Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business Certification, 27650-27665 [2020-09022]
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Federal Register / Vol. 85, No. 91 / Monday, May 11, 2020 / Rules and Regulations
SMALL BUSINESS ADMINISTRATION
13 CFR Parts 124, 125, 126, and 127
RIN 3245–AG75
Women-Owned Small Business and
Economically Disadvantaged WomenOwned Small Business Certification
U.S. Small Business
Administration.
ACTION: Final rule.
AGENCY:
The Small Business
Administration (SBA or the Agency)
amends its regulations to implement a
statutory requirement to certify WomenOwned Small Business Concerns
(WOSBs) and Economically
Disadvantaged Women-Owned Small
Business Concerns (EDWOSBs)
participating in the Procurement
Program for Women-Owned Small
Business Concerns (the Program). The
certification requirement applies only to
those businesses wishing to compete for
set-aside or sole source contracts under
the Program, and to those seeking to be
awarded multiple award contracts for
pools reserved for WOSBs and
EDWOSBs. Once this rule is effective,
WOSBs and EDWOSBs that are not
certified will not be eligible for
contracts under the Program. Other
women-owned small business concerns
that do not participate in the Program
may continue to self-certify their status,
receive contract awards outside the
Program, and count toward an agency’s
goal for awards to WOSBs. For those
purposes, contracting officers would be
able to accept self-certifications without
requiring them to verify any
documentation. In this rule, SBA
implements the statutory mandate to
provide certification, to accept
certification from certain identified
government entities, and to allow
certification by SBA-approved thirdparty certifiers. As part of the changes
necessary to implement a certification
program, this final rule amends SBA’s
regulations with regard to continuing
eligibility and program examinations.
This rule also adjusts the economic
disadvantage thresholds for determining
whether an individual qualifies as
economically disadvantaged. The new
thresholds will be used for assessing the
economic disadvantage of applicants to
the 8(a) Business Development (BD)
Program, as well as applicants seeking
EDWOSB status.
DATES: This rule is effective on July 15,
2020, except for the amendments to
§§ 127.300, 127.304, 127.305, the
addition of § 127.351, and the
amendments to §§ 127.400, 127.401,
127.403, 127.405, 127.504, 127.505,
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SUMMARY:
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127.603, and 127.604, which are
effective on October 15, 2020. The
addition of § 127.355 is delayed
indefinitely and we will publish a
document in the Federal Register
announcing the effective date.
FOR FURTHER INFORMATION CONTACT:
Nikki Burley, U.S. Small Business
Administration, Office of Policy,
Planning and Liaison, 409 Third Street
SW, Washington, DC 20416; (202) 205–
6459; nikki.burley@sba.gov.
SUPPLEMENTARY INFORMATION: As set
forth in section 8(m) of the Small
Business Act, 15 U.S.C. 637(m), the
Program authorizes Federal contracting
officers to restrict competition to
eligible WOSBs or EDWOSBs for
Federal contracts in certain industries.
Section 825 of the National Defense
Authorization Act for Fiscal Year 2015,
Public Law 113–291, 128 Stat. 3292
(December 19, 2014) (2015 NDAA),
amended the Small Business Act to
grant contracting officers the authority
to award sole source awards to WOSBs
and EDWOSBs. In addition, section 825
of the 2015 NDAA amended the Small
Business Act to create a requirement
that a concern be certified as a WOSB
or EDWOSB by a Federal agency, a State
government, SBA, or a national
certifying entity approved by SBA, in
order to be awarded a set aside or sole
source contract under the authority of
section 8(m) of the Small Business Act.
15 U.S.C. 637(m)(2)(E). SBA believes
that certification is also required where
an agency establishes a pool of WOSBs
or EDWOSBs on a multiple award
contract and intends to set-aside or
reserve one or more orders for WOSBs
or EDWOSBs.
On September 14, 2015, SBA
published in the Federal Register a final
rule to implement the sole source
authority for WOSBs and EDWOSBs. 80
FR 55019 (effective October 14, 2015).
SBA did not address the certification
portion of the 2015 NDAA in that final
rule because its implementation could
not be accomplished by merely
incorporating the statutory language
into the regulations and would have
delayed the implementation of the sole
source authority. SBA notified the
public that because it did not want to
delay the implementation of the WOSB
sole source authority, it would
implement the certification requirement
through a separate rulemaking.
As part of the process to draft the
regulations governing the WOSB/
EDWOSB certification program, SBA
published an Advance Notice of
Proposed Rulemaking in the Federal
Register on December 18, 2015 (80 FR
78984) and a proposed rule in the
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Federal Register on May 14, 2019 (84
FR 21256). The proposed rule solicited
public comments to assist SBA in
drafting a final rule to implement a
WOSB/EDWOSB certification program.
SBA received 898 comments from 307
commenters in response to the proposed
rule (Regulations.Gov Docket #SBA–
2019–0003). SBA has reviewed all input
from interested stakeholders while
drafting this rule.
The proposed rule also revised
§ 124.104(c) to make the economic
disadvantage requirements for the 8(a)
BD Program consistent with the
economic disadvantage requirements for
women-owned small businesses seeking
EDWOSB status. The proposed change
eliminated the distinction in the 8(a) BD
Program for initial entry into and
continued eligibility for the program.
Economic Disadvantage
Currently, the economic disadvantage
criteria for EDWOSBs is $750,000,
which is the same as the continuing
eligibility threshold for the 8(a) BD
program, but higher than the $250,000
initial eligibility threshold for that
program. A concern applying for
EDWOSB and 8(a) BD status
simultaneously could thus be found
economically disadvantaged for
EDWOSB purposes, but not
economically disadvantaged for the 8(a)
BD Program. This result would
introduce unnecessary confusion and
uncertainty into the application and
certification processes. To remedy this,
this final rule makes economic
disadvantage consistent across
programs.
SBA commissioned a study to assist
the Office of Business Development in
defining or establishing criteria for
determining what constitutes
‘‘economic disadvantage’’ for purposes
of firms applying to the 8(a) BD
program. The study concluded that the
available data support an economic
disadvantage threshold between
$375,000 and $1.2 million. This range
reflects the complexity of establishing a
threshold that considers the ability of
disadvantaged business owners to
compete in the free enterprise system, as
well as those individuals’ access to
credit and capital. That inherent
complexity is evident in the varied
economic disadvantage thresholds
established by other Federal and state
programs. For example, the
Disadvantaged Business Enterprise
Program (DBE), administered by
agencies authorized by the U.S.
Department of Transportation (DOT),
uses a $1.32 million economic
disadvantage threshold. States with
similar programs for ‘‘minority and
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women business enterprises’’ have
economic disadvantage thresholds up to
$1.6 million. The study commissioned
by SBA did not come to a definitive
conclusion on which threshold the
Agency should use. One suggestion was
to use a $1.1 million ‘‘unadjusted’’
(home and business equity included)
personal net worth standard, which
would be equal to a $375,000
‘‘adjusted’’ (home and business equity
excluded) standard. The study did not,
however, consider differences in
economic disadvantage between
applying to the 8(a) BD program and
continuing in the program once
admitted, nor did it consider economic
disadvantage in the context of EDWOSB
eligibility. Because SBA believes that it
is important to have the same economic
disadvantage criteria for the 8(a) BD
program as for the EDWOSB program to
avoid confusion and inconsistency
between the programs, SBA considered
applying a $375,000 net worth standard
to both the 8(a) BD and EDWOSB
programs. SBA requested comments on
whether the $375,000 net worth
standard or the $750,000 net worth
standard should be used for the
EDWOSB and 8(a) BD and Programs.
In response, SBA received 146
comments that supported $750,000 as
the appropriate economic disadvantage
threshold. Of these, a substantial
number explicitly expressed support for
changing the regulations to make the
economic disadvantage threshold
consistent between programs, while the
rest expressed support more broadly for
maintaining EDWOSB’s economic
disadvantage threshold of $750,000.
SBA did not receive any comments
supporting a common $375,000 net
worth standard for the EDWOSB and
8(a) BD programs. SBA also received
four comments that offered alternative
methods to establish an economic
threshold. One argued that the standard
should be variable and based on
inflation, one thought the standard
should be locality-based, and two
suggested a tiered system. Three
additional commenters opposed an
economic disadvantage threshold of
$750,000. One recommended an
economic disadvantage threshold of $1
million, one opposed having an
economic disadvantage threshold at all,
and the third merely thought that
$750,000 was inappropriate. SBA
believes that varying the economic
disadvantage threshold depending on
fluid external factors such as inflation,
or applying different thresholds
depending on locality, would introduce
too much volatility and confusion into
the application process and lead to
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inconsistency between programs.
Increasing the economic disadvantage
threshold to $1 million or abolishing
economic disadvantage thresholds
altogether were not contemplated in the
proposed rule and are not under
consideration now. Based on the study’s
conclusion that SBA could set an
economic disadvantage threshold
between $375,000 and $1.2 million,
stakeholders’ clear affirmation of a
$750,000 economic disadvantage
threshold, and the preference for
uniform standards across programs,
SBA is keeping the EDWOSB economic
disadvantage threshold and adjusting
the 8(a) BD economic disadvantage
thresholds accordingly.
SBA also received comments
regarding how economic disadvantage
would be assessed going forward.
