Women-Owned Small Business Set-Asides Remain Only Small Percentage of Overall Federal Contracts

by Rachel Thomas

  • News Insights

On April 15, 2019, the Government Accountability Office (GAO) publicly published a report regarding the Women-Owned Small Business Program (WOSB) at the request of Congress. The report identified several oversight deficiencies with the WOSB program. Overall, despite an increase of more than two million women-owned firms between 2007 and 2012, agencies have routinely not been meeting the prime contracting goal of awarding five percent of all prime contracting dollars to WOSBs. In fact, between the years of 2013 through 2017, this goal was only met in the fiscal year 2015.

What’s the Deal?

The WOSB program was authorized by Congress in 2000, which permitted contracting officers to set aside procurements to women-owned small businesses in industries in which they are substantially underrepresented. To be an eligible WOSB in the program, firms had the option to either self-certify or be certified by a third party. However, the 2015 NDDA authorized the Small Business Administration (SBA) to eliminate the self-certification option and implement a new certification process. The GAO found that, as of February 2019, the SBA had not removed the option for program participants to self-certify but that the SBA expected to implement a new certification process by January 2020. Despite the lack of a new certification process, the GAO also found that the SBA does not and has no plans to monitor the third-party certifiers, which are private entities.

The Bigger Picture

As part of its findings, the GAO also found that, while federal contract obligations to all WOSB and WOSB program set-asides have increased since 2012, the set-asides remain a small percentage of this figure. For example, in 2012, WOSB program contract obligations were only 0.5 percent of contract obligations to all WOSB business; in 2017, this figure only had only grown to about 3.8 percent. Both numbers are woefully under the five percent prime contracting goal.

What’s Next?

Despite federal agencies’ inability to meet its WOSB program goals and a lack of oversight into the certification process, the SBA has continued to enforce stringent requirements for meeting the WOSB eligibility criteria. For example, the SBA’s Office of Hearing and Appeals (OHA) issued a recent decision In the Matter of C & E Industrial Services, Inc., SBA No. WOSB-112 (Apr. 8, 2019), determining that an offeror was not an eligible WOSB entity for the subject solicitation. Specifically, the OHA found that the woman owners lacked the “management and technical expertise” to run the firm under 13 C.F.R. § 127.202(b), which requires the woman owner to have “managerial experience of the extent and complexity to run the concern.” In contrast, the OHA found that the purported women-owners’ husbands likely oversaw the day to day management of the firm based on their experience in the type of required services.

The SBA has continued to stringently enforce its requirements for eligibility under the WOSB program despite federal agencies’ shortage of contract awards to WOSB programs. The GAO also noted in its report several instances where contracts using a WOSB set-aside were awarded for ineligible goods or services (approximately 3.5 percent from April 2011 through June 2018). Thus, despite the numerous issues identified with the program overall, the GAO issued one recommendation that the SBA develop a process to review the extent that awards under the WOSB program set-asides are awarded for ineligible goods or services and provide the appropriate outreach or training to agencies to prevent such ineligible awards.