SBA Issues Final Rule on Women-Owned Certification

Obermayer Rebmann Maxwell & Hippel LLP

Obermayer Rebmann Maxwell & Hippel LLP

Several months ago, we blogged about the forthcoming change to the WOSB/EDWOSB regulations.  As we said then, big changes regarding self-certification were on the horizon.  While those changes were very long-awaited –it was the 2015 NDAA that directed the SBA to modify its regulations, abolish self-certification, and create an application process to vet potential WOSB/EDWOSB participants! – there was still a lot of confusion about how the new process would work.  The SBA’s May 2019 Proposed Rule left many of the most pressing questions open.  When would the changes occur?  Would all of the currently-certified WOSBs immediately have to apply, and at the same time? Would there be a grace period for currently-certified WOSBs or would companies lose their certification while they waited for applications to be approved?  Would companies who had gone through the more rigorous third-party application system be given any preference?  The SBA’s proposed rule left many of these questions open, seeking comments and guidance from the industry.  Now, the questions have been answered … for the most part.

As expected, (and mandated by the NDAA) the crux of the change is the elimination of self-certification for those seeking WOSB/EDWOSB sole-source or set-aside awards.  As the SBA explains:

“The certification requirement applies only to those businesses wishing to compete for set-aside or sole source contracts under the Program, and to those seeking to be awarded multiple award contracts for pools reserved for WOSBs and EDWOSBs. Once this rule is effective, WOSBs and EDWOSBs that are not certified will not be eligible for contracts under the Program.”

Pursuant to the final rule, 13 CFR § 127.300 (which governs how a WOSB/EDWOSB is certified) will be revised.  It will provide the various options that women-owned companies can pursue to obtain certification.  For WOSB certification, a concern will have three options: First, it may apply (for free) to SBA for certification via; second, a company may submit evidence that it is a women-owned and controlled small business that is certified by the Department of Veterans Affairs Center for Verification and Evaluation as a Veteran Owned, or Service-Disabled Veteran Owned, Small Business; third, the company can submit evidence that it has been certified as a WOSB by an approved Third-Party Certifier. The list of SBA-approved third-party certifiers can be found on SBA’s website at  Third-party certifiers may charge a reasonable fee, but must notify applicants first, in writing, that SBA offers certification for free.

With regard to EDWOSB certification, there are four options: First, a company may apply (for free) to SBA for certification via; second, a concern that is a certified participant in the 8(a) BD Program and owned and controlled by one or more women qualifies as an EDWOSB;  third, a concern may submit evidence to SBA that it is an economically disadvantaged women-owned and controlled small business that is certified by the U.S. Department of Veterans Affairs Center for Verification and Evaluation as a Service-Disabled Veteran Owned Business or Veteran Owned Business; or, fourth, a concern may submit evidence that it has been certified as an EDWOSB by a Third-Party Certifier.

What documents must be submitted as part of the application will be governed by the revised 13 CFR § 127.303, and will differ, depending on which certification option the company pursues. The new regulations advise contractors that the SBA will not process incomplete applications. SBA will advise each applicant within 15 calendar days after the receipt of an application whether the application is complete and suitable for evaluation and, if not, what additional information or clarification is required to complete the application.  Then, SBA will make its determination within ninety (90) calendar days after receipt of a complete package, whenever practicable.  If the SBA denies an application, the contractor can re-apply after waiting 90 days; there does not appear to be a mechanism for requesting reconsideration or appealing the decision. 

Interestingly, the revised regulation provides that, a concern seeking to submit an offer on a specific EDWOSB or WOSB set-aside requirement, must either be a certified EDWOSB or WOSB pursuant to § 127.300, or represent that it has submitted a complete application for WOSB or EDWOSB certification to SBA or a third-party certifier and has not received a negative determination regarding that application.  This seems to be leaving some room for the inevitable lag-time in processing new certification applications.  However, there are limitations; at some point, a delayed certification decision will in effect be presumed to be a denial, nullifying eligibility for award.

This rule is generally effective on July 15, 2020, but certain provisions (including those relating to certification options, application processing, recertification, continuing certification, etc.) do not go into effect until October 15, 2020.  Again, the SBA appears to be building in some time for WOSB/EDWOSB companies to get up to speed on the regulations and get their applications in.  But that does not mean you should wait! 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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