
various programs may occur as a result of these Procedures.
4. What are the projected reporting, recordkeeping, Paperwork Reduction 
Act and other compliance Requirements?
    For purposes of the Paperwork Reduction Act, 44 U.S.C. Chapter 35, 
SBA has determined that the rule imposes new reporting and 
recordkeeping requirements. The certification process described in 
Subpart C, Sec. Sec.  127.300 to 127.302, is an information collection. 
The certification process requires a concern seeking to benefit from 
Federal contracting opportunities designated for WOSBs or EDWOSBs to 
verify its status by providing documents to the WOSB Program 
Repository, submitting a certification to the WOSB Program Repository, 
and representing its status in an existing electronic contracting 
system (i.e., ORCA). The WOSB or EDWOSB will have to represent in ORCA 
that it meets each eligibility requirement of the program.
    Specifically, the WOSB or EDWOSB will be required to submit certain 
documents verifying eligibility at the time of certification in ORCA 
(and every year thereafter). These documents will be submitted to a 
document repository established by SBA, or until the repository is 
established, the contracting office upon notice of a proposed award. 
Further, the protest and eligibility examination procedures will 
require the submission of documents from those parties subject to a 
protest and eligibility examination. To reduce the burden on the WOSBs 
or EDWOSBs, the same documents submitted at the time of certification 
will be used for the protests and eligibility examinations, except that 
for protests and eligibility examinations, SBA will also request copies 
of proposals submitted in response to a WOSB or EDWOSB

[[Page 62279]]

solicitation and certain other documents and information to verify the 
status of an EDWOSB.
    Finally, the rule also requires the WOSBs or EDWOSBs to retain 
copies of the documents submitted for a period of six (6) years. The 
SBA stated in the proposed rule that it believes that any additional 
burden imposed by this recordkeeping requirement would be minimal since 
the firms would maintain the information in their general course of 
business.
    As stated above, SBA submitted this information collection to OMB 
for review and it was approved.
    There will also be some recordkeeping requirements for the 
Government; but since the Government already tracks procurement awards 
to WOSBs, the additional reporting requirements will require minimal 
changes to existing systems. The SBA is working with the Integrated 
Acquisition Environment, which is managed by GSA, to ensure that CCR, 
ORCA, and the Federal Procurement Data System-Next Generation (FPDS-NG) 
contain the fields needed to capture the new socio-economic data. 
EDWOSB will be a new classification that the Government has not 
previously used.
5. Description of the Steps the Agency Has Taken To Minimize the 
Significant Economic Impact on Small Entities Consistent With the 
Stated Objectives of Applicable Statutes, Including a Statement of the 
Factual, Policy, and Legal Reasons for Selecting the Alternative 
Adopted in the Final Rule and Why Each One of the Other Significant 
Alternatives to the Rule Considered by the Agency Which Affect the 
Impact on Small Entities Was Rejected
    The SBA has minimized the significant economic impact on small 
entities. Pursuant to section 8(m) of the Small Business Act, a WOSB 
may be certified by a Federal agency, a State government, or a national 
certifying entity approved by the Administrator; or a WOSB may self-
certify to the contracting officer that it is a small business concern 
owned and controlled by women, along with adequate documentation in 
accordance with standards established by the Administration. As 
discussed earlier, SBA will allow EDWOSBs and WOSBs to self-certify 
their status in the existing CCR and ORCA databases or provide evidence 
of certification from an approved third-party certifier.
    An alternative approach would have been to require EDWOSBs and 
WOSBs to apply to SBA for formal certification. The SBA has ruled out 
this approach as unnecessary, not required by statute, and too costly. 
The SBA believes that eligibility examinations and protest procedures 
incorporated into the Final Rule will minimize the likelihood of fraud 
and misrepresentation of WOSB and EDWOSB status. The SBA has decided 
that allowing self-certification and the option for firms to apply for 
certification from SBA-approved certifiers, when combined with random 
eligibility examinations and a formal protest procedure, is a more 
viable approach than formal certification by SBA and greatly reduces 
the burden on small entities.
    In addition, SBA estimates that implementation of this Final Rule 
will require no additional proposal costs for WOSBs, as compared to 
submitting proposals under any other small business set-aside 
preferences. Moreover, WOSBs currently represent their status for 
purposes of data collection that is needed to implement 15 U.S.C. 
644(g); therefore, the self-certification process of this Final Rule 
imposes no additional requirement on WOSBs.
    Pursuant to Executive Order 13272 dated August 16, 2002, agencies 
issuing final rules are required to discuss any comments received from 
SBA's Office of Advocacy in response to the proposed rule. In this 
case, SBA's Office of Advocacy submitted two formal comments on May 3, 
2010. The first comment recommended that SBA address new market 
opportunities for women-owned small businesses that may not yet be 
incorporated in the NAICS System. While SBA understands and appreciates 
the concern expressed by the comment to consider emerging areas for 
WOSBs, SBA is limited by the data available, particularly the FPDS-NG 
and CCR databases, to construct the disparity ratios which determine 
underrepresentation. The FPDS-NG and CCR databases contain data which 
relate to well-defined NAICS codes in which WOSBs have participated in 
Federal procurement. To the extent that there are new areas in which 
WOSBs are participating, SBA is committed to making an on-going effort 
to obtain accurate and timely data to use in the anticipated updates to 
the list of eligible industries.
    The second comment received from the SBA Office of Advocacy 
expressed concern with the submission of documents that WOSBs are 
required to make prior to award. Particularly, the comment was 
concerned that ``until the repository is operational, the women-owned 
business that decides to self-certify must not only submit documents to 
the Online Representations and Certifications Application system (ORCA) 
but must provide each contracting officer with eligibility documents.'' 
The SBA Office of Advocacy was concerned with what it viewed as a 
duplicative submission and sought to have SBA seek a less burdensome 
alternative.
    As stated in the portion of the preamble which discussed the public 
comments, many of the public comments confused the CCR and ORCA 
databases. However, neither CCR nor ORCA collects documents; rather CCR 
is an online government-maintained database on which companies who want 
to do business with the Federal Government can register and supply 
limited information relative to their size and type of business, and 
ORCA collects the representations and certifications required for 
Federal contracts.
    As a requirement for participation in this Program, an EDWOSB or 
WOSB must register in CCR first. Next, it must provide documents 
supporting its EDWOSB or WOSB status to an online document repository, 
called that the WOSB Program Repository, that the SBA is planning to 
establish. The business concern will be placing these documents in a 
secure, Web-based environment that would only be accessible to the 
individual WOSBs and EDWOSBs, Federal contracting officers and SBA. The 
contracting officer would be required to access the documents prior to 
contract award to review the submitted documents. The SBA proposed this 
approach so that the WOSBs and EDWOSBs would not have to submit 
documents each time they are being considered for the award of a WOSB 
or EDWOSB contract.
    Until the repository is completed, or if the system is otherwise 
unavailable, then SBA explained that the WOSB or EDWOSBs must submit 
the documents directly to the contracting officer prior to each WOSB or 
EDWOSB award. The contracting officer must retain these documents in 
the contract file so that SBA may later review the file for purposes of 
a status protest or eligibility examination. However, the WOSB or 
EDWOSB will also be required to post the documents to the WOSB Program 
Repository within thirty (30) days of the repository becoming 
available.
    Finally, after registering in CCR and submitting the required 
document to the repository, the EDWOSB or WOSB must represent its 
status in ORCA at https://orca.bpn.gov.
    Thus, the supporting documents will be provided to a repository 
(which is not necessarily part of ORCA) or, if the repository is 
unavailable, to the contracting officer. The SBA notes that

[[Page 62280]]

the statute requires the submission of supporting documents to the 
contracting officer and, until or unless the repository is established, 
this appears to be the sole alternative that meets this statutory 
requirement. In addition, SBA believes that although the 
representations and document requirement may seem burdensome to some 
small businesses, this is required to meet the statutory provisions, 
reduce fraud in the program, and ensure that only eligible concerns 
receive the benefits of the program.

List of Subjects

13 CFR Part 121

    Administrative practice and procedure, Government procurement, 
Government property, Reporting and recordkeeping requirements, Small 
businesses.

13 CFR Part 124

    Administrative practice and procedure, Government procurement, 
Hawaiian natives, Indians--business and finance, Minority businesses, 
Reporting and recordkeeping requirements, Technical assistance.

13 CFR Part 125

    Government contracts, Government procurement, Reporting and 
recordkeeping requirements, Small businesses, Technical assistance.

13 CFR Part 127

    Government procurement, Reporting and recordkeeping requirements, 
Small businesses.

13 CFR Part 134

    Administrative practice and procedure, Claims, Equal access to 
justice, Lawyers, Organization and functions (Government agencies).

0
Accordingly, for the reasons stated in the preamble, SBA amends 13 CFR 
parts 121, 124, 125, 126, 127 and 134 as follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

0
1. The authority citation for 13 CFR part 121 continues to read as 
follows:

    Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637, 644, 662(5) 
and 694a; and Pub. L. 105-135, sec. 401 et seq., 111 Stat. 2592.


0
2. Revise Sec.  121.401 to read as follows:


Sec.  121.401  What procurement programs are subject to size 
determinations?

    The rules set forth in Sec. Sec.  121.401 through 121.413 apply to 
all Federal procurement programs for which status as a small business 
is required or advantageous, including the small business set-aside 
program, SBA's Certificate of Competency program, SBA's 8(a) Business 
Development program, SBA's HUBZone program, the Women Owned Small 
Business (WOSB) Federal Contract Program, SBA's Service-Disabled 
Veteran-Owned Small Business program, the Small Business Subcontracting 
program, and the Federal Small Disadvantaged Business (SDB) program.


0
3. Amend Sec.  121.1001 by revising paragraph (a)(9) to read as 
follows:


Sec.  121.1001  Who may initiate a size protest or request a formal 
size determination?

    (a) * * *
    (9) For SBA's WOSB Federal Contracting Program, the following 
entities may protest:
    (i) Any concern that submits an offer for a specific requirement 
set aside for WOSBs or WOSBs owned by one or more women who are 
economically disadvantaged (EDWOSB) pursuant to part 127 of this 
chapter;
    (ii) The contracting officer;
    (iii) The SBA Government Contracting Area Director; and
    (iv) The Director for Government Contracting, or designee.
* * * * *


0
4. Amend Sec.  121.1008(a) by adding a sentence after the third 
sentence to read as follows:


Sec.  121.1008  What occurs after SBA receives a size protest or 
request for a formal size determination?

    (a) * * * If the protest pertains to a requirement set aside for 
WOSBs or EDWOSBs, the Area Director will also notify SBA's Director for 
Government Contracting of the protest. * * *

PART 124--8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS 
STATUS DETERMINATIONS

0
5. The authority citation for 13 CFR part 124 continues to read as 
follows:

    Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d) and Pub. 
L. 99-661, sec. 1207, Pub. L. 100-656, Pub. L. 101-37, Pub. L. 101-
574, and 42 U.S.C. 9815.


0
6. Amend Sec.  124.503 by revising paragraph (j) to read as follows:


Sec.  124.503  How does SBA accept a procurement for award through the 
8(a) BD program?

