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Women's Groups Oppose SBA Set-Aside Rule

Several women’s business organizations and contractor groups urged the Small Business Administration to accept self-certification or third-party certification for the women’s set-aside contracting program.

In comments on SBA’s proposed rule, the U.S. Women’s Chamber of Commerce and the Professional Services Council said the agency ignored the intent of Congress by rejecting self-certification. “We do not believe SBA has the authority to simply ignore implementing such clear statutory direction,” the PSC wrote.

Although Congress authorized self-certification in the 2000 law creating the set-aside program, SBA said it believes that might not stand up to a legal challenge under Supreme Court rulings limiting affirmative action. “SBA certification…would reduce the likelihood of fraud and misrepresentation of [woman-owned small business] status,” the agency said in its explanation of the proposed rule.

SBA said it would accept certifications under its 8(a) and small disadvantaged business programs, as long as the company is 51% owned by one or more women. It said it may also accept certifications under the Transportation Department’s Disadvantaged Business Enterprise program, but would not accept certifications from outside the federal government.

The Women’s Chamber accused SBA of creating additional barriers to woman-owned businesses in federal contracting. The Chamber has sued SBA over the five-and-a-half year delay in implementing the program.

Women Impacting Public Policy, speaking for a coalition of women’s business groups, urged the agency to accept certification from national organizations and from state and local agencies. “Women-owned businesses spend considerable time and money obtaining WBE/MBE certifications at the state and local level, the state DOT certification and/or the certifications available from national certifying entities,” WIPP wrote.

Congress authorized the agency to accept existing certifications by “a Federal agency, a State government, or a national certifying entity.’’

WIPP said accepting outside certifications would speed up the process. Although SBA estimates its planned online certification system can process 2,000 applications a year, there are 75,000 woman-owned business registered in the government’s Central Contractor Registration.

By SBA’s calculations, “it would take decades to process the applications,” WIPP said. But SBA believes only a fraction of those 75,000 businesses will seek certification.

The women’s set-aside program will not begin operating until SBA publishes a separate rule specifying which industries will be eligible. In creating the program, Congress authorized set-asides for small woman-owned firms in industries that are “substantially underrepresented” in federal contracting. In industries that are “underrepresented,” set-asides would be limited to companies owned by economically disadvantaged women.

SBA hired the Rand Corporation to conduct a study on eligibility, but no completion date has been announced. The Professional Services Council urged the agency to “promptly publish all that it knows” about which industries will be eligible, so agencies and contractors can begin planning for implementation of the program.

SBA’s proposed rule would define “economically disadvantaged” in the same way that the term is defined in the 8(a) program. A business owner must have a net worth of no more than $750,000, excluding equity in the business and a home.


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