Specifically, commenters asked about
whether there is any difference between
the EDWOSB and the 8(a) BD
regulations governing how retirement
accounts are calculated when
determining an economically
disadvantaged individual’s net worth,
and if the change in the economic
disadvantage threshold will affect that
calculation. In light of this feedback,
SBA has revised § 124.104(c)(2)(ii) and
§ 127.203(b)(3) in the final rule to note
that retirement accounts will now be
excluded from calculations of an
economically disadvantaged
individual’s net worth, irrespective of
the individual’s age. SBA has previously
contemplated this change, believing that
it accords with the valuable public
policy of incentivizing, rather than
punishing, saving for retirement. It also
expands the pool of potential EDWOSB
and 8(a) BD participants because
retirement-age small business owners
will no longer be ineligible solely due
to their retirement savings. Changing the
EDWOSB and 8(a) BD net worth
provisions now, in conjunction with the
changes to the economic disadvantage
threshold for both programs, furthers
SBA’s long-term aim of promoting
regulatory consistency and continuity.
Women-Owned Small Business
Certification Program
The 2015 NDAA amended the Small
Business Act to require that concerns
participating in the Program must be
certified by SBA, a Federal agency, a
state government, or an approved
national certifying entity. In response,
SBA proposed amending the regulations
in part 127 to remove references to selfcertification with respect to the award of
WOSB/EDWOSB contracts. The
certification requirement applies only to
participants wishing to compete for setaside or sole source contracts under the
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Program. Once this rule is effective,
WOSBs and EDWOSBs that are not
certified will not be eligible for
contracts under the Program. Other
women-owned small business concerns
that do not participate in the Program
may continue to self-certify their status,
receive contract awards outside the
Program, and count toward an agency’s
goal for awards to WOSBs. The final
rule adds a new § 127.200(c) to make
clear that a concern may continue to
self-certify as a WOSB for goaling
purposes. Revised § 127.300 establishes
options for small business concerns
seeking certification as WOSBs or
EDWOSBs: Applying via SBA’s free
online application, submitting evidence
of certification from another approved
Government entity, or submitting
evidence of certification from an
approved third-party certifier.
SBA received over 400 comments on
the proposed revisions to § 127.300(a)
and (b), which detail the options for
certification. Of these, 170 commenters
expressed a general sentiment that there
should be ‘‘a fair and unified set of
requirements and application processes
for all participants’’ and ‘‘the process of
submitting an application . . . should
be fully uniform and completed at
certify.sba.gov.’’ An additional sixteen
commenters explicitly supported the
proposed processes, and two
commenters opposed them.
SBA shares the view that certification
requirements must be fair and
consistently applied. To ensure this
consistency, SBA is the final authority
for all of the certification processes.
Congress’ intent in allowing SBA to
delegate certification to other authorized
parties was to ensure that the public has
access to the broadest range of
certification options while at the same
time ensuring that consistent Program
eligibility requirements are met. There
will naturally be differences between
each of the processes because they will
be administered by different entities,
but the foundation for all the processes
is SBA’s Program eligibility
requirements. Each applicant will be
providing evidence to SBA that it meets
these requirements; the application
processes outlined in §§ 127.300–
127.305 differ primarily in what kind of
documentation demonstrates eligibility.
Based on the comments received, SBA
understands that many stakeholders
harbor reservations about the fairness
and uniformity of the application
process. As such, the final rule will
clarify in subpart C, ‘‘Certification of
WOSB or EDWOSB Status,’’ that there is
no distinction between ‘‘Certification by
SBA’’ and ‘‘Certification by Third
Party,’’ as written in the proposed rule.
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Instead, the regulations will refer to all
the provisions covering the different
application processes in §§ 127.300–
127.305 as ‘‘Certification.’’ SBA also
removed references to SBA in the
headings for §§ 127.301–127.305 so that
concerns understand that the
regulations apply to all applicants,
regardless of how they opt to seek
certification. The rules for third-party
certifiers, covered extensively in new
§§ 127.350–127.356, will be labeled as
‘‘Requirements for Third-Party
Certifiers.’’ SBA believes this will
reaffirm that ‘‘Certification’’ is a unitary
process, that all concerns must meet the
same eligibility requirements, and that
the only difference is in how they can
present evidence that they have met
those requirements.
SBA received four comments
regarding the proposed change to
§ 127.300(a)(1), which specifies that
concerns can apply for WOSB
certification from SBA. Three
commenters were supportive. The
fourth opposed the provision because it
believes that concerns should continue
to have the option to self-certify.
Because the statutory language
mandates the methods for certification,
SBA has no authority to retain selfcertification as an option for concerns
seeking to compete for WOSB and
EDWOSB set-aside procurements (as
noted above, concerns can still selfcertify for non-WOSB and nonEDWOSB set-aside procurements, still
self-identify as women-owned small
businesses, and awards to firms selfidentifying as WOSBs may be counted
by a procuring agency towards its
WOSB goal). SBA adopts the proposed
language as final.
SBA received 12 comments that
specifically touched on § 127.300(a)(2),
which outlines the options for non-SBA,
government-entity certification options.
The proposed rule stated that a concern
could submit evidence that it was a
certified participant of the 8(a) BD
Program or the DBE Program, or that it
was certified as a Veteran-Owned or
Service-Disabled Veteran-Owned Small
Business by the U.S. Department of
Veterans Affairs (VA) Center for
Verification and Evaluation (CVE). The
Supplementary Information in the
proposed rule also contemplated
potentially accepting evidence that a
concern participated in SBA’s HUBZone
Program.
The final rule removes reference to
the 8(a) BD Program in § 127.300(a)(2)
and instead includes it only in
§ 127.300(b)(2), which details EDWOSB
certification. Every current 8(a) BD
participant that is 51% owned and
controlled by a woman or women is an
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EDWOSB because economic
disadvantage is a component of 8(a) BD
eligibility, and all EDWOSBs are
WOSBs. As such, including this
information in the EDWOSB
certification sub-section covers both
EDWOSB and WOSB participation.
The final rule also omits reference to
the HUBZone Program in that section.
While evidence of HUBZone
participation would indicate a concern
is small, it would not provide any of the
other information to demonstrate
WOSB/EDWOSB eligibility.
Specifically, a firm need not
demonstrate that it is owned and
controlled by a specific individual in
order to be eligible for the HUBZone
program. Thus, such a certification does
not include a finding by SBA of any
ownership and control. The purpose of
§ 127.300(a)(2) and (b)(2) is to expand
the options for concerns to demonstrate
Program eligibility as efficiently as
possible. A certification option that
necessitates submitting documentation
of all but one of the elements of Program
eligibility does not meaningfully
effectuate this purpose. Similarly, the
final rule removes DBE certification
from the list of options. After
discussions with stakeholders, SBA
concluded that evidence of DBE
certification would not provide the
requisite level of certainty that a
concern was eligible for the Program.
While the DOT DBE regulations refer
back to SBA’s size regulations at 13 CFR
part 121, concerns would still need to
provide documentation to confirm they
met SBA’s distinct requirements for
ownership and control by one or more
women, or that they met SBA’s
economic disadvantage criteria if they
were seeking EDWOSB certification. As
with HUBZone Program participation,
evidence of DBE participation would
not help small businesses demonstrate
eligibility as efficiently and easily as
possible while still ensuring the
requirements are met. In contrast, the
governing regulations for the CVE
program (38 CFR 74.2–74.4) refer to
SBA’s standards for size, socioeconomic
status, ownership, and control.
Documentation of CVE certification,
along with confirmation that the
concern was owned and controlled by
one or more women, would demonstrate
that a concern had met all the eligibility
requirements for the Program. To help
concerns better understand how to
demonstrate their Program eligibility
with their CVE certification, the final
rule details the application process in
§ 127.303.
SBA received 188 comments on
§ 127.300(a)(3), which provides that a
concern may submit evidence that it has
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been certified as an eligible Program
participant by a Third-Party Certifier. Of
these, 170 stated generally that SBA
should have oversight of third-party
certifiers and implement standards for
certifiers. SBA agrees with these
commenters and §§ 127.350–127.356,
discussed below, detail requirements for
third-party certifiers. These commenters
also requested that SBA update
SAM.gov to reflect that they are
certified, including third-party certified.
SBA does not oversee SAM.gov but will
maintain its own internal records that
will reflect up-to-date information and
that information will be relayed to the
General Services Administration, the
agency that maintains SAM.gov.
Fifteen commenters opposed
proposed § 127.300(a)(3) for a wide
variety of reasons. One commenter
stated that there should not be
‘‘required’’ third-party certification.
SBA believes that this commenter
misinterpreted the rule. As outlined in
the rule, there are several different
certification options, and concerns are
not required to choose third-party
certification. Which way to seek WOSB
or EDWOSB certification is a business
decision up to discretion of each firm.
Three commenters said all certification
should be handled by SBA, rather than
by third-party certifiers that may have
differing standards. In response, SBA
notes that Congress specifically
enumerated several different
certification options in the statutory
language, making clear that SBA should
not be the sole entity processing
certification applications. However,
SBA retains responsibility for
overseeing the Program eligibility
requirements, and these requirements
are the standards by which all
applicants will be assessed. Certifiers
will not be able to impose their own
application standards for Program
applicants.
Six commenters opposed third-party
certification because of the associated
fees, which commenters perceived as
prohibitively expensive for many small
businesses. Both Congress and SBA
understand the importance of ensuring
certification is available to every eligible
concern. As such, Congress authorized
several free certification options, and
SBA will not distinguish between
concerns based on how they were
certified. No firm will be required to pay
a fee for certification. Again, it is up to
each firm seeking WOSB or EDWOSB
certification to determine which method
of certification makes sense for it. One
commenter opposed third-party
certification because of the ‘‘frequency
of certification’’ associated with thirdparty certifiers. Currently, third-party-
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certified concerns are recertified
annually. Under the new regulations, all
concerns, whether certified directly by
SBA or otherwise, will be required to
attest to SBA annually that they remain
eligible for the Program and undergo a
full program examination every three
years. As such, third-party-certified
concerns will not face a greater
administrative burden than concerns
certified via other processes. SBA
updated subpart D to discuss the
requirements for recertification, and
these changes are discussed in greater
detail below.
