Women-Owned Small Business Federal Contract Program Updates and Clarifications

<RULE> SMALL BUSINESS ADMINISTRATION <CFR>13 CFR Parts 124, 126, 127, 128, and 134</CFR> <RIN>RIN 3245-AI04</RIN> <SUBJECT>Women-Owned Small Business Federal Contract Program Updates and Clarifications</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> U.S. Small Business Administration. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This final rule makes several changes to the Small Business Administration (SBA or Agency) Women-Owned Small Business (WOSB) Federal Contract Program regulations, including adding definitions that are not currently included in the regulations and conforming the regulations to current statutes that have not yet been integrated. The rule also adopts similar language to that used in SBA's other government contracting program regulations regarding requirements for the qualifying individual's control of an applicant concern and limits on outside employment and makes changes to the process by which an application for certification is reviewed by SBA in order to implement a statutory amendment from the National Defense Authorization Act for Fiscal Year 2022 regarding the effects of a status determination on a small business concern. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This rule is effective January 3, 2025. It applies to all solicitations issued on or after that date. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Harry T. Alexander Jr., U.S. Small Business Administration, Office of Contracting Assistance, 409 Third Street SW, Washington, DC 20416; (202) 619-0314, <E T="03">harry.alexanderjr@sba.gov</E> . </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> On May 16, 2024, SBA published a proposed rule in the <E T="04">Federal Register</E> to change the process by which an application for certification is reviewed by SBA. SBA proposed this change in order to implement a statutory amendment from the National Defense Authorization Act for Fiscal Year 2022 (Pub. L. 117-81) regarding the effects of a status determination on a small business concern. SBA also proposed to replace outdated references to the U.S. Department of Veterans Affairs Center for Verification and Evaluation with references to SBA's Veteran Small Business Certification (VetCert) Program, add definitions of terms used in the Women-Owned Small Business (WOSB) regulations, provide consistency across the regulations used in SBA's other government contracting programs, and define who is authorized to represent a firm when validating or signing certification pages during the certification process. During the rule's 60-day comment period, SBA timely received comments from two commenters, with one commenter expressing full support for the proposed rule. The other commenter expressed general support for the substantive changes proposed by SBA, noting that the rule is “generally well-conceived and addresses the concerns of the industry,” and appreciated SBA's efforts to standardize the requirements of the government contracting programs. <HD SOURCE="HD1">Section-by-Section Analysis and Response to Comments</HD> <HD SOURCE="HD2">Sections 124.106(a), 127.202(c), and 128.203(i)</HD> Sections 124.106(a), 127.202(c), and 128.203(i) address limitations on outside employment that can affect a business concern's eligibility for participation in the 8(a) Business Development (BD), WOSB, and VetCert programs, respectively, based on a qualifying individual's lack of control. Each of these provisions generally requires the qualifying individual to devote full time or the number of hours of normal operation to the business. Each also requires the business concern to demonstrate how a qualifying individual controls the day-to-day operations of the business concern, particularly if the qualifying individual devotes fewer hours to the business than its normal hours of operation. The language of the three provisions, however, is not identical. These discrepancies led to questions as to whether SBA intended different application of the control requirements for different programs. Current § 127.202 generally requires that a woman devote sufficient time to the business with a rebuttable presumption that the business does not qualify for WOSB if a woman devotes fewer hours to the business than its normal hours of operation. Where the presumption applies, the woman must provide evidence to SBA that she has ultimate managerial and supervisory control over both the long-term decision making and day-to-day management and administration of the business. This final rule aligns the language of this section to the current restriction in the VetCert Program. The business will still be generally required to have the qualified woman that controls the concern devote full time to the business during the business's normal hours of operation. The business may, however, demonstrate to SBA that the woman has ultimate managerial and supervisory control over both the long-term decision