Government Contracts Monitor

FAR Interim Rule Eliminates Size Caps on WOSB Contract Set-Asides

September 6, 2013

As discussed previously here, the U.S. Small Business Administration (“SBA”) issued an Interim Final Rule, effective May 7, 2013, implementing Section 1697(a) of the National Defense Authorization Act for Fiscal Year 2013 (“NDAA”), and eliminating the former statutory caps on the value of contracts that can be set-aside for competition among Women-Owned Small Businesses (“WOSBs”) and Economically-Disadvantaged Women-Owned Small Businesses (“EDWOSBs”).  This means that contracts of any dollar size may now be set-aside, providing that the Contracting Officer has a reasonably expectation that (i) at least two qualifying companies will submit offers, and (ii) award will be made at a fair and reasonable price.

We noted at that time that similar language to that eliminated by SBA continued to exist in the FAR, and expressed the concern that such outdated language might cause some continuing confusion and uncertainty on the part of Contracting Officers.  We further pointed out that the FAR Counsel had opened FAR Case 2013-010 to address this inconsistency, but had not, at that time, published any amendment to the FAR.

An Interim Rule subsequently was published, effective June 21, 2013, amending the FAR to adopt similar language changes implementing the NDAA’s statutory change to the Small Business Act, and conforming to SBA’s revised regulations per the above Interim Rule.  See 78 Fed. Reg. 37692 (June 21, 2013).  Specifically, this new Interim Rule amends FAR 19.1505(b) and (c) by removing the previous dollar caps on the anticipated award price of contracts to EDWOSBs and WOSBs.  “As a result, contracting officers may set aside acquisitions for competition restricted to EDWOSB concerns or WOSB concerns eligible under the WOSB program at any dollar level above the micro-purchase threshold, provided the other requirements for a set-aside under the WOSB Program are met.”  Id. at 37693.

In justifying issuance of this Interim Rule without prior opportunity for public comment, the Federal Register notice states that urgent and compelling circumstances were found because of (1) the need to “minimize the risk of disseminating conflicting guidance” between “the two primary regulations used by the Federal acquisition community to implement the WOSB Program, the Small Business Regulations and the FAR,” and (2) so that “agencies can immediately begin taking advantage of having no dollar limitations for set-asides to EDWOSB or WOSB concerns eligible under the WOSB Program, as envisioned by section 1697 [of the NDAA].”  Id. at 37693-4.

This latter goal is particularly important in view of the subsequently-released Fiscal Year 2012 (“FY12”) small business goaling data by SBA, showing that the federal government continues to fall significantly short of its goal of awarding 5% of eligible contracts to WOSBs.  Specifically, SBA’s FY12 goaling data reveals that the government awarded only 4.0% of prime contract awards to WOSBs, totaling some $16.2 billion.  See our report on SBA’s goals here.

WOSBs should aggressively market themselves to potential customer agencies, to ensure that they are aware of the removal of the former size caps on WOSB set-asides and the resulting opportunity for the agencies to enhance their WOSB contracting goaling performance by setting-aside larger contracting opportunities for WOSBs and EDWOSBs in the balance of FY13 and beyond.

 

Hopewell Darneille is the attorney responsible for the contents of this article.