SBA received six comments on
§ 127.300(b), which discusses how SBA
will certify concerns as EDWOSBs. One
commenter supported having an array of
certification options. Two others
requested clarification about how SBA
will accept certification from other
government entities. SBA has provided
additional detail about what applicants
must submit in order to demonstrate
certification via non-SBA government
entity certifiers in § 127.303.
SBA received seven comments related
to § 127.300(b)(2), which states that a
woman- or women-owned business that
is a certified 8(a) BD participant
qualifies as an EDWOSB. One
commenter said that EDWOSB should
be a ‘‘sub-set’’ of the 8(a) BD Program.
Another commenter said that EDWOSB
certification should automatically
confer 8(a) BD certification. There is
significant overlap between the
eligibility requirements of the two
programs, but they are not identical.
The most important difference is that a
concern can participate in the WOSB
Program for as long as it is eligible,
whereas participation in the 8(a) BD
Program is limited to nine years.
Further, the 8(a) BD Program has unique
eligibility requirements that do not
apply to the WOSB Program. In
particular, the 8(a) BD Program requires
the principal of a business to be socially
disadvantaged in order to qualify for
participation, and women as a group are
not presumed to be socially
disadvantaged. An individual seeking to
qualify as socially disadvantaged based
on her status as a woman must
demonstrate that she personally has
suffered discrimination or bias that has
adversely affected her entry into or
advancement in the business world.
Determining whether an individual
woman can demonstrate social
disadvantage requires fact-specific
analysis and cannot be automatically
presumed. Thus, EDWOSB qualification
does not automatically confer 8(a) BD
qualification, even though the converse
is true. In addition, the 8(a) BD
certification process requires an
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applicant to demonstrate that it
possesses the necessary ‘‘potential for
success,’’ as defined in the 8(a) BD
regulations, and WOSB certification has
no corresponding requirement.
Two commenters said that SBA
should adjust goaling requirements so
that more 8(a) BD awards are
apportioned for WOSBs/EDWOSBs.
Goaling thresholds are set by Congress
and SBA establishes them in a way that
seeks to ensure that the statutory goal is
met Government-wide. Although SBA
has some discretion in the setting of a
particular agency’s goals, SBA cannot
establish goals that do not meet the
overall Government-wide statutory goal.
SBA is always seeking to enhance small
business participation in Federal
contracting and will continue to do so.
One commenter suggested that the
Program should mirror the outreach and
public education efforts of the 8(a) BD
Program because the contracting
community is not aware of or familiar
with WOSB and EDWOSB
opportunities. SBA hopes that the
increased public outreach during the
rulemaking process has helped
ameliorate this perceived lack of
awareness and that the certification
application process will further
familiarize concerns with Program
benefits and responsibilities. SBA
adopts the proposed language as final.
One commenter opposed
§ 127.300(b)(3), specifically asking why
veteran-owned small business that are
owned and controlled by women could
not be automatically certified as
WOSBs, but rather had to submit
additional information to SBA to be so
designated. CVE eligibility is not based
on gender and thus evidence of CVE
certification would not automatically
communicate that an applicant had
necessarily satisfied all Program
requirements, including 51% ownership
and control by a woman or women. A
CVE certification demonstrates that a
firm is owned and controlled by one or
more veterans or service-disabled
veterans, but not necessarily by women
veterans or women service-disabled
veterans. The process for CVE-certified
small businesses will be to demonstrate
that the individuals certified to own and
control the business concern are women
and, if they seek EDWOSB status, that
they are economically disadvantaged.
CVE certification alone would also not
demonstrate an applicant’s economic
disadvantage, which is a necessary
component of EDWOSB participation.
SBA adopts the proposed language as
final.
SBA did not receive any comments on
proposed § 127.301, which provides
guidance on when concerns should
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27653
apply for Program certification. As such,
SBA adopts it as final in this rule. SBA
did, however, receive comments
regarding who will be deemed certified
as a WOSB or EDWOSB upon this rule
becoming effective and, therefore, be
immediately eligible to be awarded setaside and sole source WOSB and
EDWOSB contracts. SBA agrees that this
is an important issue that should be
clarified.
Pursuant to the underlying statutory
authority, a concern must be certified as
a WOSB or EDWOSB in order to be
awarded a WOSB or EDWOSB set-aside
or sole-source contract. The change in
the regulations implementing that
statutory provision does not affect
contracts previously awarded through
the Program, so a concern that was
previously awarded a WOSB or
EDWOSB contract may continue to
perform that contract and the procuring
agency may continue to count the
contract towards its WOSB goal. Once
this rule is effective, however, a concern
performing on a long-term WOSB or
EDWOSB contract (i.e., one in excess of
five years) must represent that it is a
certified WOSB or EDWOSB in order for
the award to continue to count towards
an agency’s WOSB goal. For new WOSB
and EDWOSB set-aside contracts, a
concern must be able to demonstrate
that it has applied for certification
before the date it submitted a bid, and
that it has not previously sought and
been denied certification. For new
WOSB or EDWOSB sole-source
contracts, a concern must already be
certified at the time it seeks to obtain
the sole-source contract. In both
situations, the concern must be certified
prior to award. Concerns that are owned
and controlled by one or more women
and certified through the 8(a) BD
Program, concerns that are third-party
certified, and concerns that were subject
to a program examination or status
protest and received a concomitant
positive decision in the three years prior
to the rule’s effective date will all be
considered certified the day the rule is
effective. SBA trusts this information
will help concerns plan for when and
how to apply for certification so that
they are ready to compete for new
WOSB and EDWOSB set-aside contracts
and able to continue working on
existing set-aside contracts without
interruption.
SBA received one comment on
§ 127.302, which provides that concerns
will apply for certification on
certify.sba.gov or any successor system.
The commenter opposed having an
electronic-only application process.
SBA believes that an electronic process
is the most efficient and timely way to
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process the number of applications SBA
is expecting once the rule is effective. In
today’s business environment, SBA
believes that every business concern
seeking to contract with the Federal
Government must have access to a
computer and that this is the easiest and
best way to transmit and process
applications. SBA adopts the proposed
language and will remove ‘‘from SBA’’
from the heading in the final rule.
SBA did not receive any comments on
§ 127.303, which outlines what
documentation concerns must submit
for certification. Based on questions and
feedback received on related sections,
SBA has expanded § 127.303 in the final
rule. This section now refers to the
documentation applicants must submit
for each of the certification options
detailed in § 127.300(a) and (b). This
additional information is intended to
help applicants better prepare their
applications and will hopefully
facilitate a more efficient process.
SBA received two comments on
§ 127.304, which discusses how SBA
will process applications. Both
commenters opposed the 90-day
timeframe for making determinations
after receipt of a completed application.
Neither commenter offered an
alternative timeframe that would better
suit the needs of the small business
community. This 90-day processing
time aligns with that of the 8(a) BD and
HUBZone Programs, and SBA believes
that is appropriate for the WOSB
Programs as well. As such, SBA adopts
the proposed language as final.
SBA received eight comments on
§§ 127.305 and 127.306, which dealt
with how and when applicants could
reapply or seek recertification after
being declined or decertified. Five
commenters opposed the provisions,
two were supportive, and one sought
clarification. The commenters in
opposition vigorously disagreed with
the proposed one-year ‘‘cooling-off’’
period, during which time a concern
could not reapply for Program
certification. One commenter noted that
not being able to appeal or rectify a
negative certification decision until a
year has passed was ‘‘the worst of both
worlds.’’ In response to the comments,
SBA has amended these provisions. The
final rule removes proposed § 127.305
(reconsideration) and moves the
language in proposed § 127.306 to that
section. The final rule also amends the
language in proposed § 127.306 (now
§ 127.305) to align with the HUBZone
Program regulations, which do not have
a reconsideration or appeal process and
instead allow concerns to remedy their
eligibility deficits and reapply after 90
days. In addition to responding to
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industry concerns, mirroring the
HUBZone Program regulations has the
added benefit of furthering SBA’s aim of
promoting consistency between its
programs.
Requirements for Third-Party Certifiers
SBA proposed to amend subpart C of
part 127 to establish procedures for
Third-Party Certification in the context
of a required certification program. In
§ 127.350, SBA proposed that all ThirdParty Certifiers must be approved by
SBA. Under this rule, an approved
third-party certifier need not be a nonprofit entity. SBA also clarified that a
third-party certifier is a nongovernmental entity, in contrast to the
governmental certifications (8(a) BD and
VA CVE) that SBA will accept for
WOSB/EDWOSB certification purposes.
The proposed rule also stipulated what
concerns must do to be certified by a
third-party certifier.
SBA received five comments on
revised §§ 127.350–127.356. One
commenter said that new third-party
certifiers must be ‘‘credible.’’ SBA does
not have concerns about the credibility
of third-party certifiers. The statutory
language stipulates that only SBAapproved third-party certifiers are
authorized to certify concerns. There are
currently four SBA-approved third-party
certifiers. In advance of effectuating the
final rule, SBA has focused on
providing clarity and guidance on the
certification process as a whole and not
on third-party certifiers specifically, but
foresees expanding the list of authorized
third-party certifiers in the future. All
third-party certifiers participating in the
Program are required to abide by both
the regulations in part 127, and their
agreements with SBA. SBA
communicates regularly with thirdparty certifiers, collects monthly data
about the WOSBs and EDWOSBs they
work with, and periodically reviews
their application processes. This is all
intended to ensure that SBA’s eligibility
requirements are consistently applied.
