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WIPP Posts Comments - Advanced Notice of Proposed Rulemaking on WOSB Certification

Tuesday, February 16, 2016  
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February 12, 2016

 

Filed electronically at http://www.regulations.gov

 

Ms. Brenda Fernandez

U.S. Small Business Administration Office of Policy, Planning and Liaison 409 Third St., SW 8th Floor Washington, D.C. 20416

 

Re: Comments relating to RIN 3245–AG75, Advanced Notice of Proposed Rulemaking to implement section 825 of the National Defense Authorization Act for Fiscal Year 2015

 

 

Dear Ms. Fernandez,

 

On behalf of our coalition of 4.7 million women business owners and 78 organizations, Women Impacting Public Policy (WIPP) is pleased to submit comments on the Small Business Administration’s (SBA) Advanced Notice of Proposed Rulemaking (ANPRM) regarding certification in the Women-­‐Owned Small Business Federal Contract Program (“WOSB Program”), issued December 18, 2015. As a leading advocate for women entrepreneurs engaged in the federal marketplace, we appreciate the effort by the SBA to address new legislative requirements with respect to the WOSB  certification  process, which were part of the FY2015 National Defense Authorization Act (NDAA).

 

Since many of the questions posed by SBA are of a technical nature not necessarily appropriate for WIPP, we have chosen to respond to the ANPRM by laying out principles. We hope these will guide SBA in their implementation of the changes to the certification process.

 

Access to federal markets is an important part of keeping the US industrial base strong, and women-­‐owned businesses are the fastest growth sector in the US. The National Women’s Business Council (NWBC) recently released a report citing that the number of women-­‐ owned businesses is now at ten million.1 These businesses are job creators employing nearly nine million Americans and an economic force that generates $1.6 trillion into the economy every year.2 

 

Nonetheless, a recent study by the Department of Commerce found that women-­‐owned firms were 21% less likely to win federal contracts. The report concluded, “Even when controlling for firm characteristics, including firm size and age, women-­‐owned businesses are less likely to win contracts than otherwise similar businesses not owned by women.”3

 

These findings, paired with the growing impact of women business owners on the national economy, increase the need for the WOSB Program to assist women entrepreneurs entering the federal market.

 

Third-­‐Party Certification

 

Keep the Integrity of the Program Intact

 

First and foremost, WIPP worked tirelessly for 11 years to see implementation of the WOSB Program. The past four years have been spent securing legislative changes to the program to give it parity among other small business contracting programs and improve the likelihood that the WOSB Program will result in more awards to women-­‐owned businesses.

 

Now we are focused on ensuring that changes to the certification process do not result in a disruption of the program. The program has made significant progress since its inception— more than two thousand awards totaling nearly $700 million.4 Although we are not privy to the number of self-­‐certified WOSBs in the Repository, we do know that approximately 23,000 women have registered in the Repository. Given the 90-­‐day period that the current certifiers have indicated is necessary to certify, it would take many years to certify all women-­‐owned businesses with the current list of certifiers.

 

It is instructive to note that when the program was first proposed in 2006, the SBA implemented a two-­‐part certification system. WIPP’s comments in July 2006 stated, “Given that it has identified 75,000 WOSBs in the CCR which would potentially qualify for this certification, it would take decades to process the applications.”

 

Our most recent search of the System for Award Management (SAM) found 75,000 women-­‐ owned firms registered as of February 2016. Of that 75,000, approximately one-­‐third, are registered in the WOSB Repository. Given that the move away from self-­‐certification will create a significant demand for certification, an SBA-­‐only certification process could still take decades to complete.

 

In addition, WIPP noted in its 2006 comments that a reason to include third-­‐party certification was to keep the costs of certification low. WIPP estimated:

 

If SBA administered the program, the cost of an application to a WOSB would be $700 per application because of the costs associated with creating, collecting and organizing documentation. Preparing the application would require attorney and CPA costs as well as the owner’s time. 5

 

We find no evidence to suggest that the costs associated with an SBA certification in 2016 would be any less.

 

Clearly, a stand-­‐alone SBA certification program needs to take into consideration the length of time required to migrate women who are self-­‐certified to another form of certification. If this is not done correctly, the program will suffer, resulting in loss of federal awards to women-­‐owned companies. Any form of certification the SBA decides is appropriate for the program should take into account a smooth transition.

