Women Owned Small Business (WOSB) Program, also known as the SBA 8(m)
The Federal government has a statutory goal of awarding five percent of federal prime and subcontracting dollars to women-owned small businesses (“WOSBs”). In addition, each Federal agency negotiates annual small business goals with the Small Business Administration (“SBA”) that present, for that agency, the maximum practicable opportunity for small businesses. In 2000, Congress passed the Women’s Equity in Contracting Act (“Act”) as a tool to assist federal contracting agencies in meeting these goals by establishing a program under which contracts could be set-aside for award to women-owned small businesses in certain industries.
On October 7, 2010, the U.S. Small Business Administration published a final rule effective February 4, 2011, aimed at expanding federal contracting opportunities for women-owned small businesses (WOSBs). The Women-Owned Small Business (WOSB) Federal Contract program authorizes contracting officers to set aside certain federal contracts for eligible:
- Women-owned small businesses (WOSBs) or
- Economically disadvantaged women-owned small businesses (EDWOSBs)
Under the Act and the SBA rule, an agency contracting officer may restrict competition for a contract award to WOSBs bidders if certain requirements are met. First, the anticipated contract award price (including options) cannot exceed $6.5 million for manufacturing contracts and $4 million for all other contracts including construction contracts. In this regard, the WOSB program is the only SBA set-aside program with a contract dollar cap. The contract dollar cap has been criticized as limiting the effectiveness of the WOSB program. On December 5, 2012, the Senate passed the FY 2013 National Defense Authorization Act (NDAA) which includes a provision that removes the $6.5 million and $4 million award caps placed on WOSB federal contracts. At the time of publication of this Article, the law is still pending in Congress.
Second, the contracting officer must determine that there is reasonable expectation that two or more WOSBs will submit bids and that the contract can be awarded at a fair and reasonable price. Sole source contract awards are not permitted under the WOSB program.
Third, the contract award must be in an industry in which the SBA has found that women-owned businesses are either underrepresented or substantially underrepresented in Federal contracting.
Firms seeking EDWOSB status must be owned and controlled by one or more women who are economically disadvantaged. There is a presumption of economic disadvantage if the adjusted gross yearly income of the woman business owner averaged less than $200,000 for the two most recent tax years preceding WOSB certification. The presumption may be rebutted by, among other things, a showing that the two-year average income level of more than $200,000 was unusual and not likely to be repeated in the future.
In addition to a maximum adjusted gross income, there are two other requirements for successfully claiming economic disadvantaged status. First, the personal net worth of the woman business owner must be less than $750,000. Excluded from the determination of personal net worth are an equity interest in a primary personal residence, income received from an EDWOSB that is an S corporation, LLC or partnership, and amounts in legitimate retirement accounts. Second, the fair market value of the woman business owner’s total assets must be less than $6 million. This includes her primary residence and the value of the business but excludes legitimate retirement accounts. Assets transferred to an immediate family member within two years will be attributed to the woman business owner unless the transfer was made for educational, medical or other form of essential support, or in recognition of a special occasion. The SBA may consider a spouse’s financial situation in assessing the woman’s access to capital and credit with respect to the economic disadvantage determination.
At present, the SBA has identified 45 industries in which WOSBs are underrepresented in Federal contracting and an additional 38 industries in which WOSBs are substantially underrepresented. Among the 45 industries in which WOSBs are underrepresented are:
Water, Sewage and Other systems (NAICS 2213);
Residential Building Construction (NAICS 2361);
Utility System Construction (NAICS 2371);
Foundation, Structure, and Building Exterior Contractors (NAICS 2381);
Building Equipment Contractors (NAICS 2382);
Building Finishing Contractors (NAICS 2383); and
Other Specialty Trade Contractors (NAICS 2389).
Also included in the 45 industries in which WOSBs are underrepresented are architectural, engineering, design and related services, transportation services and certain manufacturing industries that provide supplies to construction firms such as electrical equipment manufacturing.
For a complete updated list, visit http://www.sba.gov/content/women-owned-small-business-program.
For more information contact the Small Business Administration at www.sba.gov.