making and day-to-day management of the business although the woman may not meet full-time devotion. One commenter expressed support for this change but identified minor inconsistencies remaining between the rule as proposed and §§ 124.106(a)(4) and 128.203(i). The commenter suggested SBA revise the rule to fully conform these sections. SBA has made minor wording changes to § 127.202 to conform that language to the language regarding outside employment contained in § 124.106(a) for the 8(a) BD program and § 128.203(i) for the VetCert program. The commenter additionally noted that the proposed rule does not clarify whether WOSB allows for exceptions to the control requirements in “extraordinary circumstances” as the VetCert regulations provide. SBA agrees that the “extraordinary circumstances” provisions should equally apply in the WOSB program and has proposed to incorporate them into the WOSB regulations in a separate rulemaking. <E T="03">See</E> 89 FR 68274, 68316 (Aug. 23, 2024). <HD SOURCE="HD2">Sections 127.102, 126.103, 128.500, and 134.1002</HD> Section 127.102 sets out the definitions for the WOSB Program. SBA proposed to add a definition for the term “Applicant,” as a definition was not included in the previous version of the regulations and appears in the regulations of SBA's other government contracting programs. SBA believes that including this definition will provide consistency in the rules that apply to its various certification programs and make clear that a concern applying for certification in the WOSB Program is an “Applicant.” SBA received no comments to this provision and adopts it as final in this rule. SBA also proposed to amend the current definition of the term “System for Award Management (SAM) (or any successor system).” SBA believes that the definition is outdated and should match the definition that is used in the FAR for consistency purposes. SBA received no comments to this provision and adopts it as final. The proposed rule also removed the definition for “WOSB Program Repository” as this definition refers to the old repository system that is no longer in use. SBA believes that removing this definition, which is not used elsewhere in 13 CFR part 127, will alleviate any confusion. Lastly, the proposed rule amended the definition of “Interested party,” limiting it to certified WOSB concerns or concerns that have a pending application for WOSB certification, either at SBA or a third-party certifier, and that submit an offer for a specific Economically Disadvantaged Women-Owned Small Business (EDWOSB) or WOSB requirement, rather than any concern that submits an offer for a specific EDWOSB or WOSB requirement. SBA believes that only certified WOSBs and EDWOSBs or concerns pending WOSB certification should be able to submit a protest against an apparent successful offeror's EDWOSB or WOSB status since only those firms can themselves be eligible for award and truly have an economic interest in the award. It is not uncommon for an incumbent contractor to file a bid or size/status protest in order for its performance to be extended pending the resolution of the protest. SBA does not want to encourage firms that are not certified WOSBs or certified EDWOSBs to submit offers merely to be able to file a status protest that could prolong their performance under a preceding contract. Such firms have no chance to be awarded a WOSB/EDWOSB contract, and such protests may be nothing more than delay tactics. Only firms that are capable of winning the WOSB set-aside contract or order should be able to protest the WOSB status of an apparent successful offeror. Furthermore, in Fiscal Year 2024, only one of the twelve protests received by the WOSB program office would have been impacted by this change in the definition of “interested party.” Thus, this change would have an insignificant impact on the number of status protests that would have been reviewed. Status protests for the VetCert program are heard by SBA's Office of Hearings and Appeals (OHA). The expected impact on firms able to submit a VetCert status protest would be similarly insignificant by this change in the definition of “interested party.” One commenter expressed support for this change, and suggested SBA similarly update the 8(a) BD Program, Historically Underutilized Business Zone (HUBZone) Program, and VetCert Program regulations. SBA first notes that it does not allow status protests in connection with the award of 8(a) contracts. Second, SBA proposed to similarly change the definition of interested party for the HUBZone program in a separate rulemaking. <E T="03">See</E> 89 FR 68274, 68307. SBA received two positive comments and no negative comments about this proposed change for the HUBZone program. SBA agrees with the commenter that similar treatment should be afforded to the HUBZone program and VetCert program and, thus, has adopted this co ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 43k characters. 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