* * * * *
    (j) Contracting Among Small Business Programs.
    (1) Acquisitions Valued At or Below $100,000/Simplified Acquisition 
Threshold. The contracting officer shall set aside any acquisition with 
an anticipated dollar value exceeding $3,000 ($15,000 for acquisitions 
as described in the Federal Acquisition Regulation (FAR) at 48 CFR 
13.201(g)(1)) but valued below $100,000 ($250,000 for acquisitions 
described in paragraph (1) of the Simplified Acquisition Threshold 
definition in the FAR at 48 CFR 2.101) for small business concerns when 
there is a reasonable expectation that offers will be obtained from at 
least two small business concerns that are competitive in terms of 
quality and delivery and award will be made at fair market prices. This 
requirement does not preclude a contracting officer from setting aside 
a contract under the 8(a) BD, HUBZone, Service Disabled Veteran Owned 
(SDVO), or WOSB programs.
    (2) Acquisitions Valued Above $100,000/Simplified Acquisition 
Threshold.
    (i) The contracting officer shall set aside any acquisition with an 
anticipated dollar value exceeding $100,000 ($250,000 for acquisitions 
described in paragraph (1) of the Simplified Acquisition Threshold 
definition in the FAR at 48 CFR 2.101) for small business concerns when 
there is a reasonable expectation that offers will be obtained from at 
least two small business concerns that are competitive in terms of 
quality and delivery and award will be made at fair market prices. 
However, after conducting market research, the contracting officer 
shall first consider a set-aside or sole source award (if the sole 
source award is permitted by statute or regulation) under the 8(a) BD, 
HUBZone, SDVO SBC or WOSB programs before setting aside the requirement 
as a small business set-aside. There is no order of precedence among 
the 8(a) BD, HUBZone, SDVO SBC or WOSB programs. The contracting 
officer must document the contract file with the rationale used to 
support the specific set-aside, including the type and extent of market 
research conducted. In addition, the contracting officer must document 
the contract file showing that the apparent successful offeror's ORCA 
certifications and associated representations were reviewed.
    (ii) SBA believes that Progress in fulfilling the various small 
business goals, as well as other factors such as the results of market 
research, programmatic needs specific to the procuring agency, 
anticipated award price, and the acquisition history, will be 
considered in making a decision as to which program to use for the 
acquisition.


[[Page 62281]]



 PART 125--GOVERNMENT CONTRACTING PROGRAMS

0
7. The authority citation for 13 CFR part 125 continues to read as 
follows:

    Authority:  15 U.S.C. 632(p), (q), 634 (b)(6), 637, 644, and 
657f.


0
8. Add new paragraph (f) to Sec.  125.2 to read as follows:


Sec.  125.2  Prime contracting assistance.

* * * * *
    (f) Contracting Among Small Business Programs.
    (1) Acquisitions Valued At or Below $100,000/Simplified Acquisition 
Threshold. The contracting officer shall set aside any acquisition with 
an anticipated dollar value exceeding $3,000 ($15,000 for acquisitions 
as described in the Federal Acquisition Regulation (FAR) at 48 CFR 
13.201(g)(1)) but valued below $100,000 ($250,000 for acquisitions 
described in paragraph (1) of the Simplified Acquisition Threshold 
definition in the FAR at 48 CFR 2.101) for small business concerns when 
there is a reasonable expectation that offers will be obtained from at 
least two small business concerns that are competitive in terms of 
quality and delivery and award will be made at fair market prices. This 
requirement does not preclude a contracting officer from setting aside 
a contract under the 8(a) BD, HUBZone, Service Disabled Veteran Owned 
(SDVO), or WOSB programs.
    (2) Acquisitions Valued Above $100,000/Simplified Acquisition 
Threshold.
    (i) The contracting officer shall set aside any acquisition with an 
anticipated dollar value exceeding $100,000 ($250,000 for acquisitions 
described in paragraph (1) of the Simplified Acquisition Threshold 
definition in the FAR at 48 CFR 2.101) for small business concerns when 
there is a reasonable expectation that offers will be obtained from at 
least two small business concerns that are competitive in terms of 
quality and delivery and award will be made at fair market prices. 
However, after conducting market research, the contracting officer 
shall first consider a set-aside or sole source award (if the sole 
source award is permitted by statute or regulation) under the 8(a) BD, 
HUBZone, SDVO SBC or WOSB programs before setting aside the requirement 
as a small business set-aside. There is no order of precedence among 
the 8(a) BD, HUBZone, SDVO SBC or WOSB programs. The contracting 
officer must document the contract file with the rationale used to 
support the specific set-aside, including the type and extent of market 
research conducted. In addition, the contracting officer must document 
the contract file showing that the apparent successful offeror's ORCA 
certifications and associated representations were reviewed.
    (ii) SBA believes that Progress in fulfilling the various small 
business goals, as well as other factors such as the results of market 
research, programmatic needs specific to the procuring agency, 
anticipated award price, and the acquisition history, will be 
considered in making a decision as to which program to use for the 
acquisition.

0
9. Amend Sec.  125.19 by revising paragraph (b) to read as follows:


Sec.  125.19  When may a contracting officer set-aside a procurement 
for SDVO SBCs?

* * * * *
    (b) Contracting Among Small Business Programs.
    (1) Acquisitions Valued At or Below $100,000/Simplified Acquisition 
Threshold. The contracting officer shall set aside any acquisition with 
an anticipated dollar value exceeding $3,000 ($15,000 for acquisitions 
as described in the Federal Acquisition Regulation (FAR) at 48 CFR 
13.201(g)(1)) but valued below $100,000 ($250,000 for acquisitions 
described in paragraph (1) of the Simplified Acquisition Threshold 
definition in the FAR at 48 CFR 2.101) for small business concerns when 
there is a reasonable expectation that offers will be obtained from at 
least two small business concerns that are competitive in terms of 
quality and delivery and award will be made at fair market prices. This 
requirement does not preclude a contracting officer from setting aside 
a contract under the 8(a) BD, HUBZone, Service Disabled Veteran Owned 
(SDVO), or WOSB programs.
    (2) Acquisitions Valued Above $100,000/Simplified Acquisition 
Threshold.
    (i) The contracting officer shall set aside any acquisition with an 
anticipated dollar value exceeding $100,000 ($250,000 for acquisitions 
described in paragraph (1) of the Simplified Acquisition Threshold 
definition in the FAR at 48 CFR 2.101) for small business concerns when 
there is a reasonable expectation that offers will be obtained from at 
least two small business concerns that are competitive in terms of 
quality and delivery and award will be made at fair market prices. 
However, after conducting market research, the contracting officer 
shall first consider a set-aside or sole source award (if the sole 
source award is permitted by statute or regulation) under the 8(a) BD, 
HUBZone, SDVO SBC or WOSB programs before setting aside the requirement 
as a small business set-aside. There is no order of precedence among 
the 8(a) BD, HUBZone, SDVO SBC or WOSB programs. The contracting 
officer must document the contract file with the rationale used to 
support the specific set-aside, including the type and extent of market 
research conducted. In addition, the contracting officer must document 
the contract file showing that the apparent successful offeror's ORCA 
certifications and associated representations were reviewed.
    (ii) SBA believes that Progress in fulfilling the various small 
business goals, as well as other factors such as the results of market 
research, programmatic needs specific to the procuring agency, 
anticipated award price, and the acquisition history, will be 
considered in making a decision as to which program to use for the 
acquisition.
* * * * *

PART 126--HUBZONE PROGRAM

0
10. The authority citation for part 126 continues to read as follows:

    Authority:  15 U.S.C. 632(a), 632(j), 632(p) and 657a.

0
11. Amend Sec.  126.607 by revising paragraph (b) to read as follows:


Sec.  126.607  When must a contracting officer set aside a requirement 
for qualified HUBZone SBCs?

* * * * *
    (b) Contracting Among Small Business Programs.
    (1) Acquisitions Valued At or Below $100,000/Simplified Acquisition 
Threshold. The contracting officer shall set aside any acquisition with 
an anticipated dollar value exceeding $3,000 ($15,000 for acquisitions 
as described in the Federal Acquisition Regulation (FAR) at 48 CFR 
13.201(g)(1)) but valued below $100,000 ($250,000 for acquisitions 
described in paragraph (1) of the Simplified Acquisition Threshold 
definition in the FAR at 48 CFR 2.101) for small business concerns when 
there is a reasonable expectation that offers will be obtained from at 
least two small business concerns that are competitive in terms of 
quality and delivery and award will be made at fair market prices. This 
requirement does not preclude a contracting officer from setting aside 
a contract under the 8(a) BD, HUBZone, Service Disabled Veteran Owned 
(SDVO), or WOSB programs.

[[Page 62282]]

    (2) Acquisitions Valued Above $100,000/Simplified Acquisition 
Threshold.
    (i) The contracting officer shall set aside any acquisition with an 
anticipated dollar value exceeding $100,000 ($250,000 for acquisitions 
described in paragraph (1) of the Simplified Acquisition Threshold 
definition in the FAR at 48 CFR 2.101) for small business concerns when 
there is a reasonable expectation that offers will be obtained from at 
least two small business concerns that are competitive in terms of 
quality and delivery and award will be made at fair market prices. 
However, after conducting market research, the contracting officer 
shall first consider a set-aside or sole source award (if the sole 
source award is permitted by statute or regulation) under the 8(a) BD, 
HUBZone, SDVO SBC or WOSB programs before setting aside the requirement 
as a small business set-aside. There is no order of precedence among 
the 8(a) BD, HUBZone, SDVO SBC or WOSB programs. The contracting 
officer must document the contract file with the rationale used to 
support the specific set-aside, including the type and extent of market 
research conducted. In addition, the contracting officer must document 
the contract file showing that the apparent successful offeror's ORCA 
certifications and associated representations were reviewed.
    (ii) SBA believes that Progress in fulfilling the various small 
business goals, as well as other factors such as the results of market 
research, programmatic needs specific to the procuring agency, 
anticipated award price, and the acquisition history, will be 
considered in making a decision as to which program to use for the 
acquisition.
* * * * *


Sec.  126.609  [Removed and Reserved]

0
12. Remove and reserve Sec.  126.609.