As such, SBA feels confident the thirdparty certifiers are, and will continue to
be, credible partners in the certification
process.
Three other commenters sought
clarification on different provisions in
this section. In response to § 127.353(b),
one commenter suggested SBA provide
language that third-party certifiers can
use to advise applicants that SBA offers
a free certification option. SBA agrees
that providing that language would be
helpful, but including it in the
regulations would preclude the Agency
from refining the language in response
to feedback from applicants once the
certification process is underway. SBA
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will plan to communicate with thirdparty certifiers in the coming months on
what the advisory language should look
like. Similarly, another commenter
requested additional detail about what
information SBA will require in reports
from third-party certifiers under
§ 127.355(a). The proposed language
was drafted deliberately to allow for
SBA to make determinations about what
third-party certifiers will have to submit
regularly once the certification program
is underway and it becomes clear what
type of information would be helpful. A
third commenter asked for clarification
on the timeline for periodic compliance
reviews, which SBA believes is
adequately spelled out in
§ 127.355(b)(1).
Finally, several commenters opposed
this section on the grounds that SBA
should not allow for-profit entities to
certify concerns, that there will be too
many discrepancies between third-party
certification and certification via other
entities, and that ‘‘SBA’s failure to act
appropriately in the budgetary process’’
deprived the Program of the funds
necessary to manage a certification
process. On the first point, the
authorizing legislation does not limit
third-party certifier participation to
entities that are non-profit, so going
forward, SBA will not require thirdparty certifiers to maintain non-profit
status. In response to the second
concern, SBA reiterates that all
certifying entities will assess applicants
against the same eligibility
requirements. The third point, which
expressed concern that the certification
program was not appropriately funded,
was echoed by many commenters. All of
these commenters used identical
language to urge SBA to, ‘‘act
immediately to move budgetary
(taxpayer) funds from programs that
have not been sanctioned by Congress
towards the full and effective
implementation of this nearly twentyyear-old Congressionally-mandated
program and advise Congress of the full
budget needed so that SBA may receive
the necessary funding to assure this
program is well run.’’ SBA appreciates
these commenters’ sense of urgency
about the implementation of the
certification program and understands
commenters’ frustrations. SBA notes,
however, that the requirement that a
concern must be certified as a WOSB or
EDWOSB in order to be awarded a setaside or sole source contract under the
Program was enacted as part of 2015
NDAA. Further, the Agency’s ability to
spend funds that ‘‘have not been
sanctioned by Congress’’ is proscribed
by law, and its ability to shift money
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between unrelated programs is limited.
SBA believes Congress is well-apprised
of the scope and breadth of the
certification program. The plan
continues to be to stand up Program
certification by leveraging existing
resources.
SBA did not receive specific
comments on § 127.354, but in light of
the broader concerns expressed about
discrepancies between third-party
certification and certification by a
government entity, the final rule revises
the heading of this paragraph to
emphasize that SBA will require thirdparty certifiers to follow detailed,
uniform guidance to demonstrate
capability to certify concerns.
Proposed § 127.357(a) permitted a
concern found to be ineligible by a
third-party certifier to request
reconsideration and a redetermination.
Proposed § 127.357(c) prohibited a
declined concern from reapplying for
WOSB or EDWOSB certification by SBA
or a third-party certifier for a one-year
period, and proposed § 127.357(d)
prohibited concerns from reapplying
through another third-party certifier
during that time. In light of the changes
to § 127.305, which shortens the
reapplication timeframe from one year
to 90 days, § 127.357 is omitted in the
final rule. As discussed, SBA’s aim is to
ensure consistency and uniformity
between the certification options, both
as a policy matter and in response to the
168 commenters who stressed the
importance of, ‘‘a fair and unified set of
requirements and application processes
for all participants.’’ Allowing concerns
that opt for third-party certification to
seek reconsideration if they are declined
would privilege them over concerns that
apply for certification from SBA or
another government entity, because the
latter groups will not have a
reconsideration option. Removing this
proposed section better facilitates
alignment between the certification
options and is responsive to
stakeholders’ concerns.
SBA received eight comments on
proposed § 127.400, which requires that
concerns recertify eligibility every three
years. Four commenters supported
recertification every three years and four
opposed. Of the four commenters
opposed, three suggested annual
recertification because that is what
SBA’s other programs require. SBA
believes that a helpful comparison is to
look at the requirements of the
HUBZone Program. Per the HUBZone
Program regulations at § 126.500, SBA
conducts a program examination and
recertification of each HUBZone
concern every three years, and concerns
are required to represent annually that
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they continue to meet all program
criteria. In contrast, proposed § 127.400
would only have required WOSBs and
EDWOSBs to recertify every three years.
In an effort to more closely align the
WOSB Program regulations with other
SBA regulations, and in response to the
commenters concerned that
recertification every three years is
insufficient, the final rule revises
§ 127.400 to require concerns to
annually attest to SBA that they meet
the Program requirements, and undergo
a full program examination and
recertification every three years. SBA
added two examples to this section to
help illustrate the recertification
requirements detailed in the final rule.
Proposed § 127.401 provided that all
certified concerns have an affirmative
duty to notify SBA of any material
changes in writing. SBA did not receive
any comments on this section and
adopts the proposed language as final.
Proposed § 127.402 addressed the
failure of a concern to recertify every
three years or to notify SBA of a
material change. SBA did not receive
any comments on this section. In light
of the changes to the rest of this subpart,
§ 127.402 is omitted in the final rule and
the subsequent sections have been
renumbered. The information detailed
in proposed § 127.402 is included in
§ 127.405 (formerly § 127.406) in the
final rule, which discusses the
consequences if SBA is unable to
determine a concern’s eligibility or
determines that a concern is no longer
eligible for the Program.
Proposed § 127.403 detailed how SBA
would conduct program examinations
and specifically how program
examinations would change after the
certification process is implemented.
SBA did not receive any comments on
this section. To align with the changes
discussed above, SBA has renumbered
sections §§ 127.403–127.406. Aside
from renumbering, SBA adopts as final
the language in proposed § 127.403
(now § 127.402).
Proposed § 127.404 detailed when
SBA was authorized to conduct program
examinations. SBA did not receive any
comments on this section. SBA revised
this section in the final rule to reflect
that concerns will undergo program
examinations every three years in
accordance with the recertification
process set forth in § 127.400. SBA also
renumbered this section to § 127.403 in
the final rule. SBA adopts as final the
revised and renumbered paragraph.
Proposed § 127.405 authorized SBA to
request additional information, in
addition to material already submitted,
when conducting a program
examination. SBA did not receive any
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27655
comments on this section. SBA
renumbered this section to § 127.404 in
the final rule. SBA adopts as final the
proposed language and renumbered
paragraph.
Proposed § 127.406 authorized SBA to
decertify concerns that fail to provide or
maintain the required certifications or
documents. SBA did not receive any
comments on this section. This section
has been renumbered to § 127.405 in the
final rule. SBA also revised this
provision in the final rule to more
clearly lay out the causes for which SBA
can propose decertification, including a
failure to follow the recertification
processes in § 127.400. Paragraph (a)
describes the steps SBA will take to
propose decertification and how a
concern must respond to a notice of
proposed decertification. Paragraph (b)
states that SBA’s decision on
decertification is final and cannot be
appealed, and paragraph (c) permits
concerns to reapply to the Program after
decertification. SBA adopts as final the
revised and renumbered paragraph.
The final rule revises § 127.503(h)(2)
to confirm that if a concern cannot
recertify as a WOSB or EDWOSB by the
end of the fifth year of a long-term
contract, the procuring agency can no
longer count awards made pursuant to
that contract as WOSB/EDWOSB
awards. SBA’s rules have long required
recertification of size for contracts with
a duration of more than five years. If a
concern is unable to recertify its size,
the contracting officer could no longer
consider awards to that concern towards
the procuring agency’s small business
goals. The Agency’s intent in drafting
§ 127.503(h)(2), and its corresponding
paragraphs in §§ 124.1015(f), 125.18(f),
and 126.601(i), was to mandate that
contracting officers must request that a
concern recertify its status on long-term
contracts, including Multiple Award
Contracts. If a concern were unable to
recertify its status as a WOSB, for
example, the contracting officer could
no longer consider awards to that
concern towards the procuring agency’s
WOSB goals. Procuring agencies
understood this was SBA’s intent in
drafting §§ 124.1015, 125.18(e),
126.601(h), and 127.503(h)(2), and have
read them accordingly. The revision to
these paragraphs in the final rule
confirms that agencies correctly
deduced SBA’s intent and brings the
regulatory text into alignment with
already-existing practice, which SBA
believes will provide helpful clarity to
small businesses and contracting
officers.
SBA proposed to remove § 127.505, as
the pertinent information in this
provision was already detailed in
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§ 121.406(b). SBA did not receive any
comments on this proposed change and
finalizes the deletion in the final rule.
SBA proposed to revise § 127.604(f)(4)
to clarify that concerns found to be
ineligible would need to reapply, rather
than request a reexamination. SBA did
not receive any comments on this
change and adopts the proposed
language as final, except for updating a
citation to the appropriate regulation for
reapplication procedures (formerly at
§ 127.306 and now at § 127.305).
