The federal government is the world’s biggest customer of goods and services with purchases totaling more than $425 billion per year from construction and technical services to office furniture and grounds maintenance services. This allows for many revenue opportunities for small businesses, especially women-owned, disadvantaged, service-disabled veteran owned, and businesses located in areas identified as historically underutilized business zones. Federal agencies are required by law to set contracting goals with at least 23 percent of federal spending going to small businesses. The government has a goal of awarding at least five percent of federal contracting dollars to women-owned small businesses (WOSBs).
Last year, the U.S. Small Business Administration expanded federal contracting opportunities for WOSBs and economically disadvantaged WOSBs (EDWOSBs) with a new contracting set-aside in 83 industries. These industries have been identified as ones where WOSBs are underrepresented or substantially underrepresented in federal procurement.
To be an eligible WOSB, a company must be a small business that is at least 51 percent unconditionally and directly owned and controlled by one or more women who are U.S. citizens. A company must be at least 51 percent owned by one or more women who are economically disadvantaged to be eligible as an EDWOSB. The SBA sets the guidelines to demonstrate “economic disadvantage.” To qualify for the program, the long-term decision making, day-to-day management and administration of the business operations must be conducted by one or more economically disadvantaged women.
When a small business meets the eligibility requirements of the WOSB program, the business must self-certify or get certified by a SBA-approved third party certifier. Self-certification is conducted by submitting information online to the federal databases called the Central Contractor Registration (CCR) and the Online Representations and Certifications Application (ORCA). By the end of July 2012, both systems will be migrated into the government’s new System for Award Management.
The new WOSB program aims to have a significant impact on increasing contract awards to women-owned businesses in industries where women are underrepresented. If a procurement falls under one of 83 particular industry classifications where women-owned businesses are underrepresented, contracting officers can restrict competition to WOSBs or EDWOSBs if the contracting officer has a reasonable expectation that two or more WOSBs or EDWOSBs will submit offers for the contract.
Federal contractors will be competing more fiercely for contracts and face increasing scrutiny from regulators seeking to eliminate fraud, waste, and abuse. Businesses should be aware that they are subject to eligibility examinations and protests regarding their certification. The SBA can conduct an eligibility examination to verify the accuracy of any representation made in connection with a WOSB or EDWOSB contract at any time after certifying their status. Likewise, the SBA can conduct a site visit at any time without prior notification. Further, an eligibility examination can be conducted after five days notice where the SBA will request copies of proposals or bids submitted in response to a solicitation, copies of financial statements and the three most recent personal income tax returns for women claiming an economic disadvantage.
A WOSB or EDWOSB status can also be challenged in a written protest by an “interested party” such as an unsuccessful contract offeror, the contracting officer, or the SBA. A protest must set forth specific and credible evidence showing that the concern may not be owned and controlled by one or more women who are U.S. citizens. A separate protest can be filed on a concern’s small size status for the failure to meet the government’s small business size standards.
Potentially severe penalties and risks are involved in government contracting. The SBA has issued proposed rules implementing the business integrity requirements of the Small Business Jobs Act of 2010. If a business sought and received an award upon willful, affirmative, and intentional certification of its size or status and misrepresented its size or status, there is an irrefutable presumption of loss to the United States based on the total amount of the contract expended. A contractor’s liability for this loss is in addition to the monetary penalties under the False Claims Act and related criminal penalties.
Procurement opportunities are available on the federally administered website www.Fedbizopps.gov. Information on the WOSB program and other government set-aside programs for veteran-owned businesses, disadvantaged SBA 8(a) Program businesses, and HUBZone businesses are available at www.sba.gov.
Evangelin “Evie” Lee
Evangelin “Evie” Lee is an associate attorney at Lipson, Neilson, Cole, Seltzer, Garin, P.C.
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