0
13. Revise part 127 to read as follows:

PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT PROGRAM

Subpart A--General Provisions
Sec.
127.100 What is the purpose of this part?
127.101 What type of assistance is available under this part?
127.102 What are the definitions of the terms used in this part?
Subpart B--Eligibility Requirements To Qualify as an EDWOSB or WOSB
127.200 What are the requirements a concern must meet to qualify as 
an EDWOSB or WOSB?
127.201 What are the requirements for ownership of an EDWOSB and 
WOSB?
127.202 What are the requirements for control of an EDWOSB or WOSB?
127.203 What are the rules governing the requirement that 
economically disadvantaged women must own EDWOSBs?
Subpart C--Certification of EDWOSB or WOSB Status
127.300 How is a concern certified as an EDWOSB or WOSB?
127.301 When may a contracting officer accept a concern's self-
certification?
127.302 What third-party certifications may a concern use as 
evidence of its status as a qualified EDWOSB or WOSB?
127.303 How will SBA select and identify approved certifiers?
127.304 How does a concern obtain certification from an approved 
certifier?
127.305 May a concern determined not to qualify as an EDWOSB or WOSB 
submit a self-certification for a particular EDWOSB or WOSB 
requirement?
Subpart D--Eligibility Examinations
127.400 What is an eligibility examination?
127.401 What is the difference between an eligibility examination 
and an EDWOSB or WOSB status protest pursuant to subpart F of this 
part?
127.402 How will SBA conduct an examination?
127.403 What happens if SBA verifies the concern's eligibility?
127.404 What happens if SBA is unable to verify a concern's 
eligibility?
127.405 What is the process for requesting an eligibility 
examination?
Subpart E--Federal Contract Assistance
127.500 In what industries is a contracting officer authorized to 
restrict competition under this part?
127.501 How will SBA determine the industries that are eligible for 
EDWOSB or WOSB requirements?
127.502 How will SBA identify and provide notice of the designated 
industries?
127.503 When is a contracting officer authorized to restrict 
competition under this part?
127.504 What additional requirements must a concern satisfy to 
submit an offer on an EDWOSB or WOSB requirement?
127.505 May a non-manufacturer submit an offer on an EDWOSB or WOSB 
requirement for supplies?
127.506 May a joint venture submit an offer on an EDWOSB or WOSB 
requirement?
127.507 Are there EDWOSB and WOSB contracting opportunities at or 
below the Simplified Acquisition Threshold?
127.508 May SBA appeal a contracting officer's decision not to 
reserve a procurement for award as a WOSB Program Contract?
127.509 What is the process for such an appeal?
Subpart F--Protests
127.600 Who may protest the status of a concern as an EDWOSB or 
WOSB?
127.601 May a protest challenging the size and status of a concern 
as an EDWOSB or WOSB be filed together?
127.602 What are the grounds for filing an EDWOSB or WOSB status 
protest?
127.603 What are the requirements for filing an EDWOSB or WOSB 
protest?
127.604 How will SBA process an EDWOSB or WOSB status protest?
127.605 What are the procedures for appealing an EDWOSB or WOSB 
status protest decision?
Subpart G--Penalties
127.700 What penalties may be imposed under this part?

    Authority: 15 U.S.C. 632, 634(b)(6), 637(m), and 644.

Subpart A--General Provisions


Sec.  127.100  What is the purpose of this part?

    Section 8(m) of the Small Business Act authorizes certain 
procurement mechanisms to ensure that Women-Owned Small Businesses 
(WOSBs) have an equal opportunity to participate in Federal 
contracting. This part implements these mechanisms and ensures that the 
program created, referred to as the WOSB Program, is substantially 
related to this important Congressional goal in accordance with 
applicable law.


Sec.  127.101  What type of assistance is available under this part?

    This part authorizes contracting officers to restrict competition 
to eligible Economically Disadvantaged Women-Owned Small Businesses 
(EDWOSBs) for certain Federal contracts in industries in which the 
Small Business Administration (SBA) determines that WOSBs are 
underrepresented or substantially underrepresented in Federal 
procurement. It also authorizes contracting officers to restrict 
competition to eligible WOSBs for certain Federal contracts in 
industries in which SBA determines that WOSBs are substantially 
underrepresented in Federal procurement and has waived the economically 
disadvantaged requirement.


Sec.  127.102  What are the definitions of the terms used in this part?

    For purposes of this part:
    8(a) Business Development (8(a) BD) concern means a concern that 
SBA has certified as an 8(a) BD program participant and whose term has 
not expired or otherwise left the 8(a) BD program early.
    AA/GC&BD means SBA's Associate Administrator for Government 
Contracting and Business Development.
    Central Contractor Registration (CCR) Database means the primary

[[Page 62283]]

Government repository for contractor information required for the 
conduct of business with the Government. It is also a means for 
conducting searches for small business contractors. In general, 
prospective Federal contractors must be registered in CCR prior to 
award of a contract or purchase agreement. CCR is located at https://www.bpn.gov/ccr/.
    Citizen means a person born or naturalized in the United States. 
Resident aliens and holders of permanent visas are not considered to be 
citizens.
    Concern means a firm that satisfies the requirements in Sec.  
121.105 of this chapter.
    Contracting officer has the meaning given to that term in Section 
27(f)(5) of the Office of Federal Procurement Policy Act (codified at 
41 U.S.C. 423(f)(5)).
    D/GC means SBA's Director for Government Contracting.
    Economically Disadvantaged WOSB (EDWOSB) means a concern that is 
small pursuant to part 121 of this chapter and that is at least 51 
percent owned and controlled by one or more women who are citizens and 
who are economically disadvantaged in accordance with Sec. Sec.  
127.200, 127.201, 127.202 and 127.203. An EDWOSB automatically 
qualifies as a WOSB.
    EDWOSB requirement means a Federal requirement for services or 
supplies for which a contracting officer has restricted competition to 
EDWOSBs.
    Immediate family member means father, mother, husband, wife, son, 
daughter, stepchild, brother, sister, grandfather, grandmother, 
grandson, granddaughter, father-in-law, mother-in-law, son-in-law, and 
daughter-in-law.
    Interested party means any concern that submits an offer for a 
specific EDWOSB or WOSB requirement, the contracting activity's 
contracting officer, or SBA.
    ORCA (the Online Representations and Certifications Application) 
means the primary Government repository for contractor submitted 
representations and certifications required for the conduct of business 
with the Government. ORCA is located at https://orca.bpn.gov.
    Primary industry classification means the six-digit North American 
Industry Classification System (NAICS) code designation that best 
describes the primary business activity of the concern. The NAICS code 
designations are described in the NAICS manual available via the 
Internet at http://www.census.gov/NAICS. In determining the primary 
industry in which a concern is engaged, SBA will consider the factors 
set forth in Sec.  121.107 of this chapter.
    Same or similar line of business means business activities within 
the same four-digit ``Industry Group'' of the NAICS Manual as the 
primary industry classification of the WOSB or EDWOSB.
    Substantial underrepresentation means a disparity ratio which is 
less than 0.5.
    Underrepresentation means a disparity ratio between 0.5 and 0.8.
    WOSB means a concern that is small pursuant to part 121 of this 
chapter, and that is at least 51 percent owned and controlled by one or 
more women who are citizens in accordance with Sec. Sec.  127.200, 
127.201 and 127.202.
    WOSB Program Repository means a secure, Web-based application that 
collects, stores and disseminates documents to the contracting 
community and SBA, which verify the eligibility of a business concern 
for a contract to be awarded under a WOSB or EDWOSB requirement.
    WOSB requirement means a Federal requirement for services or 
supplies for which a contracting officer has restricted competition to 
eligible WOSBs.

Subpart B--Eligibility Requirements To Qualify as an EDWOSB or WOSB


Sec.  127.200  What are the requirements a concern must meet to qualify 
as an EDWOSB or WOSB?

    (a) Qualification as an EDWOSB. To qualify as an EDWOSB, a concern 
must be:
    (1) A small business as defined in part 121 of this chapter for its 
primary industry classification; and
    (2) Not less than 51 percent unconditionally and directly owned and 
controlled by one or more women who are United States citizens and are 
economically disadvantaged.
    (b) Qualification as a WOSB. To qualify as a WOSB, a concern must 
be:
    (1) A small business as defined in part 121 of this chapter; and
    (2) Not less than 51 percent unconditionally and directly owned and 
controlled by one or more women who are United States citizens.


Sec.  127.201  What are the requirements for ownership of an EDWOSB and 
WOSB?

    (a) General. To qualify as an EDWOSB one or more economically 
disadvantaged women must unconditionally and directly own at least 51 
percent of the concern. To qualify as a WOSB, one or more women must 
unconditionally and directly own at least 51 percent of the concern. 
Ownership will be determined without regard to community property laws.
    (b) Requirement for unconditional ownership. To be considered 
unconditional, the ownership must not be subject to any conditions, 
executory agreements, voting trusts, or other arrangements that cause 
or potentially cause ownership benefits to go to another. The pledge or 
encumbrance of stock or other ownership interest as collateral, 
including seller-financed transactions, does not affect the 
unconditional nature of ownership if the terms follow normal commercial 
practices and the owner retains control absent violations of the terms.
    (c) Requirement for direct ownership. To be considered direct, the 
qualifying women must own 51 percent of the concern directly. The 51 
percent ownership may not be through another business entity or a trust 
(including employee stock ownership plan) that is, in turn, owned and 
controlled by one or more women or economically disadvantaged women. 
However, ownership by a trust, such as a living trust, may be treated 
as the functional equivalent of ownership by a woman or economically 
disadvantaged woman where the trust is revocable, and the woman is the 
grantor, the trustee, and the sole current beneficiary of the trust.
    (d) Ownership of a partnership. In the case of a concern that is a 
partnership, at least 51 percent of each class of partnership interest 
must be unconditionally owned by one or more women or in the case of an 
EDWOSB, economically disadvantaged women. The ownership must be 
reflected in the concern's partnership agreement. For purposes of this 
requirement, general and limited partnership interests are considered 
different classes of partnership interest.
    (e) Ownership of a limited liability company. In the case of a 
concern that is a limited liability company, at least 51 percent of 
each class of member interest must be unconditionally owned by one or 
more women or in the case of an EDWOSB, economically disadvantaged 
women.
    (f) Ownership of a corporation. In the case of a concern that is a 
corporation, at least 51 percent of each class of voting stock 
outstanding and 51 percent of the aggregate of all stock outstanding 
must be unconditionally owned by one or more women, or in the case of 
an EDWOSB, economically disadvantaged women. In determining 
unconditional ownership of the concern, any unexercised stock options 
or similar agreements held by a woman will be disregarded. However, any 
unexercised stock option or other agreement, including the right to 
convert non-voting stock or debentures into voting

[[Page 62284]]

stock, held by any other individual or entity will be treated as having 
been exercised.


Sec.  127.202  What are the requirements for control of an EDWOSB or 
WOSB?

    (a) General. To qualify as a WOSB, the management and daily 
business operations of the concern must be controlled by one or more 
women. To qualify as an EDWOSB, the management and daily business 
operations of the concern must be controlled by one or more women who 
are economically disadvantaged. Control by one or more women or 
economically disadvantaged women means that both the long-term decision 
making and the day-to-day management and administration of the business 
operations must be conducted by one or more women or economically 
disadvantaged women.
    (b) Managerial position and experience. A woman, or in the case of 
an EDWOSB an economically disadvantaged woman, must hold the highest 
officer position in the concern and must have managerial experience of 
the extent and complexity needed to run the concern. The woman or 
economically disadvantaged woman manager need not have the technical 
expertise or possess the required license to be found to control the 
concern if she can demonstrate that she has ultimate managerial and 
supervisory control over those who possess the required licenses or 
technical expertise. However, if a man possesses the required license 
and has an equity interest in the concern, he may be found to control 
the concern.
    (c) Limitation on outside employment. The woman or economically 
disadvantaged woman who holds the highest officer position of the 
concern must manage it on a full-time basis and devote full-time to the 
business concern during the normal working hours of business concerns 
in the same or similar line of business. The woman or economically 
disadvantaged woman who holds the highest officer position may not 
engage in outside employment that prevents her from devoting sufficient 
time and attention to the daily affairs of the concern to control its 
management and daily business operations.
    (d) Control over a partnership. In the case of a partnership, one 
or more women, or in the case of an EDWOSB, economically disadvantaged 
women, must serve as general partners, with control over all 
partnership decisions.
    (e) Control over a limited liability company. In the case of a 
limited liability company, one or more women, or in the case of an 
EDWOSB, economically disadvantaged women, must serve as management 
members, with control over all decisions of the limited liability 
company.
    (f) Control over a corporation. One or more women, or in the case 
of an EDWOSB, economically disadvantaged women, must control the Board 
of Directors of the concern. Women or economically disadvantaged women 
are considered to control the Board of Directors when either:
    (1) One or more women or economically disadvantaged women own at 
least 51 percent of all voting stock of the concern, are on the Board 
of Directors and have the percentage of voting stock necessary to 
overcome any super majority voting requirements; or
    (2) Women or economically disadvantaged women comprise the majority 
of voting directors through actual numbers or, where permitted by state 
law, through weighted voting.
    (g) Involvement in the concern by other individuals or entities. 
Men or other entities may be involved in the management of the concern 
and may be stockholders, partners or limited liability members of the 
concern. However, no males or other entity may exercise actual control 
or have the power to control the concern.


