• SBA Removes Dollar Value Caps for Women-Owned Small Business (WOSB) Program Set-Aside Contracts
  • May 30, 2013
  • Law Firm: Holland Hart LLP - Denver Office
  • On May 7, 2013, the Small Business Administration (SBA) amended its rules to remove dollar value caps previously applicable to contracts awarded on a set-aside basis to women-owned small businesses (WOSBs) and economically disadvantaged women-owned small businesses (EDWOSBs) under the WOSB Program.1 EDWOSBs are a subset of WOSBs and covered by the WOSB Program. Previously, WOSB Program set-aside awards had been limited to awards not exceeding $6.5 million for manufacturing contracts and awards not exceeding $4 million for all other contract types. The SBA's rule implements Section 1697 of the National Defense Authorization Act for Fiscal Year 2013 (NDAA) which removed the statutory limitation on the dollar amount of WOSB Program set-aside contracts.

    The SBA's rule will impact contractors in those industries with North American Industry Classification System (NAICS) codes determined by SBA to be industries in which WOSBs are "substantially underrepresented" (or in the case of EDWOSBs "underrepresented"), and therefore eligible for set-aside contract awards.2 WOSB Program-eligible NAICS codes represent only a fraction of all NAICS codes. Under this new rule, to the extent that a procurement is WOSB Program-eligible, the Contracting Officer may set-aside the procurement for WOSB concerns without regard to the procurement's value, so long as market research demonstrates that two or more WOSB concerns are reasonably likely to submit offers for the contract and that contract award will be made at a fair and reasonable price.

    It is important to understand that procurements for goods and services covered by NAICS codes which are not contained in the WOSB Program-eligible list may not be set-aside under the WOSB Program. As noted, the substantial majority of NAICS code are not included on the WOSB Program-eligible list. It is also important to understand that the practical effect of the new rule will be limited in many instances even for WOSB Program-eligible NAICS codes by regulatory restrictions already applicable to set-aside contracts:

    • Non-Manufacturer Rule. Absent formal waiver by SBA, the "Non-Manufacturer Rule" restricts a non-manufacturer Small Business contractor from offering (reselling) products manufactured by a Large Business;
    • Limitation on Subcontracting Clause. This clause requires the Small Business contractor performing a service or supply contract to perform at least 50% of the cost of the contract work, with the precise methodology for calculating the cost of contract work varying by contract type (services vs. supplies). Construction contractors are also subject to (lower) subcontracting limits.

    Notwithstanding the significant limitations on the practical impact of the SBA rule described above, it may provide a significant new competitive advantage for certain WOSB concerns on certain types of procurements. The rule was issued as an interim rule effective as of its publication on May 7, 2013. Comments on the interim rule are due by June 6, 2013 through www.regulations.gov (or via hard-copy).

    Notes:
    1. The rule is found at the following link: http://www.gpo.gov/fdsys/pkg/FR-2013-05-07/pdf/2013-10841.pdf
    2.The SBA's list of NAICS codes eligible for WOSB Program set-asides is available at the following link: http://www.sba.gov/sites/default/files/files/WOSB%20Program%20Applicable%20NAICS%20Codes.xlsx