Compliance With Executive Orders
12866, 13563, 12988, 13132, and 13771,
the Paperwork Reduction Act (44
U.S.C. Ch. 35), and the Regulatory
Flexibility Act (5 U.S.C. 601–612)
Executive Order 12866
The Office of Management and Budget
(OMB) has determined that this rule is
a significant regulatory action for the
purposes of Executive Order 12866.
Accordingly, the next section contains
SBA’s Regulatory Impact Analysis. This
is not a major rule, however, under the
Congressional Review Act.
Regulatory Impact Analysis
1. Is there a need for the regulatory
action?
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The U.S. Small Business
Administration (SBA) is required by
statute to administer the WOSB Federal
Contract Program (WOSB Program). The
Small Business Act (Act) sets forth the
certification criteria for the WOSB
Program. Specifically, the Act states that
a WOSB or EDWOSB must, ‘‘be certified
by a Federal agency, a State government,
the Administrator, or a national
certifying entity approved by the SBA
Administrator, as a small business
concern owned and controlled by
women.’’ 15 U.S.C. 637(m)(2)(E).
The Federal Acquisition Regulation
(FAR) and SBA regulations require that
in order to be certified as a WOSB or
EDWOSB a small business concern must
provide documents supporting its
WOSB or EDWOSB status to SBA. See
13 CFR 127.300 and FAR 19.1503(b)(3).
The specific documents concerns are
required to provide are outlined in
§ 127.303. The Act also states that the
SBA is authorized to conduct eligibility
examinations of any certified WOSB or
EDWOSB, and to handle protests and
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appeals related to such certifications. 15
U.S.C. 637(m)(5)(A) and (5)(B).
Under the current system, WOSBs
and EDWOSBs may be certified by
third-party certifiers, or they may
essentially self-certify and upload the
required documents to sba.certify.gov.
In order to award a WOSB set-aside or
sole source contract, the contracting
officer must document that the
contracting officer reviewed the
concern’s certifications and
documentation. 13 CFR 127.503(g); FAR
19.1503(b)(3). The lack of required
certification, coupled with the
requirement that the contracting officer
must verify that documents have been
uploaded, may contribute to reluctance
by procuring agencies to use the
program, resulting in the failure to meet
the statutory goal of 5% of all prime
contract dollars being awarded to
WOSBs. In FY 2018, the governmentwide WOSB goal of 5% was not met
with actual performance at 4.75%
($22.9B). The government has only met
the goal once (FY 2015). While the
amount of dollars awarded to WOSBs
under the set aside program is trending
up, they still account for less than
0.016% of dollars awarded to WOSBs. A
certification could help entice agencies
to set aside more contracts for WOSBs,
so that the government can meet the
statutory 5% goal.
2. What are the potential benefits and
costs of this regulatory action?
The benefit of this regulation is a
significant improvement in the
confidence of contracting officers to
make Federal contract awards to eligible
concerns. Under the existing system, the
burden of eligibility compliance is
placed upon the awarding contracting
officer. Contracting officers must review
the documentation of the apparent
successful offeror on a WOSB or
EDWOSB contract. Under this rule, the
burden is placed upon SBA and/or
third-party certifiers. All that a
contracting officer needs to do is to
verify that the concern is in fact a
certified WOSB or EDWOSB in SAM. A
contracting officer would not have to
look at any documentation provided by
a concern or prepare any internal
memorandum memorializing any
review. This will encourage more
contracting officers to set aside
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opportunities for WOSB Program
participants as the validation process
will be controlled by SBA in both SAM
and DSBS. Increased procurement
awards to WOSB concerns can further
close a gap of under-representation of
women in industries where in the
aggregate WOSB represent 12 percent of
all sales in contrast with male-owned
businesses that represent 79% of all
sales (per SBA Office of Advocacy Issue
Brief Number 13, dated May 31, 2017
https://www.sba.gov/sites/default/files/
advocacy/Womens-BusinessOwnership-in-the-US.pdf).
Another benefit of this rule is to
reduce the cost associated with the time
required for completing WOSB
certification by replacing the WOSB
Program Repository with
Certify.SBA.gov (‘‘Certify’’) in the
regulation. It is also anticipated that the
WOSB certification methodology and
likely increased use of WOSB/EDWOSB
set asides will likely increase program
participation levels. Under the prior
WOSB Program Repository, SBA
determined that the average time
required to complete the process
required by the WOSB Program
Repository was two hours, whereas the
use of Certify requires only one hour.
Across an estimated 12,347 firms, the
total cost savings is significant, as
discussed below. Another potential
benefit is the reduction of time and
costs to WOSB firms through the
reduction of program participation
costs. By successfully leveraging
technology, SBA has reduced the total
cost of burden hours substantially.
Based on the calculations below, the
total estimated number of respondents
(WOSBs and EDWOSBs) for this
collection of information varies
depending upon the types of
certification that a business concern is
seeking. For initial certification, the
total estimated number of respondents
is 9,349. The total number was
calculated using the two-year average
number of business concerns that have
provided information through Certify
from March 2016 through February
2018. For annual updates and new
certifications, the total number is
12,347. For examinations and protests,
the total number is 130.
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Number of
respondents
Type of certification
Initial certification ......................................
9,349
New certifications each year .....................
500
Annual updates to certification .................
11,847
Total annual responses ............................
12,347
Each respondent submits one
response at the time of initial
certification and one at the time of
annual update. Estimated burden hours
vary depending upon the type of
certification that a WOSB or EDWOSB
pursues. SBA conducted a survey
among a sample of entities that assist
WOSBs and EDWOSBs to provide
information through Certify. The
majority of those surveyed stated that
for initial certifications the estimated
time for completion is one hour per
submission. For annual updates,
because of the need to submit little if
27657
Source
Average annual number of respondents to Certify between March 2016 and February 2018.
Program participation is expected to remain constant after initial year of certification, with 500 new certifications annually.
Program participation is expected to remain constant after initial year of certification, with a reduction of 500 participants annually through attrition.
Annual new certifications plus annual updates.
any additional information, the
estimated burden is 0.5 hour per
submission. For examinations and
protests, the estimated burden is 0.25,
which is much lower because firms
have already provided the
documentation referred to in 13 CFR
127.303 through Certify. It is estimated
that the initial certification will involve
9,349 existing participants and 2,998
new respondents in the first year. After
the first year, initial certifications are
expected for 500 new respondents
annually with an additional 11,847
annual certifications for existing
participants for a total of 12,347
participants in each succeeding year.
The participant level is expected to
remain stable at 12,347 participants
annually with 500 new respondents and
500 attritions from the program
annually. Based on the number of
protests and appeals received in years
past, 130 respondents are expected to
participate in protests and appeals. The
respondent’s cost of burden hours for a
five-year period and average is provided
in the following table and detailed
below.
COST OF BURDEN HOURS—5 YEAR COST ESTIMATE AND AVERAGE
Initial—
existing
1 hour at
$164.23 per
participant
Year
Initial—new
participants
1 hour at
$164.23 per
participant
Annual
updates
.5 hour at
$164.23 per
participant
Protests and
appeals
.25 hour at
$164.23 per
participant
Annual totals
Number of Program Participants
1
2
3
4
5
...........................................................................................
...........................................................................................
...........................................................................................
...........................................................................................
...........................................................................................
9,349
........................
........................
........................
........................
2,998
500
500
500
500
........................
11,847
11,847
11,847
11,847
130
130
130
130
130
12,477
12,477
12,477
12,477
12,477
Costs
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1
2
3
4
5
...........................................................................................
...........................................................................................
...........................................................................................
...........................................................................................
...........................................................................................
$1,535,386
........................
........................
........................
........................
$492,362
82,115
82,115
82,115
82,115
........................
972,816
972,816
972,816
972,816
$5,337
5,337
5,337
5,337
5,337
$2,033,085
1,060,269
1,060,269
1,060,269
1,060,269
5 Year Total ..................................................................
........................
........................
........................
........................
6,274,161
Annual Cost Avg ....................................................
........................
........................
........................
........................
1,254,832
Initial certification—transition of
existing participants (one-time cost):
Estimated officer’s salary = $164.23/
hour (based on General Schedule 15
Step 10, Washington-BaltimoreNorthern Virginia area, plus an
additional 100% to account for the cost
of benefits and overhead, which would
be equivalent to a senior manager in an
average small business firm).
Total estimated burden: 9,349 × 1
hour × $164.23/hour = $1,535,386.
Initial certification—new participants
(first year cost):
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Estimated officer’s salary = $164.23/
hour (based on General Schedule 15
Step 10, Washington-BaltimoreNorthern Virginia area, plus an
additional 100% to account for the costs
of benefits and overhead, which would
be equivalent to a senior manager in an
average small business firm).
Total estimated burden: 2998 × 1 hour
× $164.23/hour = $492,362.
Initial certification—new participants
(cost for each succeeding year after
initial year):
Estimated officer’s salary = $164.23/
hour (based on General Schedule 15
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Step 10, Washington-BaltimoreNorthern Virginia area, plus an
additional 100% to account for the cost
of benefits and overhead, which would
be equivalent to a senior manager in an
average small business firm).
Total estimated burden: 500 × 1 hour
× $164.23/hour = $82,115.
Annual update:
Estimated officer’s salary = $164.23/
hour (based on General Schedule 15
Step 10, Washington-BaltimoreNorthern Virginia area, plus an
additional 100% to account for the cost
of benefits and overhead, which would
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be equivalent to a senior manager in an
average small business firm).