Sec.  127.203  What are the rules governing the requirement that 
economically disadvantaged women must own EDWOSBs?

    (a) General. To qualify as an EDWOSB, the concern must be at least 
51 percent owned by one or more women who are economically 
disadvantaged. A woman is economically disadvantaged if she can 
demonstrate that her ability to compete in the free enterprise system 
has been impaired due to diminished capital and credit opportunities as 
compared to others in the same or similar line of business. SBA does 
not take into consideration community property laws when determining 
economic disadvantage when the woman has no direct, individual or 
separate ownership interest in the property.
    (b) Limitation on personal net worth.
    (1) In order to be considered economically disadvantaged, the 
woman's personal net worth must be less than $750,000, excluding her 
ownership interest in the concern and her equity interest in her 
primary personal residence.
    (2) Income received from an EDWOSB that is an S corporation, LLC or 
partnership will be excluded from net worth where the EDWOSB provides 
documentary evidence demonstrating that the income was reinvested in 
the business concern or the distribution was solely for the purposes of 
paying taxes arising in the normal course of operations of the business 
concern. Losses from the S corporation, LLC or partnership, however, 
are losses to the EDWOSB only, not losses to the individual, and cannot 
be used to reduce an individual's net worth.
    (3) Funds invested in an Individual Retirement Account (IRA) or 
other official retirement account that are unavailable until retirement 
age without a significant penalty will not be considered in determining 
a woman's net worth. In order to properly assess whether funds invested 
in a retirement account may be excluded from a woman's net worth, she 
must provide information about the terms and restrictions of the 
account to SBA and certify that the retirement account is legitimate.
    (c) Factors to be considered.
    (1) General. The personal financial condition of the woman claiming 
economic disadvantage, including her personal income for the past three 
years (including bonuses, and the value of company stock given in lieu 
of cash), her personal net worth and the fair market value of all of 
her assets, whether encumbered or not, will be considered in 
determining whether she is economically disadvantaged.
    (2) Spouse's financial situation. SBA may consider a spouse's 
financial situation in determining a woman's access to credit and 
capital. When married, an individual claiming economic disadvantage 
must submit separate financial information for her spouse, unless the 
individual and the spouse are legally separated. SBA will consider a 
spouse's financial situation in determining an individual's access to 
credit and capital where the spouse has a role in the business (e.g., 
an officer, employee or director) or has lent money to, provided credit 
or financial support to, or guaranteed a loan of the business. SBA may 
also consider the spouse's financial condition if the spouse's business 
is in the same or similar line of business as the EDWOSB or WOSB and 
the spouse's business and WOSB share similar names, Web sites, 
equipment or employees. In addition, all transfers to a spouse within 
two years of a certification will be attributed to a woman claiming 
economic disadvantage as set forth in paragraph (d) of this section.
    (3) Income.
    (i) When considering a woman's personal income, if the adjusted 
gross yearly income averaged over the three years preceding the 
certification exceeds $350,000, SBA will presume that she is not 
economically disadvantaged. The

[[Page 62285]]

presumption may be rebutted by a showing that this income level was 
unusual and not likely to occur in the future, that losses commensurate 
with and directly related to the earnings were suffered, or by evidence 
that the income is not indicative of lack of economic disadvantage.
    (ii) Income received by an EDWOSB that is an S corporation, LLC, or 
partnership will be excluded from an individual's income where the 
EDWOSB provides documentary evidence demonstrating that the income was 
reinvested in the EDWOSB or the distribution was solely for the 
purposes of paying taxes arising in the normal course of operations of 
the business concern. Losses from the S corporation, LLC or 
partnership, however, are losses to the EDWOSB only, not losses to the 
individual, and cannot be used to reduce a woman's personal income.
    (4) Fair market value of all assets. A woman will generally not be 
considered economically disadvantaged if the fair market value of all 
her assets (including her primary residence and the value of the 
business concern) exceeds $6 million. The only assets excluded from 
this determination are funds excluded under paragraph (b)(3) of this 
section as being invested in a qualified IRA account or other official 
retirement account.
    (d) Transfers within two years. Assets that a woman claiming 
economic disadvantage transferred within two years of the date of the 
concern's certification will be attributed to the woman claiming 
economic disadvantage if the assets were transferred to an immediate 
family member, or to a trust that has as a beneficiary an immediate 
family member. The transferred assets within the two-year period will 
not be attributed to the woman if the transfer was:
    (1) To or on behalf of an immediate family member for that 
individual's education, medical expenses, or some other form of 
essential support; or
    (2) To an immediate family member in recognition of a special 
occasion, such as a birthday, graduation, anniversary, or retirement.

Subpart C--Certification of EDWOSB or WOSB Status


Sec.  127.300  How is a concern certified as an EDWOSB or WOSB?

    (a) General. At the time a concern submits an offer on a specific 
contract reserved for competition under this part, it must be 
registered in the Central Contractor Registration (CCR), have a current 
representation posted on the Online Representations and Certifications 
Application (ORCA) that it qualifies as an EDWOSB or WOSB and have 
provided the required documents to the WOSB Program Repository, or if 
the repository is unavailable, be prepared to submit the documents to 
the contracting officer if selected as the apparent successful offeror.
    (b) Form of certification. In conjunction with its required 
registration in the CCR database, the concern must submit a copy of the 
Women-Owned Small Business Program Certification (WOSB or EDWOSB) to 
the WOSB Program Repository and representations to the electronic 
annual representations and certifications at http://orca.bpn.gov, that 
it is a qualified EDWOSB or WOSB. The Women-Owned Small Business 
Program Certification (WOSB or EDWOSB) and representation must state, 
subject to penalties for misrepresentation, that:
    (1) The concern is an EDWOSB or WOSB or is certified as an EDWOSB 
or WOSB by a certifying entity approved by SBA, and there have been no 
changes in its circumstances affecting its eligibility since 
certification;
    (2) The concern meets each of the applicable individual eligibility 
requirements described in subpart B of this part, including that:
    (i) It is a small business concern under the size standard assigned 
to the particular procurement;
    (ii) It is at least 51 percent owned and controlled by one or more 
women who are United States citizens, or it is at least 51 percent 
owned and controlled by one or more women who are United States 
citizens and are economically disadvantaged; and
    (iii) Neither SBA, in connection with an examination or protest, 
nor an SBA-approved certifier has issued a decision currently in effect 
finding that it does not qualify as an EDWOSB or WOSB.
    (c) Documents provided to contracting officer. All of the documents 
set forth in paragraphs (d) and (e) of this section must be provided to 
the contracting officer to verify eligibility at the time of initial 
offer. The documents will be provided via the WOSB Program Repository 
or, if the repository is unavailable, directly to the contracting 
officer. The documents must be retained for a minimum of six (6) years.
    (d) Third-Party Certification.
    (1) Prior to certification in ORCA, the WOSB or EDWOSB that has 
been certified as a WOSB or EDWOSB by a certifying entity approved by 
SBA, including those certifiers from which SBA will accept 
certifications from the U.S. Department of Transportation's (DOT) 
Disadvantaged Business Enterprise (DBE) Program, or by SBA as an 8(a) 
BD Participant, must provide a copy of the third-party Certification to 
the WOSB Program Repository. If the WOSB Program Repository is 
unavailable, then prior to the award of a WOSB or EDWOSB contract, the 
apparent successful offeror WOSB or EDWOSB that has been certified as a 
EDWOSB or WOSB by a certifying entity approved by SBA must provide a 
copy of the third-party Certification to the contracting officer 
verifying that it was a WOSB or EDWOSB at the time of initial offer.
    (2) The EDWOSB or WOSB must also provide a copy of the joint 
venture agreement, if applicable.
    (3) The EDWOSB or WOSB must also provide a signed copy of the 
Women-Owned Small Business Program Certification (WOSB or EDWOSB).
    (4) The EDWOSB or WOSB must also provide any additional documents 
as requested by SBA in writing that are necessary to satisfy the WOSB 
Program requirements.
    (5) Within thirty (30) days of the WOSB Program Repository becoming 
available, the WOSB or EDWOSB must provide the same documents to the 
repository.
    (e) Non-Third Party Certification. A concern that has not been 
certified as a WOSB or EDWOSB by a third-party certifier approved by 
SBA or as a DBE or by SBA as an 8(a) BD Participant must also provide 
documents to the WOSB Program Repository. If the WOSB Program 
Repository is unavailable, then prior to award of a WOSB or EDWOSB 
contract, the apparent successful offeror must provide a copy of the 
documents to the contracting officer verifying that it was a WOSB or 
EDWOSB at the time of initial offer. Within thirty (30) days of the 
WOSB Program Repository becoming available, the WOSB or EDWOSB must 
provide the same documents to the WOSB Program Repository. These 
documents must be signed and include the following:
    (1) Birth certificates, Naturalization papers, or unexpired 
passports for owners who are women;
    (2) Copy of the joint venture agreement, if applicable;
    (3) For limited liability companies:
    (i) Articles of organization (also referred to as certificate of 
organization or articles of formation) and any amendments; and
    (ii) Operating agreement, and any amendments;
    (4) For corporations:
    (i) Articles of incorporation and any amendments;
    (ii) By-laws and any amendments;

[[Page 62286]]

    (iii) All issued stock certificates, including the front and back 
copies, signed in accord with the by-laws;
    (iv) Stock ledger; and
    (v) Voting agreements, if any;
    (5) For partnerships, the partnership agreement and any amendments;
    (6) For sole proprietorships (and corporations, limited liability 
companies and partnerships if applicable), the assumed/fictitious name 
certificate(s);
    (7) A signed copy of the Women-Owned Small Business Program 
Certification-WOSBs; and
    (8) For EDWOSBs, in addition to the above:
    (i) SBA Form 413, Personal Financial Statement, available to the 
public at http://www.sba.gov/tools/Forms/index.html, for each woman 
claiming economic disadvantage; and
    (ii) A signed copy of the Women-Owned Small Business Program 
Certification-EDWOSBs.
    (f) Update of certification and documents.
    (1) The concern must update its Women-Owned Small Business Program 
Certification (WOSB or EDWOSB) and EDWOSB and WOSB representations and 
self-certification on ORCA as necessary, but at least annually, to 
ensure they are kept current, accurate, and complete. The certification 
and representations are effective for a period of one year from the 
date of submission or update.
    (2) The WOSB or EDWOSB must update the documents submitted to the 
contracting officer via the WOSB Program Repository as necessary to 
ensure they are kept current, accurate and complete. If the WOSB 
Program Repository is not available, the WOSB or EDWOSB must provide 
current, accurate and complete documents to the contracting officer for 
each contract award. Within thirty (30) days of the WOSB Program 
Repository becoming available, the WOSB or EDWOSB must provide the same 
documents to the WOSB Program Repository.


