GAO says 40% of WOSBs may have been ineligible

More than 40% of women-owned small businesses that previously received federal contracts were judged to be ineligible for Women-Owned Small Business (WOSB) status at the time of review, according to a new report from the Government Accountability Office.

The Small Business Administration performed the reviews on a sample of self-certified and third-party certified women-owned firms in 2012 and 2013.

In the 2012 sample of WOSB firms, 42% were deemed ineligible, and in 2013, 43% were judged ineligible, at the time of review.

The SBA reviews did not examine whether the WOSBs were ineligible at the time of the contract awards. WOSBs must affirm their status at the time of contract and are subject to prosecution if they are later found to have made false representations.

“According to SBA officials, a finding of ineligibility does not mean the business was ineligible at the time of contract award because the status of the business might have changed,” the GAO said. The findings of WOSB ineligiblity were similar to those found in other socioeconomic programs, according to the SBA. The agency also told the GAO there may be a lack of understanding of the documentation required to certify as a WOSB or technical problems with loading documents.

SBA officials also said they rely on bid protests to identify ineligible WOSB firms, as a self-policing program.

Nonetheless, the GAO asserted that the high rates of WOSB ineligibility in the reviews signal a weakness in controls and oversight.

“The high rate of ineligibility (SBA) found raises questions about whether contracts may have been awarded to ineligible businesses,” the GAO said.

The auditors blamed SBA for “inadequate monitoring and controls” in the WOSB program.

As a result of the weak oversight, “potentially ineligible businesses may continue to incorrectly certify themselves as WOSBs, increasing the risk that they may receive contracts for which they are not eligible,” the GAO said.

More Information: GAO report http://www.gao.gov/assets/670/666431.pdf .

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