Total estimated burden: 11,847 × .5
hour × $164.23/hour = $72,816.
Examinations and Protests (each
year):
Estimated officer’s salary = $164.23/
hour (based on General Schedule 15
Step 10, Washington-BaltimoreNorthern Virginia area, plus an
additional 100% to account for the cost
of benefits and overhead, which would
be equivalent to a senior manager in an
average small business firm).
Total estimated burden: 130 × .25
hour × $164.23/hour = $5,337.
Previously, the estimated
respondents’ cost of burden hours was
determined to be $4,066,170 for the
initial year of certification and
$2,120,538 in subsequent years. By
successfully leveraging technology, SBA
has reduced the cost of burden hours
substantially, from $4,066,170 to
$2,033,085 in the initial year of
certification, and from $2,120,538 to
$1,060,269 in subsequent years. This
results in annual savings of $2,033,085
initially and $1,060,269 each year
thereafter, with a total five-year savings
of $6,274,161 for WOSBs to redirect as
revenue generating resources to close
the noted revenue disparity with maleowned businesses. SBA believes that
there are no additional capital or startup costs or operation and maintenance
costs and purchases of services costs to
respondents as a result of this rule
because there should be no cost in
setting up or maintaining systems to
collect the required information. As
stated previously, the information
requested should be collected and
retained in the ordinary course of
business.
SBA estimates the cost to the
government of implementing the
certification program to be $3,126,184 in
the initial year of certification, and
approximately $2,704,140 annually
thereafter. SBA is currently working to
enhance its existing information
technology infrastructure, Certify, to
expand its capacity to support SBA’s
government contracting certification
programs. The cost to develop the
WOSB and EDWOSB certification
processing systems in Certify is
$1,654,000. After the initial
improvements, Certify should not
require a substantial investment of
capital. In FY2020, SBA hired a Program
Lead, Team Lead, and two Analysts, and
brought on via internal transfer a third
Analyst and a Marketing and Outreach
specialist. The total cost of bringing
onboard the new hires and backfilling
the positions left vacant by the internal
transfers is $1,472,184 (based on
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General Schedule 13 Step 1 through
General Schedule 15 Step 1,
Washington-Baltimore-Northern
Virginia area plus 100% to account for
the cost of benefits and overhead). In the
future, the Program hopes to hire an
additional six FTEs to further support
Program Operations, the cost of which
would be $1,231,956 (based on General
Schedule 13 Step 1, WashingtonBaltimore-Northern Virginia area plus
100% to account for the cost of benefits
and overhead).
3. What are the alternatives to this rule?
This rule is required to implement
specific statutory provisions which
require promulgation of implementing
regulations. One alternative considered
would be to rely solely on third-party
certifiers to certify WOSBs and
EDWOSBs. However, there is a cost to
small businesses for third-party
certifiers. Firms submit the same
documentation to third-party certifiers
that would submit to SBA, but thirdparty certifiers charge on average $380
annually. Consequently, the cost of
relying completely on third-party
certifiers would be $3,552,620 a year
(9,349 initial applicants × $380). If
third-party certifiers were used for the
anticipated increase to 12,477 annual
participants, the cost would be
$4,741,260. In addition, SBA maintains
that certification for Federal
procurement purposes is an inherently
governmental function. Consequently,
even if SBA utilized third-party
certifiers for an initial or preliminary
review, SBA or a governmental entity
would still have to be involved in
reviewing those certifications. In
addition, there is an intended benefit of
certification. The intent is to increase
confidence in the eligibility of firms so
that contracting officers and activities
utilize the sole source authority.
Although trending upwards, the
government-wide WOSB goal of 5% was
not met with actual performance at
4.75%. In addition, WOSB/EDWOSB
set-aside and sole-source awards only
accounted for 4.1% of total dollars
awarded to WOSBs in FY 2018. The
Federal Government has met the
statutory WOSB goal of 5% of total
dollars awarded to WOSBs only once
(FY 2015).
Executive Order 13563
A description of the need for this
regulatory action and the benefits and
costs associated with this action,
including possible distributional
impacts that relate to Executive Order
13563, are included above in the
Regulatory Impact Analysis under
Executive Order 12866. As part of its
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ongoing efforts to engage stakeholders in
the development of its regulations, SBA
issued an Advance Notice of Proposed
Rulemaking (ANPR) on December 18,
2015. 80 FR 78984. The ANPR solicited
public comments to assist SBA in
drafting a proposed rule to implement a
WOSB/EDWOSB certification program.
SBA received 122 comments in
response to the ANPR. SBA issued a
Proposed Rule in the Federal Register
on May 14, 2019. 84 FR 21256. The
Proposed Rule solicited public
comments to assist SBA in drafting a
final rule to implement a WOSB/
EDWOSB certification program. SBA
received 898 comments from 307
commenters in response to the Proposed
Rule. SBA has reviewed all the
comments while drafting this final rule.
Executive Order 12988
For purposes of Executive Order
12988, SBA has drafted this rule, to the
extent practicable, in accordance with
the standards set forth in section 3(a)
and 3(b)(2) of Executive Order 12988, to
minimize litigation, eliminate
ambiguity, and reduce burden. This rule
has no preemptive or retroactive effect.
Executive Order 13132
For the purpose of Executive Order
13132, SBA has determined that this
rule will not have substantial direct
effects on the States, on the relationship
between the national government and
the States, or on the distribution of
power and responsibilities among the
various layers of government. Therefore,
SBA has determined that this rule has
no federalism implications warranting
preparation of a federalism assessment.
Executive Order 13771
This rule is an Executive Order 13771
regulatory action with annualized net
costs of $1,514,179 and a net present
value of $21,631,135, both in 2016
dollars. Details on the estimated costs of
this rule can be found in the rule’s
economic analysis. Table 1 summarizes
the savings and costs of the first three
years of implementation, with the
savings and costs in Year 3 expected to
continue into perpetuity. Table 2
presents the annualized savings in
perpetuity using a 7% discount rate, in
2016 dollars.
TABLE 1—SCHEDULE OF COSTS/(SAVINGS) OVER 3 YEAR HORIZON, CURRENT DOLLARS
Savings
Year 1 .......
Year 2 .......
Year 3 .......
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$(2,033,085)
(1,060,269)
(1,060,269)
Costs
$3,126,184
2,704,140
2,704,140
Federal Register / Vol. 85, No. 91 / Monday, May 11, 2020 / Rules and Regulations
be required to provide SBA with
TABLE 2—ANNUALIZED SAVINGS IN
PERPETUITY WITH 7% DISCOUNT monthly reports that include the
number of applications received,
RATE, 2016 DOLLARS
number of applications approved and
denied, and other information that SBA
determines may be helpful for ensuring
Annualized Savings ..............
(1,058,441) that third-party certifiers are meeting
Annualized Costs ..................
2,572,621 their obligations or information or data
Annualized Net Costs ...........
1,514,179 that may be useful for improving the
program.
Paperwork Reduction Act, 44 U.S.C.
Description of and Estimated Number
Ch. 35
of Respondents: There are four thirdparty certifiers authorized by SBA to
In carrying out its statutory mandate
certify WOSB and EDWOSB applicants.
to provide oversight of certification
related to SBA’s WOSB Federal Contract The four third-party certifiers will be
required to submit reports to SBA
Program, SBA is currently approved to
monthly, for a total of 48 reports.
collect information from the WOSB
Respondents: 4.
applicants or participants through SBA
Responses per respondent: 12.
Form 2413, and for EDWOSB applicants
Total annual responses: 48.
or participants, through SBA Form
Preparation hours per response: 0.5
2414. (OMB Control Number 3245–
hour.
0374, Certification for the WomenTotal response burden hours: 24
Owned Small Business Federal Contract hours.
Program). This collection of information
Cost per hour: $67.78/hour (based on
also requires submission or retention of
2018 Median Pay for accountants and
documents that support the applicant’s
auditors, Bureau of Labor Statistics, plus
certification. The information collected
an additional 100% to account for cost
through Certify includes eligibility
of benefits and overhead).
documents previously collected in the
Total estimated annual cost burden:
WOSB Repository, and information
$1,626.72.
collected on SBA Form 2413 (WOSB)
SBA will revise the information
and SBA Form 2414 (EDWOSB). SBA
collection accordingly and resubmit to
revised this information collection in
OMB for review and approval.
2018 to establish that the Agency has
discontinued these paper forms and will Regulatory Flexibility Act, 5 U.S.C.
601–612
collect the information and supporting
documents electronically through
According to the Regulatory
Certify, as well as to make minor
Flexibility Act (RFA), 5 U.S.C. 601,
changes to the requests for information.
when an agency issues a rulemaking, it
As discussed above, this rule will
must prepare a regulatory flexibility
fully implement the statutory
analysis to address the impact of the
requirement for small business concerns rule on small entities. However, section
to be certified by a Federal agency, a
605 of the RFA allows an agency to
State government, SBA, or a national
certify a rule, in lieu of preparing an
certifying entity approved by SBA, in
analysis, if the rulemaking is not
order to be awarded a set-aside or sole
expected to have a significant economic
source contract under the WOSB
impact on a substantial number of small
program. As a result of these changes,
entities. The RFA defines ‘‘small entity’’
the rule eliminates the option to selfto include ‘‘small businesses,’’ ‘‘small
certify for WOSB/EDWOSB set-aside
organizations,’’ and ‘‘small
and sole source contracts, permits
governmental jurisdictions.’’ This rule
applicants to provide their CVE
concerns various aspects of SBA’s
certification, along with documentation contracting programs. As such, the rule
that they meet Program eligibility
relates to small business concerns, but
requirements, as a certification option,
would not affect ‘‘small organizations’’
and clarifies the third-party certification or ‘‘small governmental jurisdictions.’’
requirements.