Sec.  127.301  When may a contracting officer accept a concern's self-
certification?

    (a) General.
    (1) Third-Party Certifications. A contracting officer may accept a 
concern's self-certification on ORCA as accurate for a specific 
procurement reserved for award under this Part if the apparent 
successful offeror WOSB or EDWOSB provided the required documents, 
which are set forth in Sec.  127.300(d), and there has been no protest 
or other credible information that calls into question the concern's 
eligibility as a EDWOSB or WOSB. An example of such credible evidence 
includes information that the concern was determined by SBA or an SBA-
approved certifier not to qualify as an EDWOSB or WOSB.
    (2) Non-Third Party Certification. A contracting officer may accept 
a concern's self-certification in ORCA if the apparent successful 
offeror WOSB or EDWOSB has provided the required documents, which are 
set forth in Sec.  127.300(e).
    (b) Referral to SBA. When the contracting officer has information 
that calls into question the eligibility of a concern as an EDWOSB or 
WOSB or the concern fails to provide all of the required documents to 
verify its eligibility, the contracting officer shall refer the concern 
to SBA for verification of the concern's eligibility by filing an 
EDWOSB or WOSB status protest pursuant to subpart F of this part. If 
the apparent successful offeror WOSB or EDWOSB fails to submit any of 
the required documents, the contracting officer cannot award a WOSB or 
EDWOSB contract to that business concern.


Sec.  127.302  What third-party certifications may a concern use as 
evidence of its status as a qualified EDWOSB or WOSB?

    In order for a concern to use a certification by another entity as 
evidence of its status as a qualified EDWOSB or WOSB in support of its 
representations in ORCA pursuant to Sec.  127.300(b), the concern must 
have a current, valid certification from:
    (a) SBA as an 8(a) BD Program participant; or
    (b) An entity designated as an SBA-approved certifier on SBA's Web 
site located at http://www.sba.gov/GC.


Sec.  127.303  How will SBA select and identify approved certifiers?

    (a) General. SBA may enter into written agreements to accept the 
EDWOSB or WOSB certification of a Federal agency, State government, or 
national certifying entity if SBA determines that the entity's 
certification process complies with SBA-approved certification 
standards and tracks the EDWOSB or WOSB eligibility requirements set 
forth in subpart B of this part. The written agreement will include a 
provision authorizing SBA to terminate the agreement if SBA 
subsequently determines that the entity's certification process does 
not comply with SBA-approved certification standards or is not based on 
the same EDWOSB or WOSB eligibility requirements as set forth in 
subpart B of this part.
    (b) Required certification standards. In order for SBA to enter 
into an agreement to accept the EDWOSB or WOSB certification of a 
Federal agency, State government, or national certifying entity, the 
entity must establish the following:
    (1) It will render fair and impartial EDWOSB or WOSB eligibility 
determinations.
    (2) It will retain the documents submitted by the approved WOSB or 
EDWOSB for a period of six (6) years from the date of certification 
(initial and any recertification) and provide any such documents to SBA 
in response to a status protest or eligibility examination or agency 
investigation or audit.
    (3) Its certification process will require applicant concerns to 
pre-register on CCR and submit sufficient information as determined by 
SBA to enable it to determine whether the concern qualifies as an 
EDWOSB or WOSB. This information must include documentation 
demonstrating whether the concern is:
    (i) A small business concern under SBA's size standards for its 
primary industry classification;
    (ii) At least 51 percent owned and controlled by one or more women 
who are United States citizens; and
    (iii) In the case of a concern applying for EDWOSB certification, 
at least 51 percent owned and controlled by one or more women who are 
United States citizens and economically disadvantaged.
    (4) It will not decline to accept a concern's application for 
EDWOSB or WOSB certification on the basis of race, color, national 
origin, religion, age, disability, sexual orientation, or marital or 
family status.
    (c) List of SBA-approved certifiers. SBA will maintain a list of 
approved certifiers, including certifiers from which SBA will accept 
DOT DBE certifications, on SBA's Internet Web site at http://www.sba.gov/GC. Any interested person may also obtain a copy of the 
list from the local SBA district office or SBA Area Office for 
Government Contracting.


Sec.  127.304  How does a concern obtain certification from an approved 
certifier?

    A concern that seeks EDWOSB or WOSB certification from an SBA-
approved certifier must submit its application directly to the approved 
certifier in accordance with the specific application procedures of the 
particular certifier. Any interested party may obtain such 
certification information and application by contacting the approved 
certifier at the address provided on SBA's list of approved certifiers.

[[Page 62287]]

Sec.  127.305  May a concern determined not to qualify as an EDWOSB or 
WOSB submit a self-certification for a particular EDWOSB or WOSB 
requirement?

    A concern that SBA or an SBA-approved certifier determines does not 
qualify as an EDWOSB or WOSB may not represent itself to be an EDWOSB 
or WOSB, as applicable, unless SBA subsequently determines that it is 
an eligible EDWOSB or WOSB pursuant to the examination procedures under 
Sec.  127.405, and there have been no material changes in its 
circumstances affecting its eligibility since SBA's eligibility 
determination. Any concern determined not to be a qualified EDWOSB or 
WOSB may request that SBA conduct an examination to determine its 
EDWOSB or WOSB eligibility at any time once it believes in good faith 
that it satisfies all of the eligibility requirements to qualify as an 
EDWOSB or WOSB.

Subpart D--Eligibility Examinations


Sec.  127.400  What is an eligibility examination?

    (a) Purpose of examination. Eligibility examinations are 
investigations that verify the accuracy of any certification made or 
information provided as part of the certification process (including 
third-party certifications) or in connection with an EDWOSB or WOSB 
contract. In addition, eligibility examinations may verify that a 
concern meets the EDWOSB or WOSB eligibility requirements at the time 
of the examination. SBA will, in its sole discretion, perform 
eligibility examinations at any time after a concern self-certifies in 
CCR or ORCA that it is an EDWOSB or WOSB. SBA may conduct the 
examination, or parts of the examination, at one or all of the 
concern's offices.
    (b) Determination on conduct of an examination. SBA may consider 
protest allegations set forth in a protest in determining whether to 
conduct an examination of a concern pursuant to subpart D of this part, 
notwithstanding a dismissal or denial of a protest pursuant to Sec.  
127.604. SBA may also consider information provided to the D/GC by a 
third-party that questions the eligibility of a WOSB or EDWOSB that has 
certified its status in ORCA or CCR in determining whether to conduct 
an eligibility examination.


Sec.  127.401  What is the difference between an eligibility 
examination and an EDWOSB or WOSB status protest pursuant to subpart F 
of this part?

    (a) Eligibility examination. An eligibility examination is the 
formal process through which SBA verifies and monitors the accuracy of 
any certification made or information provided as part of the 
certification process or in connection with an EDWOSB or WOSB contract. 
If SBA is conducting an eligibility examination on a concern that has 
submitted an offer on a pending EDWOSB or WOSB procurement and SBA has 
credible information that the concern may not qualify as an EDWOSB or 
WOSB, then SBA may initiate a protest pursuant to Sec.  127.600 to 
suspend award of the contract for fifteen (15) business days pending 
SBA's determination of the concern's eligibility.
    (b) EDWOSB or WOSB protests. An EDWOSB or WOSB status protest 
provides a mechanism for challenging or verifying the EDWOSB or WOSB 
eligibility of a concern in connection with a specific EDWOSB or WOSB 
requirement. SBA will process EDWOSB or WOSB protests in accordance 
with the procedures and timeframe set forth in subpart F, and will 
determine the EDWOSB or WOSB eligibility of the protested concern as of 
the date the concern represented its EDWOSB or WOSB status as part of 
its initial offer including price. SBA's protest determination will 
apply to the specific procurement to which the protest relates and to 
future procurements.


Sec.  127.402  How will SBA conduct an examination?

    (a) Notification. No less than five (5) business days before 
commencing an examination, SBA will notify the concern in writing that 
it will conduct an examination to verify the status of the concern as 
an EDWOSB or WOSB. However, SBA reserves the right to conduct a site 
visit without prior notification to the concern.
    (b) Request for information. SBA will request that the concern or 
contracting officer provide documentation and information related to 
the concern's EDWOSB or WOSB eligibility. These documents will include 
those submitted under Sec.  127.300 and any other pertinent documents 
requested by SBA at the time of eligibility examination to verify 
eligibility, including but not limited to, documents submitted by a 
concern in connection with any WOSB or EDWOSB certification. SBA may 
also request copies of proposals or bids submitted in response to an 
EDWOSB or WOSB solicitation. In addition, EDWOSBs will be required to 
submit signed copies of SBA Form 413, Personal Financial Statement, the 
three most recent personal income tax returns (including all schedules 
and W-2 forms) for the women claiming economic disadvantage and their 
spouses, unless the individuals and their spouses are legally 
separated, and SBA Form 4506-T, Request for Tax Transcript Form, 
available to the public at http://www.sba.gov/tools/Forms/index.html. 
SBA may draw an adverse inference where a concern fails to cooperate in 
providing the requested information. The WOSB or EDWOSB must retain 
documentation demonstrating satisfaction of the eligibility 
requirements for six (6) years from date of self-certification.


Sec.  127.403  What happens if SBA verifies the concern's eligibility?

    If SBA verifies that the concern satisfies the applicable EDWOSB or 
WOSB eligibility requirements, then the D/GC will send the concern a 
written decision to that effect and will allow the concern's EDWOSB or 
WOSB designation in CCR and ORCA to stand and the concern may continue 
to self-certify its EDWOSB or WOSB status.


Sec.  127.404  What happens if SBA is unable to verify a concern's 
eligibility?

    (a) Notice of proposed determination of ineligibility. If SBA is 
unable to verify that the concern qualifies as an EDWOSB or WOSB, then 
the D/GC will send the concern a written notice explaining the reasons 
SBA believes the concern did not qualify at the time of certification 
or does not qualify as an EDWOSB or WOSB. The notice will advise the 
concern that it has fifteen (15) calendar days from the date of the 
notice to respond.
    (b) SBA determination. Following the fifteen (15) day response 
period, the D/GC or designee will consider the reasons of proposed 
ineligibility and any information the concern submitted in response, 
and will send the concern a written decision with its findings. The D/
GC's decision is effective immediately and remains in full force and 
effect unless a new examination verifies the concern is an eligible 
EDWOSB or WOSB or the concern is certified by a third-party certifier.
    (1) If SBA determines that the concern does not qualify as an 
EDWOSB or WOSB, then the D/GC will send the concern a written decision 
explaining the basis of ineligibility, and will require that the 
concern remove its EDWOSB or WOSB designation in the CCR and ORCA 
within five (5) calendar days after the date of the decision.
    (2) If the concern has already certified itself as a WOSB or EDWOSB 
on a pending procurement the concern must immediately inform the 
officials responsible for the procurement of the adverse determination.

