The U.S. Small Business Administration is changing its certification process for women-owned small businesses and economically disadvantaged women-owned small businesses to receive federal set-aside contracts.

The changes, which take effect July 15, address concerns that unqualified businesses were being certified and receiving contracts.

Companies seeking to certify or recertify will face different choices and requirements.

The self-certification option is eliminated effective Oct. 15, 2020, and authorized third-party certifiers will have to disclose their fees to applicants as well as the option to use SBA's free online certification process.

For businesses seeking recertification, it depends on whether it's a third-party certification or self-certification, and if the business has any ongoing set-aside contracts.

Under the new regulations, companies seeking first-time certification will have to use an approved third-party certifier, or the online process.

Oversight Issues

The WOSB program was introduced in 2011 to enable women small businesses owners to obtain federal contracts.

But while other SBA programs require businesses to go through a stringent application process, WOSB and EDWOSB applicants could self-certify or use a third-party certifier.

Over time, the program was criticized for fraud.

In an October 2014 report to Congress, the Government Accountability Office found problems with the certification process.

"Without ongoing monitoring and oversight of the activities and performance of third-party certifiers, SBA cannot reasonably assure that certifiers fulfill the requirements of the agreement," the report said.

Review

The GAO also said a 2012-13 SBA review of companies that previously received set-aside contracts found that more than 40% should not have attested they were WOSBs or EDWOSBs.

In the 2015 National Defense Authorization Act, Congress ordered the SBA to eliminate self-certification for WOSBs and EDWOSBs.

Further, Congress told the SBA to change its regulations by adopting a process that screens applicants.

But another GAO report published last year found the SBA failed to make all the changes.

"By not improving its oversight of the WOSB program, SBA is limiting its ability to ensure third-party certifiers are following program requirements," the GAO wrote in its April 2019 report.

Changes

On May 11, the SBA announced it would start implementing the changes beginning July 15.

Some important dates to remember:

  • The current self-certification process is available until Oct. 15, 2020
  • WOSBs must download by July 15 their documentation, housed in the WOSB program repository, from certify.sba.gov
  • Firms can begin submitting applications for initial processing on July 15 and the SBA will begin issuing certification decisions Oct. 15

The changes also:

  • Allow firms certified by the U.S. Department of Veterans Affairs Center of Verification and Evaluations to participate if they meet eligibility requirements
  • Confirm the continued participation of approved third-party certifiers 
  • Adopt a $750,000 net worth standard when assessing economic disadvantage for individuals in the 8(a) Business Development Program and 8(a) Program, and exclude retirement funds from that assessment

The SBA said changes will improve the ease and efficiency for contracting officers to set aside contracts for firms certified as WOSBs and EDWOSBs, allowing agencies to meet the 5% contracting goal for those businesses.