SBA’s contracting programs generally
The clarifications for authorized
apply only to ‘‘business concerns’’ as
Third-party certifiers impose an
defined by SBA regulations, in other
additional reporting or recordkeeping
words, to small businesses organized for
requirements under the Paperwork
profit. ‘‘Small organizations’’ or ‘‘small
Reduction Act, 44 U.S.C. Chapter 35. A
governmental jurisdictions’’ are nonsummary description of the reporting
profits or governmental entities and do
requirement, description of
not generally qualify as ‘‘business
respondents, and estimate of the annual concerns’’ within the meaning of SBA’s
burden is provided below.
regulations.
Summary Description of Compliance
As stated in the regulatory impact
Information: Third-party certifiers will
analysis, this rule will impact
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Estimate
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27659
approximately 9,000–12,000 womenowned small businesses. These
businesses will have to apply to be
certified as WOSBs or EDWOSBs to SBA
or third-party certifiers in order to be
eligible to be awarded any WOSB or
EDWOSB set-aside contract. However,
SBA has minimized the impact on
WOSBs by accepting certifications
already conferred by SBA (through the
8(a) BD Program or a positive
determination after a status protest or
program examination), VA, and thirdparty certifiers. The costs to WOSBs for
certification should be de minimis,
because the required documentation
(articles of incorporation, bylaws, stock
ledgers or certificates, tax records, etc.)
already exists. In addition, this
information is already required to be
provided either to third-party certifiers,
governmental certifying entities, or to
SBA through Certify. SBA expects
WOSBs to see a reduction in burden
because under the prior WOSB Program
Repository, SBA determined that the
average time required to complete the
process required by the WOSB Program
Repository was two hours, whereas the
use of Certify results requires only one
hour due to technological
improvements. Thus, the Administrator
certifies that the rulemaking is not
expected to have a significant economic
impact on a substantial number of small
entities.
List of Subjects
13 CFR Part 124
Administrative practice and
procedure, Government procurement,
Minority businesses, Reporting and
recordkeeping requirements, Technical
assistance.
13 CFR Part 125
Government contracts, Government
procurement, Reporting and
recordkeeping requirements, Small
business, Technical assistance,
Veterans.
13 CFR Part 126
Administrative practice and
procedure, Government procurement,
Penalties, Reporting and recordkeeping
requirements, Small business.
13 CFR Part 127
Government contracts, Reporting and
recordkeeping requirements, Small
businesses.
For the reasons stated in the
preamble, SBA amends 13 CFR parts
124, 125, 126, and 127 as follows:
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PART 124—8(a) BUSINESS
DEVELOPMENT/SMALL
DISADVANTAGED BUSINESS STATUS
DETERMINATIONS
4. The authority citation for part 125
continues to read as follows:
■
■
1. The authority citation for part 124
continues to read as follows:
Authority: 15 U.S.C. 632(p), (q), 634(b)(6),
637, 644, 657(f), and 657r.
Authority: 15 U.S.C. 634(b)(6), 636(j),
637(a), 637(d), and 644.
■
2. Amend § 124.104 as follows:
a. Remove the first two sentences of
paragraph (c)(2) introductory text and
add one sentence in their place;
■ b. Revise the first sentence of
paragraph (c)(2)(ii);
■ c. Remove the first two sentences of
paragraph (c)(3)(i) and add one sentence
in their place; and
■ d. Revise the first sentence of
paragraph (c)(4).
The additions and revisions read as
follows:
■
■
5. Amend § 125.18 by adding a
sentence at the end of paragraph (e)(2)
to read as follows:
§ 125.18 What requirements must an
SDVO SBC meet to submit an offer on a
contract?
*
*
*
*
*
(e) * * *
(2) * * * If the business is unable to
recertify its SDVO status, the procuring
agency may no longer be able to count
the options or orders issued pursuant to
the contract, from that point forward,
towards its SDVO goals.
*
*
*
*
*
§ 124.104 Who is economically
disadvantaged?
PART 126—HUBZONE PROGRAM
*
■
*
*
*
*
(c) * * *
(2) * * * The net worth of an
individual claiming disadvantage must
be less than $750,000. * * *
*
*
*
*
*
(ii) Funds invested in an Individual
Retirement Account (IRA) or other
official retirement account will not be
considered in determining an
individual’s net worth. * * *
*
*
*
*
*
(3) * * * (i) SBA will presume that an
individual is not economically
disadvantaged if his or her adjusted
gross income averaged over the three
preceding years exceeds $350,000.
* * *
*
*
*
*
*
(4) * * * An individual will generally
not be considered economically
disadvantaged if the fair market value of
all his or her assets (including his or her
primary residence and the value of the
applicant/Participant firm) exceeds $6
million. * * *
■ 3. Amend § 124.1015 by adding a
sentence at the end of paragraph (f)(2)
to read as follows:
§ 124.1015 What are the requirements for
representing SDB status, and what are the
penalties for misrepresentation?
*
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PART 125—GOVERNMENT
CONTRACTING PROGRAMS
*
*
*
*
(f) * * *
(2) * * * If the business is unable to
recertify its SDB status, the procuring
agency may no longer be able to count
the options or orders issued pursuant to
the contract, from that point forward,
towards its SDB goals.
*
*
*
*
*
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6. The authority citation for part 126
continues to read as follows:
Authority: 15 U.S.C. 632(a), 632(j), 632(p),
644 and 657a.
7. Amend § 126.619 by adding a
sentence at the end of paragraph (b)
introductory text to read as follows:
■
§ 126.619 When must a certified HUBZone
small business concern recertify its status
for a HUBZone contract?
*
*
*
*
*
(b) * * * If the business is unable to
recertify its HUBZone status, the
procuring agency may no longer be able
to count the options or orders issued
pursuant to the contract, from that point
forward, towards its HUBZone goals.
*
*
*
*
*
PART 127—WOMEN-OWNED SMALL
BUSINESS FEDERAL CONTRACT
PROGRAM
8. The authority citation for part 127
continues to read as follows:
■
Authority: 15 U.S.C. 632, 634(b)(6),
637(m), 644 and 657r.
9. Amend § 127.200 by adding
paragraphs (c) and (d) to read as follows:
■
§ 127.200 What are the requirements a
concern must meet to qualify as an
EDWOSB or WOSB?
*
*
*
*
*
(c) WOSB and EDWOSB certifications.
(1) A concern must be certified as a
WOSB or EDWOSB pursuant to
§ 127.300 in order to be awarded a
WOSB or EDWOSB set-aside or solesource contract.
(2) Other women-owned small
business concerns that do not seek
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WOSB or EDWOSB set-aside or solesource contracts may continue to selfcertify their status, receive contract
awards outside the Program, and count
toward an agency’s goal for awards to
WOSBs.
(d) Suspension and debarment. In
order to be eligible for WOSB and
EDWOSB certification and to remain
certified, the concern and any of its
owners must not have an active
exclusion in the System for Award
Management at the time of application
or recertification.
■ 10. Amend § 127.203 by revising the
first sentence of paragraph (b)(3) to read
as follows:
§ 127.203 What are the rules governing the
requirement that economically
disadvantaged women must own
EDWOSBs?
*
*
*
*
*
(b) * * *
(3) Funds invested in an Individual
Retirement Account (IRA) or other
official retirement account will not be
considered in determining an
individual’s net worth. * * *
*
*
*
*
*
Subpart C—[Amended]
11. Subpart C is amended by adding
the undesignated center heading
‘‘Certification’’ above § 127.300.
■ 12. Effective October 15, 2020,
§ 127.300 is revised to read as follows:
■
§ 127.300 How is a concern certified as an
WOSB or EDWOSB?
(a) WOSB certification. (1) A concern
may apply to SBA for WOSB
certification. There is no cost to apply
to SBA for certification. SBA will
consider the information provided by
the concern in order to determine
whether the concern qualifies. SBA, in
its discretion, may rely solely upon the
information submitted to establish
eligibility, may request additional
information, or may verify the
information before making a
determination. SBA may draw an
adverse inference and deny the
certification where the concern fails to
cooperate with SBA or submit
information requested by SBA.
(2) A concern may submit evidence to
SBA that it is a women-owned and
controlled small business that is
certified by the U.S. Department of
Veterans Affairs Center for Verification
and Evaluation as a Service-Disabled
Veteran Owned Business or VeteranOwned Business.
(3) A concern may submit evidence
that it has been certified as a WOSB by
an approved Third-Party Certifier in
accordance with this subpart.
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(b) EDWOSB certification. (1) A
concern may apply to SBA for EDWOSB
certification. There is no cost to apply
to SBA for certification. SBA will
consider the information provided by
the concern in order to determine
whether the concern qualifies. SBA, in
its discretion, may rely solely upon the
information submitted to establish
eligibility, may request additional
information, or may verify the
information before making a
determination. SBA may draw an
adverse inference and deny the
certification where the concern fails to
cooperate with SBA or submit
information requested by SBA.
(2) A concern that is a certified
participant in the 8(a) BD Program and
owned and controlled by one or more
women qualifies as an EDWOSB.
