Government Contracts Monitor

Short Take: SBA Authorizes WOSB Sole-Source Awards

September 14, 2015

The Small Business Administration (SBA) has issued its eagerly-awaited Final Rule implementing the new sole source award authority for Women-Owned Small Businesses (WOSBs). The Final Rule essentially adopts and follows the Proposed Rule, previously discussed here. Most importantly, the Final Rule authorizes sole source awards in industries identified by SBA in which WOSBs are underrepresented or substantially underrepresented where, based on market research, the contracting officer determines that (1) there is one responsible WOSB, but does not have a reasonable expectation that two or more qualifying WOSBs will submit offers in the case of an industry in which WOSBs are substantially underrepresented, or two or more qualifying Economically-Disadvantaged WOSBs (EDWOSBs) where WOSBs are underrepresented, (2) the anticipated award price (including options) will not exceed $6.5M for manufacturing NAICS codes, and $4.0M for all other NAICS codes, and (3) award can be made at a fair and reasonable price. SBA states that “[]the objectives of this final rule are to put the WOSB Program on a level playing field with other SBA government contracting programs with sole source authority, and to provide an additional, needed tool for agencies to meet the statutorily mandated 5% prime contracting goal for WOSBs.”

The Final Rule is effective October 14, 2015. However, the FAR will need to be amended to include the new statutory sole source authority, so that there is no conflict between SBA’s new rule and the FAR. Hopefully, the FAR Council will issue its implementation in the form of an Interim Rule, so as to expedite actual implementation of the new sole source authority. There is recent precedent for this approach provided by the FAR Council’s Interim Rule two years ago eliminating the former statutory cap on WOSB awards. Moreover, this would be consistent with Congress’ purposes in authorizing sole source awards, SBA’s primacy in this area, and the fact that SBA’s proposed rule so closely tracks Congressional language.

In the meantime, WOSBs should start informing their contracting officers as to this pending development, so that they are ready to take advantage of this new authority once the final regulatory steps are completed in the coming months.

SBA’s commentary on the Final Rule reiterates SBA’s previous determination to implement the new sole source authority as quickly as possible, and defer implementing Congress’ deletion of self-certifications for WOSBs pending more thorough consideration. SBA states that “any certification process must be fair, efficient and comprehensive, but should not be burdensome or prevent new WOSBs and EDWOSBs from entering into the Federal marketplace,” and that “SBA wants to balance the need to protect the Government and other participants from fraud, with the goal of increasing WOSB and EDWOSB participation in the program.” SBA did not provide any indication as to when a proposed rule might be issued on this issue, but stated that “this process should be implemented in a systematic and thoughtful manner, and that increased public participation in the process will help SBA develop the best possible certification program.”