[[Page 62288]]

    (3) If SBA determines that the concern did not qualify as an EDWOSB 
or WOSB at the time it submitted its initial offer for an EDWOSB or 
WOSB requirement, the contracting officer may terminate the contract, 
not exercise any option, or not award further task or delivery orders.
    (4) Whether or not a contracting officer decides to allow or not 
allow an ineligible concern to fully perform a contract under paragraph 
(b)(2) of this section, the contracting officer cannot count the award 
as one to an EDWOSB or WOSB and must update the Federal Procurement 
Data System-Next Generation (FPDS-NG) and other databases from the date 
of award accordingly.
    (c) A concern that has been found to be ineligible may not 
represent itself as a WOSB or EDWOSB until it cures the reason for its 
ineligibility and SBA determines that the concern qualifies as a WOSB 
or EDWOSB. A concern that believes in good faith that it has cured the 
reason(s) for its ineligibility may request an examination under the 
procedures set forth in this section.


Sec.  127.405  What is the process for requesting an eligibility 
examination?

    (a) General. A concern may request that SBA conduct an examination 
to verify its eligibility as an EDWOSB or WOSB at any time after it is 
determined by SBA not to qualify as an EDWOSB or WOSB, if the concern 
believes in good faith that it satisfies all of the EDWOSB or WOSB 
eligibility requirements under subpart B of this part.
    (b) Format. The request for an examination must be in writing and 
must specify the particular reasons the concern was determined not to 
qualify as an EDWOSB or WOSB.
    (c) Submission of request. The concern must submit its request 
directly to the Director for Government Contracting, U.S. Small 
Business Administration, 409 Third Street, SW., Washington, DC 20416, 
or by fax to (202) 205-6390, marked ``Attn: Request for Women-Owned 
Small Business Eligibility Examination.''
    (d) Notice of receipt of request. SBA will immediately notify the 
concern in writing once SBA receives its request for an examination. 
SBA will request that the concern provide documentation and information 
related to the concern's EDWOSB or WOSB eligibility and may draw an 
adverse inference if the concern fails to cooperate in providing the 
requested information.
    (e) Determination of eligibility. The D/GC will send the concern a 
written decision finding that it either qualifies or does not qualify 
as an EDWOSB or WOSB.
    (1) If the D/GC determines that the concern does not qualify as an 
EDWOSB or WOSB, the decision will explain the specific reasons for the 
adverse determination and advise the concern that it is prohibited from 
self-certifying as an EDWOSB or WOSB. If the concern self-certifies as 
an EDWOSB or WOSB notwithstanding SBA's adverse determination, the 
concern will be subject to the penalties under subpart G of this part.
    (2) If the D/GC determines that the concern qualifies as an EDWOSB 
or WOSB, then the D/GC will send the concern a written decision to that 
effect and will advise the concern that it may self-certify as an 
EDWOSB or WOSB, as applicable.
    (f) Effect of decision. The D/GC's decision is effective 
immediately and remains in full force and effect unless a new 
examination verifies the concern is an eligible EDWOSB or WOSB or the 
concern is certified by a third-party certifier. If the concern has 
already certified itself as a WOSB or EDWOSB on a pending procurement 
the concern must immediately inform the officials responsible for the 
procurement of the adverse determination.
    (g) Determinations of Ineligibility. A concern that has been found 
to be ineligible shall not represent itself as a WOSB or EDWOSB until 
it cures the reason for its ineligibility and SBA determines that the 
concern qualifies as a WOSB or EDWOSB. A concern that believes in good 
faith that it has cured the reason(s) for its ineligibility may request 
an examination under the procedures set forth in this section.

Subpart E--Federal Contract Assistance


Sec.  127.500  In what industries is a contracting officer authorized 
to restrict competition under this part?

    A contracting officer may restrict competition under this part only 
in those industries in which SBA has determined that WOSBs are 
underrepresented or substantially underrepresented in Federal 
procurement, as specified in Sec.  127.501.


Sec.  127.501  How will SBA determine the industries that are eligible 
for EDWOSB or WOSB requirements?

    (a) Based upon its analysis, SBA will designate by NAICS Industry 
Subsector Code those industries in which WOSBs are underrepresented and 
substantially underrepresented.
    (b) In determining the extent of disparity of WOSBs, SBA may 
request that the head of any Federal department or agency provide SBA, 
data or information necessary to analyze the extent of disparity of 
WOSBs.


Sec.  127.502  How will SBA identify and provide notice of the 
designated industries?

    SBA will post on its Internet Web site at http://www.sba.gov a list 
of NAICS Industry Subsector industries it designates under Sec.  
127.501. The list of designated industries also may be obtained from 
the local SBA district office and may be posted on the General Services 
Administration Internet Web site.


Sec.  127.503  When is a contracting officer authorized to restrict 
competition under this part?

    (a) EDWOSB requirements. For requirements in industries designated 
by SBA as underrepresented pursuant to Sec.  127.501, a contracting 
officer may restrict competition to EDWOSBs if the contracting officer 
has a reasonable expectation based on market research that:
    (1) Two or more EDWOSBs will submit offers for the contract;
    (2) The anticipated award price of the contract (including options) 
does not exceed $5,000,000, in the case of a contract assigned an NAICS 
code for manufacturing; or $3,000,000, in the case of all other 
contracts; and
    (3) Contract award may be made at a fair and reasonable price.
    (b) WOSB requirements. For requirements in industries designated by 
SBA as substantially underrepresented pursuant to Sec.  127.501, a 
contracting officer may restrict competition to WOSBs if the 
contracting officer has a reasonable expectation based on market 
research that:
    (1) Two or more WOSBs will submit offers (this includes EDWOSBs, 
which are also WOSBs);
    (2) The anticipated award price of the contract (including options) 
will not exceed $5,000,000, in the case of a contract assigned an NAICS 
code for manufacturing, or $3,000,000 in the case of all other 
contracts; and
    (3) Contract award may be made at a fair and reasonable price.
    (c) 8(a) BD requirements. A contracting officer may not restrict 
competition to eligible EDWOSBs or WOSBs if an 8(a) BD Participant is 
currently performing the requirement under the 8(a) BD Program or SBA 
has accepted the requirement for performance under the authority of the 
8(a) BD program, unless SBA consented to release the requirement from 
the 8(a) BD program.
    (d) Contracting Among Small Business Programs.

[[Page 62289]]

    (1) Acquisitions Valued At or Below $100,000/Simplified Acquisition 
Threshold. The contracting officer shall set aside any acquisition with 
an anticipated dollar value exceeding $3,000 ($15,000 for acquisitions 
as described in the Federal Acquisition Regulation (FAR) at 48 CFR 
13.201(g)(1)) but valued below $100,000 ($250,000 for acquisitions 
described in paragraph (1) of the Simplified Acquisition Threshold 
definition in the FAR at 48 CFR 2.101) for small business concerns when 
there is a reasonable expectation that offers will be obtained from at 
least two small business concerns that are competitive in terms of 
quality and delivery and award will be made at fair market prices. This 
requirement does not preclude a contracting officer from setting aside 
a contract under the 8(a) BD, HUBZone, Service Disabled Veteran Owned 
(SDVO), or WOSB programs.
    (2) Acquisitions Valued Above $100,000/Simplified Acquisition 
Threshold.
    (i) The contracting officer shall set aside any acquisition with an 
anticipated dollar value exceeding $100,000 ($250,000 for acquisitions 
described in paragraph (1) of the Simplified Acquisition Threshold 
definition in the FAR at 48 CFR 2.101) for small business concerns when 
there is a reasonable expectation that offers will be obtained from at 
least two small business concerns that are competitive in terms of 
quality and delivery and award will be made at fair market prices. 
However, after conducting market research, the contracting officer 
shall first consider a set-aside or sole source award (if the sole 
source award is permitted by statute or regulation) under the 8(a) BD, 
HUBZone, SDVO SBC or WOSB programs before setting aside the requirement 
as a small business set-aside. There is no order of precedence among 
the 8(a) BD, HUBZone, SDVO SBC or WOSB programs. The contracting 
officer must document the contract file with the rationale used to 
support the specific set-aside, including the type and extent of market 
research conducted. In addition, the contracting officer must document 
the contract file showing that the apparent successful offeror's ORCA 
certifications and associated representations were reviewed.
    (ii) SBA believes that Progress in fulfilling the various small 
business goals, as well as other factors such as the results of market 
research, programmatic needs specific to the procuring agency, 
anticipated award price, and the acquisition history, will be 
considered in making a decision as to which program to use for the 
acquisition.
    (e) Contract file. When restricting competition to WOSBs or EDWOSBs 
in accordance with Sec.  127.503, the contracting officer must document 
the contract file accordingly, including the type and extent of market 
research and the fact that the NAICS code assigned to the contract is 
for an industry that SBA has designated as an underrepresented or, with 
respect to WOSBs, substantially underrepresented, industry. In 
addition, the contracting officer must document the contract file 
showing that the apparent successful offeror's documents and ORCA 
certifications and associated representations were reviewed.


Sec.  127.504  What additional requirements must a concern satisfy to 
submit an offer on an EDWOSB or WOSB requirement?

    (a) In order for a concern to submit an offer on a specific EDWOSB 
or WOSB requirement, the concern must ensure that the appropriate 
representations and certifications on ORCA are accurate and complete at 
the time it submits its offer to the contracting officer, including, 
but not limited to, the fact that:
    (1) It is small under the size standard corresponding to the NAICS 
code assigned to the contract;
    (2) It is listed on CCR and ORCA as an EDWOSB or WOSB; and
    (3) There has been no material change in any of its circumstances 
affecting its EDWOSB or WOSB eligibility.
    (b) The concern must also meet the applicable percentages of work 
requirement as set forth in Sec.  125.6 of this chapter (limitations on 
subcontracting rule).


Sec.  127.505  May a non-manufacturer submit an offer on an EDWOSB or 
WOSB requirement for supplies?

    An EDWOSB or WOSB that is a non-manufacturer, as defined in Sec.  
121.406(b) of this chapter, may submit an offer on an EDWOSB or WOSB 
contract for supplies, if it meets the requirements under the non-
manufacturer rule set forth in Sec.  121.406(b) of this chapter.


Sec.  127.506  May a joint venture submit an offer on an EDWOSB or WOSB 
requirement?

    A joint venture may submit an offer on an EDWOSB or WOSB contract 
if the joint venture meets all of the following requirements:
    (a) Except as provided in Sec.  121.103(h)(3) of this chapter, the 
combined annual receipts or employees of the concerns entering into the 
joint venture must meet the applicable size standard corresponding to 
the NAICS code assigned to the contract;
    (b) The EDWOSB or WOSB participant of the joint venture must be 
designated on the CCR and the ORCA as an EDWOSB or WOSB;
    (c) The parties to the joint venture must enter into a written 
joint venture agreement. The joint venture agreement must contain a 
provision:
    (1) Setting forth the purpose of the joint venture.
    (2) Designating an EDWOSB or WOSB as the managing venturer of the 
joint venture, and an employee of the managing venturer as the project 
manager responsible for the performance of the contract;
    (3) Stating that not less than 51 percent of the net profits earned 
by the joint venture will be distributed to the EDWOSB or WOSB;
    (4) Specifying the responsibilities of the parties with regard to 
contract performance, sources of labor, and negotiation of the EDWOSB 
or WOSB contract; and
    (5) Requiring the final original records be retained by the 
managing venturer upon completion of the EDWOSB or WOSB contract 
performed by the joint venture.
    (d) The joint venture must perform the applicable percentage of 
work required of the EDWOSB or WOSB offerors in accordance with Sec.  
125.6 of this chapter (limitations on subcontracting rule);
    (e) The procuring activity will execute the contract in the name of 
the EDWOSB or WOSB or joint venture.
    (f) The WOSB or EDWOSB must provide a copy of the joint venture 
agreement to the contracting officer.


