Government Contracts Monitor

Small, Women-Owned? Congress Allows Sole-Source Awards, But No More Self-Certification

February 9, 2015

The recently-enacted National Defense Authorization Act (NDAA) for Fiscal Year 2015 (NDAA-15) includes two important changes for Women-Owned Small Businesses (WOSBs). First, the Act authorizes certain sole source awards to WOSBs, ending a long effort to bring the WOSB program in line with other socio-economic programs that have long authorized sole source awards. Second, the Act deletes the prior statutory authorization for WSOBs to self-certify their status and eligibility for award, presumably in response to criticism that WOSB awards are being made to ineligible companies. These new provisions will have significant impacts on WOSBs, but not until promulgation of the implementing SBA and FAR regulations.

New Sole Source Award Authority: As you may know, all of the other socio-economic programs have long included authority for sole source awards within certain dollar limits – a key ingredient in the success of such programs. However, until now the WOSB Program did not include sole source authority, and only authorized set-asides in certain NAICS Codes and then only where the so-called “Rule of Two” criteria are satisfied – i.e., the contracting officer has a reasonable expectation that (1) at least two eligible WOSBs will submit offers, and (2) award can be made at a fair and reasonable price. The NDAA-15 authorizes sole source awards in situations where the contracting officer does not have a reasonable expectation that two or more qualifying WOSBs will submit offers. This new authority provides that sole source awards can be made only for contracts with anticipated award prices (including options) of less than $6.5M for manufacturing NAICS codes, and $4.0M for all other NAICS codes. These changes are an important step forward and will enable agencies to make WOSB awards where there is only a single qualifying WOSB.

Deletion of Self-Certification Authority: Currently WOSBs are permitted to self-certify their status eligibility. This scheme has been criticized for burdening contracting officers and being prone to abuse. The NDAA-15 eliminates self-certification and requires that each WOSB be “certified by a federal agency, a State Government, the [SBA] Administrator, or a national certifying entity approved by the Administrator as a small business concern owned and controlled by women.” This is a significant change, and likely to cause considerable chaos, at least in the short-term, as there are only four SBA-approved third-party certifying entities.

Impact; Recommended Actions: These statutory changes require regulatory implementation in both SBA’s regulations and the FAR. WOSBs should carefully monitor the rulemaking processes and comment as necessary to ensure a workable outcome.

In the meantime, WOSBs should evaluate the potential of the new sole source authority and begin making their contracting officers aware of such authority where appropriate. Most contracting agencies are not presently meeting their WOSB prime contracting goals. This new authority is intended as an important tool to facilitate achieving such goals. WOSBs that currently self-certify should start processing third-party certification, to avoid the certification “crunch” when the changes become effective. Even if the new regulations provide a reasonable transition period, being ahead of the curve and having valid third-party certification will provide a greater comfort level to your contracting officers in moving forward with WOSB contracting actions.