Government Contracts Monitor

SBA’s Update of WOSB Set-Aside Industries Brings Mixed News

March 14, 2016

By: Eric Whytsell

In addition to other changes previously noted, section 825 of the National Defense Authorization Act (NDAA) of 2015 required the Small Business Administration (SBA) to conduct a new study to identify the industries in which women-owned small businesses (WOSBs) are underrepresented in federal government contracting and report its findings to Congress. SBA’s March 3, 2016 Federal Register notice lays out those findings for the public and reveals that, while there are now more industry groups overall in which WOSBs can be awarded federal set-aside contracts, special set-aside opportunities for economically disadvantaged WOSBs have actually decreased.

The purpose of the WOSB program administered by SBA is to ensure that WOSBs have an equal opportunity to participate in federal contracting and to help attain the federal government’s goal of awarding 5% of its contract dollars to WOSBs. The program authorizes federal contracting officers to restrict competition for an acquisition to WOSBs if there is a reasonable expectation that at least two WOSBs will submit offers that meet the solicitation requirements at a fair and reasonable price and involve goods or services that fall within specific North American Industry Classification System (NAICS) codes in which SBA determines WOSBs are substantially underrepresented. The WOSB program also authorizes contracting officers to award a sole-source contract under such NAICS codes if only one WOSB can be identified that can perform the contract at a fair and reasonable price. Under the program, “economically disadvantaged” WOSBs (EDWOSBs) can receive set-asides and sole source awards in a smaller set of industries in which SBA has determined WOSBs are “underrepresented” but not substantially so.

SBA identified the initial set of industry groups in which WOSBs were underrepresented or substantially underrepresented in 2007. The NDAA for FY15 amended the Small Business Act to require an update of the applicable NAICS codes. The recent report reflects the results of a Commerce Department study conducted to fulfill that requirement.

As a result of the update effort, the number of industry groups (identified by four-digit NAICS codes) in which WOSBs have access to set-aside contracts rose from 38 to 92. This means EDWOSBs are now eligible for set-asides in a total of 113 industry groups, up from 83 previously. However, the number of industry groups under which EDWOSBs are eligible for exclusive EDWOSB-only awards has actually dropped more than half, from 45 to 21.

This notice -- and the updated list of industry groups -- is effective March 3, 2016 and applicable to all solicitations issued on or after the effective date. A complete list of the updated industry groups is set forth in the Federal Register notice. WOSBs and EDWOSBs should review the list carefully to see whether the changes offer them more opportunities – or take existing ones away.

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