Sec.  127.507  Are there EDWOSB and WOSB contracting opportunities at 
or below the simplified acquisition threshold?

    If the requirement is at or below the simplified acquisition 
threshold, the contracting officer may set-aside the requirement as set 
forth in Sec.  127.503.


Sec.  127.508  May SBA appeal a contracting officer's decision not to 
reserve a procurement for award as a WOSB Program contract?

    The Administrator may appeal a contracting officer's decision not 
to make a particular requirement available for award under the WOSB 
Program.


Sec.  127.509  What is the process for such an appeal?

    (a) Notice of appeal. When the contacting officer rejects a 
recommendation by SBA's Procurement Center Representative to make a 
requirement available for the WOSB Program, he or she must notify the 
Procurement Center Representative as soon as practicable. If the 
Administrator

[[Page 62290]]

intends to appeal the decision, SBA must notify the contracting officer 
no later than five (5) business days after receiving notice of the 
contracting officer's decision.
    (b) Suspension of action. Upon receipt of notice of SBA's intent to 
appeal, the contracting officer must suspend further action regarding 
the procurement until the Secretary of the department or head of the 
agency issues a written decision on the appeal, unless the Secretary of 
the department or head of the agency makes a written determination that 
urgent and compelling circumstances which significantly affect the 
interests of the United States compel award of the contract.
    (c) Deadline for appeal. Within fifteen (15) business days of SBA's 
notification to the CO, SBA must file its formal appeal with the 
Secretary of the department or head of the agency, or the appeal will 
be deemed withdrawn.
    (d) Decision. The Secretary of the department or head of the agency 
must specify in writing the reasons for a denial of an appeal brought 
under this section.

Subpart F--Protests


Sec.  127.600  Who may protest the status of a concern as an EDWOSB or 
WOSB?

    An interested party may protest the EDWOSB or WOSB status of an 
apparent successful offeror on an EDWOSB or WOSB contract. Any other 
party or individual may submit information to the contracting officer 
or SBA in an effort to persuade them to initiate a protest or to 
persuade SBA to conduct an examination pursuant to subpart D of this 
part.


Sec.  127.601  May a protest challenging the size and status of a 
concern as an EDWOSB or WOSB be filed together?

    An interested party seeking to protest both the size and the EDWOSB 
or WOSB status of an apparent successful offeror on an EDWOSB or WOSB 
requirement must file two separate protests, one size protest pursuant 
to part 121 of this chapter and one EDWOSB or WOSB status protest 
pursuant to this subpart. An interested party seeking to protest only 
the size of an apparent successful EDWOSB or WOSB offeror must file a 
size protest to the contracting officer pursuant to part 121 of this 
chapter.


Sec.  127.602  What are the grounds for filing an EDWOSB or WOSB status 
protest?

    SBA will consider a protest challenging the status of a concern as 
an EDWOSB or WOSB if the protest presents sufficient credible evidence 
to show that the concern may not be owned and controlled by one or more 
women who are United States citizens and, if the protest is in 
connection with an EDWOSB contract, that the concern is not at least 51 
percent owned and controlled by one or more women who are economically 
disadvantaged. In addition, SBA will consider a protest challenging the 
status of a concern as an EDWOSB or WOSB if the contracting officer has 
protested because the WOSB or EDWOSB apparent successful offeror has 
failed to provide all of the required documents, as set forth in Sec.  
127.300.


Sec.  127.603  What are the requirements for filing an EDWOSB or WOSB 
protest?

    (a) Format. Protests must be in writing and must specify all the 
grounds upon which the protest is based. A protest merely asserting 
that the protested concern is not an eligible EDWOSB or WOSB, without 
setting forth specific facts or allegations, is insufficient.
    (b) Filing. Protestors may deliver their written protests in 
person, by facsimile, by express delivery service, e-mail, or by U.S. 
mail (received by the applicable date) to the following:
    (1) To the contracting officer, if the protestor is an offeror for 
the specific contract; or
    (2) To the D/GC, if the protest is initiated by the contracting 
officer or SBA. IF SBA initiates a protest, the D/GC will notify the 
contracting officer of such protest.
    (c) Timeliness.
    (1) For negotiated acquisitions, a protest from an interested party 
must be received by the contracting officer prior to the close of 
business on the fifth business day after notification by the 
contracting officer of the apparent successful offeror or notification 
of award.
    (2) For sealed bid acquisitions, a protest from an interested party 
must be received by close of business on the fifth business day after 
bid opening.
    (3) Any protest received after the time limit is untimely, unless 
it is from SBA or the contracting officer. A contracting officer or SBA 
may file an EDWOSB or WOSB protest at any time after bid opening or 
notification of intended awardee, whichever applies.
    (4) Any protest received prior to bid opening or notification of 
intended awardee, whichever applies, is premature.
    (5) A timely filed protest applies to the procurement in question 
even if filed after award.
    (d) Referral to SBA. The contracting officer must forward to SBA 
any protest received, notwithstanding whether he or she believes it is 
premature, sufficiently specific, or timely. The contracting officer 
must send all protests, along with a referral letter and documents, 
directly to the Director for Government Contracting, U.S. Small 
Business Administration, 409 Third Street, SW., Washington, DC 20416, 
or by fax to (202) 205-6390, Attn: Women-Owned Small Business Status 
Protest. The contracting officer's referral letter must include 
information pertaining to the solicitation that may be necessary for 
SBA to determine timeliness and standing, including: the solicitation 
number; the name, address, telephone number and facsimile number of the 
contracting officer; whether the protestor submitted an offer; whether 
the protested concern was the apparent successful offeror; when the 
protested concern submitted its offer; whether the procurement was 
conducted using sealed bid or negotiated procedures; the bid opening 
date, if applicable; when the protest was submitted to the contracting 
officer; when the protestor received notification about the apparent 
successful offeror, if applicable; and whether a contract has been 
awarded. In addition, the contracting officer must send copies of any 
documents provided to the contracting officer pursuant to Sec.  127.300 
(if the repository is unavailable). The D/GC or designee will decide 
the merits of EDWOSB or WOSB status protests.


Sec.  127.604  How will SBA process an EDWOSB or WOSB status protest?

    (a) Notice of receipt of protest. Upon receipt of the protest, SBA 
will notify the contracting officer and the protestor of the date SBA 
received the protest and whether SBA will process the protest or 
dismiss it under paragraph (b) of this section. The contracting officer 
may award the contract after receipt of a protest if the contracting 
officer determines in writing that an award must be made to prevent 
significant harm to the public interest.
    (b) Dismissal of protest. If SBA determines that the protest is 
premature, untimely, nonspecific, or is based on nonprotestable 
allegations, SBA will dismiss the protest and will send the contracting 
officer and the protestor a notice of dismissal, citing the reason(s) 
for the dismissal. Notwithstanding SBA's dismissal of the protest, SBA 
may, in its sole discretion, consider the protest allegations in 
determining whether to conduct an examination of the protested concern 
pursuant to subpart D of this part or submit a protest itself.
    (c) Notice to protested concern. If SBA determines that the protest 
is timely, sufficiently specific and is based upon protestable 
allegations, SBA will:

[[Page 62291]]

    (1) Notify the protested concern of the protest and request 
information and documents responding to the protest within five (5) 
business days from the date of the notice. These documents will include 
those that verify the eligibility of the concern, respond to the 
protest allegations, and copies of proposals or bids submitted in 
response to an EDWOSB or WOSB requirement. In addition, EDWOSBs will be 
required to submit signed copies of SBA Form 413, Personal Financial 
Statement, the two most recent personal income tax returns (including 
all schedules and W-2 forms) for the women claiming economic 
disadvantage and their spouses, unless the individuals and their 
spouses are legally separated, and SBA Form 4506-T, Request for Tax 
Transcript Form. SBA may draw an adverse inference where a concern 
fails to cooperate in providing the requested information and 
documents; and
    (2) Forward a copy of the protest to the protested concern.
    (d) Time period for determination. SBA will determine the EDWOSB or 
WOSB status of the protested concern within fifteen (15) business days 
after receipt of the protest, or within any extension of that time that 
the contracting officer may grant SBA. If SBA does not issue its 
determination within the fifteen (15) day period, the contracting 
officer must contact SBA to ascertain when SBA estimates that it will 
issue its decision. After contacting SBA, the contracting officer may 
award the contract if he or she determines in writing that there is an 
immediate need to award the contract and that waiting until SBA makes 
it determination will harm the public interest. The determination must 
be included in the contract file and a written copy sent to the D/GC.
    (e) Notification of determination. SBA will notify the contracting 
officer, the protestor, and the protested concern in writing of its 
determination. If SBA sustains the protest, SBA will issue a decision 
explaining the basis of its determination and requiring that the 
concern remove its designation on the CCR and ORCA as an EDWOSB or 
WOSB, as appropriate. Regardless of a decision not to sustain the 
protest, SBA may, in its sole discretion, consider the protest 
allegations in determining whether to conduct an examination of the 
protested concern pursuant to subpart D of this part.
    (f) Effect of determination. SBA's determination is effective 
immediately and is final unless overturned by SBA's Office of Hearings 
and Appeals (OHA) on appeal pursuant to Sec.  127.605.
    (1) A contracting officer may award the contract to a protested 
concern after the D/GC either has determined that the protested concern 
is an eligible WOSB or EDWOSB or has dismissed all protests against it. 
If OHA subsequently overturns the D/GC's determination or dismissal, 
the contracting officer may apply the OHA decision to the procurement 
in question.
    (2) A contracting officer shall not award the contract to a 
protested concern that the D/GC has determined is not an EDWOSB or WOSB 
for the procurement in question.
    (i) Where the contracting officer has made a written determination 
under paragraph (d) of this section that there is an immediate need to 
award the contract and waiting until SBA makes its determination will 
harm the public interest, the contracting officer receives the D/GC's 
determination after contract award finding the business concern does 
not qualify as EDWOSB or WOSB, and no OHA appeal has been filed, the 
contracting officer may terminate the award, and shall not exercise any 
options, or not award further task or delivery orders. If no such 
written determination by the contracting officer has been made, the 
contracting officer receives the D/GC's determination after contract 
award finding the business concern does not qualify as an EDWOSB or 
WOSB, and no OHA appeal has been filed, the contracting officer shall 
terminate the award.
    (ii) If a timely OHA appeal has been filed after contract award, 
the contracting officer must consider whether performance can be 
suspended until an appellate decision is rendered.
    (iii) If OHA affirms the D/GC's determination finding that the 
protested concern is ineligible, the contracting officer shall either 
terminate the contract, not exercise the next option or not award 
further task or delivery orders.
    (3) The contracting officer must update the Federal Procurement 
Data System and other procurement reporting databases to reflect the 
final agency decision (the D/GC's decision if no appeal is filed or 
OHA's decision).
    (4) A concern that has been found to be ineligible may not submit 
an offer as a WOSB or EDWOSB on another procurement until it cures the 
reason(s) for its ineligibility and SBA issues a decision to this 
effect. A concern that believes in good faith that it has cured the 
reason(s) for its ineligibility may request an examination under the 
procedures set forth in Sec.  127.405.


