Foley & Lardner Guest Blogger: New Opportunities for Women-Owned Small Businesses

By: Erin L. Toomey

The Small Business Administration (“SBA”) issued a finale rule, on September 14, 2015, implementing Section 825 of the National Defense Authorization Act for Fiscal Year 2015 to allow the federal government to issue sole source awards to Women-Owned Small Businesses (“WOSBs”) and Economically Disadvantaged Women-Owned Small Businesses (“EDWOSBs”). WOSBs and EDWOSBs in manufacturing should take advantage of these new contracting opportunities reserved for these types of businesses, which will take effect on October 14, 2015.

What is a Women-Owned Small Business?

For federal government procurement purposes, a women-owned small business is a concern: (1) that is at least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least 51 percent of the voting stock is unconditionally and directly owned by one or more women; and (2) whose management and daily business operations are controlled by one or more women. FAR 2.101. A WOSB’s management and daily business operations are controlled by one or more women if, among other things:

• A woman makes long-term decisions for the business and is responsible for the day-to-day management and administration of the business operations;
• A woman holds the highest officer position and her resume evidences that she has the managerial experience of the extent and complexity needed to run the concern; and
• The woman who holds the highest officer position works at the business full-time and during normal working hours and does not engage in outside employment that prevents her from devoting sufficient time and attention to the daily affairs of the business.

To qualify as a EDWOSB, the controlling woman must: (i) have a personal net worth of less than $750,000; (ii) have an adjusted gross yearly income averaged over the three years preceding the certification of $350,000 or less; and (iii) have a fair market value of all her assets (including her primary residence and the value of the business concern) of $6M or less.

Summary of the New Rule

The new rule permits federal government contracting officers to issue sole source awards to WOSBs in industries designated by the SBA as substantially underrepresented if:

• The WOSB is a responsible contractor with respect to performance of the requirement and the contracting officer does not have a reasonable expectation that two or more WOSBs will submit offers;
• The anticipated award price of the contract (including options) will not exceed $6.5 million for manufacturing or $4M for other contract opportunities; and
• In the estimation of the contracting officer, the award can be made at a fair and reasonable price.

There are similar requirements for sole source awards to EDWOSBs, except those apply to those industries for which the SBA has determined WOSBs are underrepresented.

There are currently 133 North American Industry Classification System (“NAICS”) codes in which WOSBs are underrepresented (including several trucking, warehousing and storage, and equipment rental and leasing NAICS codes) and 197 NAICS codes in which WOSBs are substantially underrepresented (including several construction, textile, and forging NAICS codes). For a complete list of these NAICS codes, please visit the SBA’s website. Please note that the SBA is in the process of updating these lists, since they reflect the 2012 NAICS codes and not the most current NAICS codes.

Further, the new rule provides that for procurements at or below the simplified acquisition threshold, which is currently $150,000, contracting officers can set-aside the requirement or award the requirement on a sole source basis to a WOSB or EDWOSB.

Section 825 also enacted a requirement that a firm be certified as a WOSB or EDWOSB by a Federal Agency, a State government, SBA, or a national certifying entity approved by the Small Business Association. However, so as not to delay the sole source rulemaking, the SBA decided not to include in this rule regulations regarding this certification requirement, but will address this requirement in future rulemaking.

Foley & Lardner is a proud supporter of Women in Manufacturing. Content from their blog, Manufacturing Industry Advisor, written by fellow women in the manufacturing sector will be posted sporadically.