 

State and Federal Agency Certification

 

Expand Acceptable Certifications In a Uniform Manner

 

WIPP supports granting authority to certify WOSBs and Economically Disadvantaged WOSBs (EDWOSBs) to state and other federal agencies. We believe Disadvantaged Business Enterprise (DBE) certifications should be accepted for admittance into this program. We note, however, that the DBE certifications do not currently have the same guidelines that apply to EDWOSB requirements. In our view, whether certification comes through State, Local, Federal or third-­‐party certifier, they must have a mechanism for identifying economic disadvantage

 

Since state and local entities buying through the GSA Schedule program have been encouraged to accept the federal 8(a) certification, it seems logical that the federal government should find a way to accept state certifications. It is necessary that SBA keep certification eligibility as streamlined as possible. If accepting certification from a number of sources, we would urge a unified set of requirements with as little duplicative paperwork as possible.

 

SBA WOSB Certification Program

 

Without Adequate Resources, SBA Certification Will Fail WOSBs

 

Congress should  fund  its  directive  to  rewrite  the  certification  requirements.  If  it  is envisioned that the women’s certification should follow other small business contracting certification programs, the process can require multiple reviews at both the District Office level and at the SBA headquarters level.

 

Our members tell us that the goal for approval in other SBA contracting programs is 90 days, but, in actuality, can be much longer. We cannot see how any reasonable time period could be met for approval if resources remain at current levels. If other programs are already struggling to meet timely certification approvals, it would be highly unlikely that a new certification program without experienced/dedicated staff could adequately meet the demand of the 75,000 WOSBs in SAM seeking a certification.

 

An SBA certification process for the WOSB program should be carefully designed. In reports on other small business contracting programs, the Government Accountability Office (GAO) found fraud despite an SBA certification. In its 2014 report on the WOSB program, the GAO did not recommend a whole new certification program. Rather, the GAO concluded:

 

To improve management and oversight of the WOSB program [and] to help ensure the effective oversight of third-­‐party certifiers, the Administrator of SBA should establish and implement comprehensive procedures to monitor and assess performance of  certifiers  in accord with the requirements of the third-­‐party certifier agreement and program regulations. To provide reasonable assurance that only eligible businesses obtain WOSB set-­‐aside contracts, the Administrator of SBA should enhance examination of businesses that register to participate in the WOSB program, including actions such as: (1) promptly completing the development of procedures to conduct annual eligibility examinations and implementing such  procedures;  (2)  analyzing  examination  results  and  individual businesses found to be ineligible to better understand the cause of the high rate of ineligibility in annual reviews, and determine what actions are needed to  address  the causes; and (3) implementing ongoing reviews of a sample of all businesses that have represented their eligibility to participate in the program. 6

 

In other words, enforcement seems to be at the core of the GAO’s recommendation to reduce the possibility of fraud in the WOSB program.

 

With respect to the question of how often WOSBs should certify, all federal contractors are already required to annually certify compliance with their respective size standards. In addition, if an ownership change results in loss of “women-­‐owned” status, companies are required to report the change to the federal government. Failure to do so carries strict penalties. Given these compliance requirements, we believe a recertification beyond the annual size certification is unnecessary.

 

Strengthen Compliance/Enforcement Procedures

 

As noted above, the GAO recommended that SBA improve enforcement actions against fraudulent companies. At the outset of the program, concerns were raised about fraud. SBA’s answer to that concern was establishment of a fraud hotline, where anyone could report a company that appeared to be posing as a WOSB, but in actuality, run by a male.7 A consistent complaint we hear is that women are put in charge of a company in title only while the male (usually a relative or spouse) is running the company. Yet, we have not seen much evidence that reporting such a company to the Inspector General’s hotline has resulted in many investigations or revocation of a certification. There is no acknowledgement by the IG to those who file a complaint that it is being investigated.

 

WIPP recommends that SBA increase its enforcement efforts. Given ongoing reports of fraud, this should not wait until SBA promulgates new certification requirements.

 

As certification requirements mandated by Congress move forward, WIPP asks that the SBA do so carefully, making sure the WOSB Program is not placed in jeopardy by inadequate resources or a massive shift to a new form of certification. Women in this country fought for 15 years to get the program to a place where it can be an effective tool to give WOSBs access to the federal market. Much work needs to be done to increase the effectiveness of the program. We urge thoughtful consideration of next steps. The progress made since the inception of the program deserves a chance to reach its full potential.

 

 

Sincerely,

 

Kristie Arslan

Executive Director

 

 

                                                        

1 National Women’s Business Council, 10 Million Strong -­‐  The Tipping Point for Women's Entrepreneurship, 4

(November  2015). 

2 Id

3 Jackie Calmes, Businesses Owned by Women Less Likely to Win U.S. Contracts, Study Shows, N.Y. Times, Feb. 3, 2016, at B7.  

4 Bloomberg Government, Contracts Intelligence Tool, (Last Visited February 3, 2016).

5 Women Impacting Public Policy, Comments on Proposed Rule RIN 3245-­‐AE65, The Women-­‐Owned Small Business Federal Contract Assistance Program, (July 17, 2006).

 


 


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