Sec.  127.605  What are the procedures for appealing an EDWOSB or WOSB 
status protest decision?

    The protested concern, the protestor, or the contracting officer 
may file an appeal of a WOSB or EDWOSB status protest determination 
with SBA's Office of Hearings and Appeals (OHA) in accordance with part 
134 of this chapter.

Subpart G--Penalties


Sec.  127.700  What penalties may be imposed under this part?

    Persons or concerns that falsely self-certify, provide false 
information to the Government, or otherwise misrepresent a concern's 
status as an EDWOSB or WOSB for purposes of receiving Federal contract 
assistance under this part are subject to:
    (a) Suspension and Debarment pursuant to the procedures set forth 
in the Federal Acquisition Regulations, 48 CFR 9.4;
    (b) Administrative and civil remedies prescribed by the False 
Claims Act, 31 U.S.C. 3729-3733 and under the Program Fraud Civil 
Remedies Act, 31 U.S.C. 3801-3812;
    (c) Administrative and criminal remedies as described at Sections 
16(a) and (d) of the Small Business Act, 15 U.S.C. 645(a) and (d), as 
amended;
    (d) Criminal penalties under 18 U.S.C. 1001; and
    (e) Any other penalties as may be available under law.

PART 134--RULES OF PROCEDURE GOVERNING CASES BEFORE THE OFFICE OF 
HEARINGS AND APPEALS

0
14. The authority citation for part 134 continues to read as follows:

    Authority:  5 U.S.C. 504, 15 U.S.C. 632, 634(b)(6), 637(a), 
637(m), 648(l), 656(i) and 687(c); E.O. 12549, 51 FR 6370, 3 CFR, 
1986 Comp., p. 189.

Subpart A--General Rules

0
15. In Sec.  134.102, paragraph (s) is revised to read as follows:


Sec.  134.102  Jurisdiction of OHA.

* * * * *
    (s) Appeals from Women-Owned Small Business or Economically-
Disadvantaged Women-Owned Small Business protest determinations under 
part 127 of this chapter;
* * * * *

[[Page 62292]]

Subpart E--Rules of Practice for Appeals from Service-Disabled 
Veteran Owned Small Business Concern Protests

0
16. In Sec.  134.515, paragraph (b) is revised to read as follows:


Sec.  134.515  What are the effects of the Judge's decision?

* * * * *
    (b) The Judge may reconsider an appeal decision within twenty (20) 
calendar days after issuance of the written decision. Any party who has 
appeared in the proceeding, or SBA, may request reconsideration by 
filing with the Judge and serving a petition for reconsideration on all 
the parties to the appeal within twenty (20) calendar days after 
service of the written decision. The request for reconsideration must 
clearly show an error of fact or law material to the decision. The 
Judge may also reconsider a decision on his or her own initiative.
* * * * *

0
17. Revise Subpart G to read as follows:
Subpart G--Rules of Practice for Appeals from Women-Owned Small 
Business Concern (WOSB) and Economically Disadvantaged WOSB Concern 
(EDWOSB) Protests
Sec.
134.701 What is the scope of the rules in this subpart G?
134.702 Who may appeal?
134.703 When must a person file an appeal from an WOSB or EDWOSB 
protest determination?
134.704 What are the effects of the appeal on the procurement at 
issue?
134.705 What are the requirements for an appeal petition?
134.706 What are the service and filing requirements?
134.707 When does the D/GC transmit the protest file and to whom?
134.708 What is the standard of review?
134.709 When will a Judge dismiss an appeal?
134.710 Who can file a response to an appeal petition and when must 
such a response be filed?
134.711 Will the Judge permit discovery and oral hearings?
134.712 What are the limitations on new evidence?
134.713 When is the record closed?
134.714 When must the Judge issue his or her decision?
134.715 Can a Judge reconsider his decision?

Subpart G--Rules of Practice for Appeals from Women-Owned Small 
Business Concern (WOSB) and Economically Disadvantaged WOSB Concern 
(EDWOSB) Protests


Sec.  134.701  What is the scope of the rules in this subpart G?

    (a) The rules of practice in this subpart G apply to all appeals to 
OHA from formal protest determinations made by the Director for 
Government Contracting (D/GC) in connection with a Women-Owned Small 
Business Concern (WOSB) or Economically Disadvantaged WOSB Concern 
(EDWOSB) protest. Appeals under this subpart include issues related to 
whether the concern is owned and controlled by one or more women who 
are United States citizens and, if the appeal is in connection with an 
EDWOSB contract, that the concern is at least 51 percent owned and 
controlled by one or more women who are economically disadvantaged. 
This includes appeals from determinations by the D/GC that the protest 
was premature, untimely, nonspecific, or not based upon protestable 
allegations.
    (b) Except where inconsistent with this subpart, the provisions of 
subparts A and B of this part apply to appeals listed in paragraph (a) 
of this section.
    (c) Appeals relating to formal size determinations and NAICS Code 
designations are governed by subpart C of this part.


Sec.  134.702  Who may appeal?

    Appeals from WOSB or EDWOSB protest determinations may be filed 
with OHA by the protested concern, the protestor, or the contracting 
officer responsible for the procurement affected by the protest 
determination.


Sec.  134.703  When must a person file an appeal from an WOSB or EDWOSB 
protest determination?

    Appeals from a WOSB or EDWOSB protest determination must be 
commenced by filing and serving an appeal petition within ten (10) 
business days after the appellant receives the WOSB or EDWOSB protest 
determination (see Sec.  134.204 for filing and service requirements). 
An untimely appeal must be dismissed.


Sec.  134.704  What are the effects of the appeal on the procurement at 
issue?

    Appellate decisions apply to the procurement in question. If a 
timely OHA appeal has been filed after contract award, the contracting 
officer must consider whether performance can be suspended until an 
appellate decision is rendered. If OHA affirms the D/GC's determination 
finding that the protested concern is ineligible, the contracting 
officer shall either terminate the contract, not exercise the next 
option or not award further task or delivery orders. If OHA overturns 
the D/GC's dismissal or determination that the concern is an eligible 
EDWOSB or WOSB, the contracting officer may apply the OHA decision to 
the procurement in question.


Sec.  134.705  What are the requirements for an appeal petition?

    (a) Format. There is no required format for an appeal petition. 
However, it must include the following information:
    (1) The solicitation or contract number, and the name, address, and 
telephone number of the contracting officer;
    (2) A statement that the petitioner is appealing a WOSB or EDWOSB 
protest determination issued by the D/GC and the date that the 
petitioner received it;
    (3) A full and specific statement as to why the WOSB or EDWOSB 
protest determination is alleged to be based on a clear error of fact 
or law, together with an argument supporting such allegation; and
    (4) The name, address, telephone number, facsimile number, and 
signature of the appellant or its attorney.
    (b) Service of appeal. The appellant must serve the appeal petition 
upon each of the following:
    (1) The D/GC at U.S. Small Business Administration, 409 3rd Street, 
SW., Washington, DC 20416, facsimile (202) 205-6390;
    (2) The contracting officer responsible for the procurement 
affected by a WOSB or EDWOSB determination;
    (3) The protested concern (the business concern whose WOSB or 
EDWOSB status is at issue) or the protester; and
    (4) SBA's Office of General Counsel, Associate General Counsel for 
Procurement Law, U.S. Small Business Administration, 409 3rd Street, 
SW., Washington, DC 20416, facsimile number (202) 205-6873.
    (c) Certificate of Service. The appellant must attach to the appeal 
petition a signed certificate of service meeting the requirements of 
Sec.  134.204(d).


Sec.  134.706  What are the service and filing requirements?

    The provisions of Sec.  134.204 apply to the service and filing of 
all pleadings and other submissions permitted under this subpart unless 
otherwise indicated in this subpart.

[[Page 62293]]

Sec.  134.707  When does the D/GC transmit the protest file and to 
whom?

    Upon receipt of an appeal petition, the D/GC will send to OHA a 
copy of the protest file relating to that determination. The D/GC will 
certify and authenticate that the protest file, to the best of his or 
her knowledge, is a true and correct copy of the protest file.


Sec.  134.708  What is the standard of review?

    The standard of review for an appeal of a WOSB or EDWOSB protest 
determination is whether the D/GC's determination was based on clear 
error of fact or law.


Sec.  134.709  When will a Judge dismiss an appeal?

    (a) The presiding Judge must dismiss the appeal if the appeal is 
untimely filed under Sec.  134.703.
    (b) The matter has been decided or is the subject of adjudication 
before a court of competent jurisdiction over such matters. However, 
once an appeal has been filed, initiation of litigation of the matter 
in a court of competent jurisdiction will not preclude the Judge from 
rendering a final decision on the matter.


Sec.  134.710  Who can file a response to an appeal petition and when 
must such a response be filed?

    Although not required, any person served with an appeal petition 
may file and serve a response supporting or opposing the appeal if he 
or she wishes to do so. If a person decides to file a response, the 
response must be filed within seven (7) business days after service of 
the appeal petition. The response should present argument.


Sec.  134.711  Will the Judge permit discovery and oral hearings?

    Discovery will not be permitted, and oral hearings will not be 
held.


Sec.  134.712  What are the limitations on new evidence?

    The Judge may not admit evidence beyond the written protest file 
nor permit any form of discovery. All appeals under this subpart will 
be decided solely on a review of the evidence in the written protest 
file, arguments made in the appeal petition, and response(s) filed 
thereto.


Sec.  134.713  When is the record closed?

    The record will close when the time to file a response to an appeal 
petition expires pursuant to Sec.  134.710.


Sec.  134.714  When must the Judge issue his or her decision?

    The Judge shall issue a decision, insofar as practicable, within 
fifteen (15) business days after close of the record.


Sec.  134.715  Can a Judge reconsider his decision?

    (a) The Judge may reconsider an appeal decision within twenty (20) 
calendar days after issuance of the written decision. Any party who has 
appeared in the proceeding, or SBA, may request reconsideration by 
filing with the Judge and serving a petition for reconsideration on all 
the parties to the appeal within twenty (20) calendar days after 
service of the written decision. The request for reconsideration must 
clearly show an error of fact or law material to the decision. The 
Judge may also reconsider a decision on his or her own initiative.
    (b) The Judge may remand a proceeding to the D/GC for a new WOSB or 
EDWOSB determination if the D/GC fails to address issues of decisional 
significance sufficiently, does not address all the relevant evidence, 
or does not identify specifically the evidence upon which it relied. 
Once remanded, OHA no longer has jurisdiction over the matter, unless a 
new appeal is filed as a result of the new WOSB or EDWOSB 
determination.

    Dated: October 1, 2010.
Karen Gordon Mills,
Administrator.
[FR Doc. 2010-25179 Filed 10-4-10; 11:15 am]
BILLING CODE 8025-01-P