(3) A concern may submit evidence to
SBA that it is an economically
disadvantaged women-owned and
controlled small business that is
certified by the U.S. Department of
Veterans Affairs Center for Verification
and Evaluation as a Service-Disabled
Veteran Owned Business or VeteranOwned Business.
(4) A concern may submit evidence
that it has been certified as an EDWOSB
by a Third-Party Certifier under this
subpart.
(c) SBA notification and designation.
If SBA determines that the concern is a
qualified WOSB or EDWOSB, it will
issue a letter of certification and
designate the concern as a certified
WOSB or EDWOSB on the Dynamic
Small Business Search (DSBS) system,
or successor system.
■ 13. Sections 127.301 through 127.303
are revised to read as follows:
Sec.
*
*
*
*
*
127.301 When may a concern apply for
certification?
127.302 Where can a concern apply for
certification?
127.303 What must a concern submit for
certification?
*
*
*
*
*
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§ 127.301 When may a concern apply for
certification?
A concern may apply for WOSB or
EDWOSB certification and submit the
required information whenever it can
represent that it meets the eligibility
requirements, subject to the restrictions
of § 127.306. All representations and
supporting information contained in the
application must be complete and
accurate as of the date of submission.
The application must be signed by an
officer of the concern who is authorized
to represent the concern.
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§ 127.302 Where can a concern apply for
certification?
A concern seeking certification as a
WOSB or EDWOSB may apply to SBA
for certification via https://
certify.sba.gov or any successor system.
Certification pages must be validated
electronically or signed by a person
authorized to represent the concern.
§ 127.303 What must a concern submit for
certification?
(a)(1) SBA certification. (i) To be
certified by SBA as a WOSB or
EDWOSB, a concern must provide
documents and information
demonstrating that it meets the
requirements set forth in part 127,
subpart B. SBA maintains a list of the
minimum required documents that can
be found at https://certify.sba.gov or any
successor system. A concern may
submit additional documents and
information to support its eligibility.
The required documents must be
provided to SBA during the application
process electronically. This may
include, but is not limited to, corporate
records, business and personal financial
records, including copies of signed
Federal personal and business tax
returns, and individual and business
bank statements.
(ii) A concern that is certified by the
8(a) BD Program and is owned and
controlled by one or more women may
use documentation of its most recent
annual review, or documentation of its
8(a) acceptance if it has not yet had an
annual review, in support of its
application for certification.
(iii) A concern that is certified
through a program examination or status
protest may use the positive
determination from SBA as evidence for
certification.
(2) CVE certification. (i) To be
certified as a WOSB, a concern that is
certified by the U.S. Department of
Veterans Affairs Center for Verification
and Evaluation may submit
documentation of its most recent
certification, along with documentation
confirming that it is owned and
controlled by one or more women, in
support of its application for
certification.
(ii) To be certified as an EDWOSB, a
concern that is certified by the U.S.
Department of Veterans Affairs Center
for Verification and Evaluation may
submit documentation of its most recent
certification, along with documentation
confirming that it is owned and
controlled by one or more women who
are economically disadvantaged in
accordance with § 127.203(b)(3), in
support of its application for
certification.
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(3) Third-Party Certifier certification.
A concern that is certified by a ThirdParty Certifier must provide a current,
valid certification from an entity
designated as an SBA-approved
certifier.
(b) In addition to the minimum
required documents, SBA may request
additional information from applicants
in order to verify eligibility.
(c) After submitting the required
documentation, an applicant must
notify SBA of any changes that could
affect its eligibility.
(d) If a concern was decertified or
previously denied certification, it must
include with its application for
certification a full explanation of why it
was decertified or denied certification,
and what, if any, changes have been
made. If SBA is not satisfied with the
explanation provided, SBA will decline
to certify the concern.
(e) If the concern was decertified for
failure to notify SBA of a material
change affecting its eligibility pursuant
to § 127.401, it must include with its
application for certification a full
explanation of why it failed to notify
SBA of the material change. If SBA is
not satisfied with the explanation
provided, SBA will decline to certify the
concern.
■ 14. Effective October 15, 2020,
§§ 127.304 and 127.305 are revised to
read as follows:
§ 127.304 How is an application for
certification processed?
(a) The SBA’s Director of Government
Contracting (D/GC) or designee is
authorized to approve or decline
applications for certification. SBA must
receive all required information and
supporting documents before it will
begin processing a concern’s
application. SBA will not process
incomplete applications. SBA will
advise each applicant within 15
calendar days after the receipt of an
application whether the application is
complete and suitable for evaluation
and, if not, what additional information
or clarification is required to complete
the application. SBA will make its
determination within ninety (90)
calendar days after receipt of a complete
package, whenever practicable.
(b) SBA may request additional
information or clarification of
information contained in an application
or document submission at any time.
(c) The burden of proof to
demonstrate eligibility is on the
applicant concern. If a concern does not
provide requested information within
the allotted time provided by SBA, or if
it submits incomplete information, SBA
may presume that disclosure of the
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missing information would adversely
affect the business concern’s eligibility
or demonstrate a lack of eligibility in the
area or areas to which the information
relates.
(d) The applicant must be eligible as
of the date it submitted its application
and up until the time the D/GC issues
a decision. The decision will be based
on the facts contained in the
application, any information received in
response to SBA’s request for
clarification, and any changed
circumstances since the date of
application.
(e) Any changed circumstances
occurring after an applicant has
submitted an application will be
considered and may constitute grounds
for decline. After submitting the
application and signed representation,
an applicant must notify SBA of any
changes that could affect its eligibility.
The D/GC may propose decertification
for any EDWOSB or WOSB that fails to
inform SBA of any changed
circumstances that affected its eligibility
for the program during the processing of
the application.
(f) If SBA approves the application,
SBA will send a written notice to the
concern and update https://
certify.sba.gov or any successor system,
and update DSBS and the System for
Award Management (or any successor
systems) to indicate the concern has
been certified by SBA as a WOSB and/
or EDWOSB.
(g) A decision to deny eligibility must
be in writing and state the specific
reasons for denial.
(h) SBA will send a copy of the
decision letter to the electronic mail
address provided with the application.
SBA will consider any decision sent to
this electronic mail address provided to
have been received by the applicant
concern.
(i) The decision of the D/GC to
decline certification is the final agency
decision. The concern can reapply for
certification after ninety (90) days, as set
forth in § 127.305.
khammond on DSKJM1Z7X2PROD with RULES
§ 127.305 May declined or decertified
concerns seek recertification at a later
date?
(a) A concern that SBA or a thirdparty certifier has declined or that SBA
has decertified may seek certification
after ninety (90) days from the date of
decline or decertification if it believes
that it has overcome all of the reasons
for decline or decertification and is
currently eligible. A concern that has
been declined may seek certification by
any of the certification options listed in
§ 127.300.
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(b) A concern found to be ineligible
during a WOSB/EDWOSB status protest
or program examination is precluded
from applying for certification for ninety
(90) days from the date of the final
agency decision (the D/GC’s decision if
no appeal is filed or the decision of
SBA’s Office of Hearings and Appeals
(OHA) where an appeal is filed pursuant
to § 127.605).
■ 15. An undesignated center heading
and § 127.350 are added to subpart C to
read as follows:
Requirements for Third-Party Certifiers
§ 127. 350
What is a third-party certifier?
A third-party certifier is a nongovernmental entity that SBA has
authorized to certify that an applicant
concern is eligible for the WOSB or
EDWOSB contracting program. A thirdparty certifier may be a for-profit or nonprofit entity. The list of SBA-approved
third-party certifiers may be found on
SBA’s website at sba.gov.
■ 16. Effective October 15, 2020,
§ 127.351 is added to subpart C to read
as follows:
§ 127.351 What third-party certifications
may a concern use as evidence of its status
as a qualified EDWOSB or WOSB?
In order for SBA to accept a thirdparty certification that a concern
qualifies as a WOSB or EDWOSB, the
concern must have a current, valid
certification from an entity designated
as an SBA-approved certifier. The thirdparty certification must be submitted to
SBA through https://certify.sba.gov or a
successor system.
■ 17. Sections 127.352 through 127.356
are added to subpart C to read as
follows:
Subpart C—Certification of EDWOSB or
WOSB Status
*
*
*
*
*
Sec.
127.352 What is the process for becoming a
third-party certifier?
127.353 May third-party certifiers charge a
fee?
127.354 What requirements must a thirdparty certifier follow to demonstrate
capability to certify concerns?
127.355 How will SBA ensure that
approved third-party certifiers are
meeting the requirements?
127.356 How does a concern obtain
certification from an approved certifier?
§ 127.352 What is the process for
becoming a third-party certifier?
SBA will periodically hold open
solicitations. All entities that believe
they meet the criteria to act as a thirdparty certifier will be free to respond to
the solicitation.
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Fmt 4700
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§ 127.353
a fee?
May third-party certifiers charge
(a) Third-party certifiers may charge a
reasonable fee, but must notify
applicants first, in writing, that SBA
offers certification for free.
(b) The method of notification and the
language that will be used for this
notification must be approved by SBA.
The third-party certifier may not change
its method or the language without SBA
approval.
§ 127.354 What requirements must a thirdparty certifier follow to demonstrate
capability to certify concerns?
(a) All third-party certifiers must enter
into written agreements with SBA. This
agreement will detail the requirements
that the third-party certifier must meet.
SBA may terminate the agreement if
SBA subsequently determines that the
entity’s certification process does not
comply with SBA-approved certification
standards or is not based on the same
program eligibility requirements as set
forth in subpart B of this part or if, upon
review, SBA determines that the thirdparty certifier has demonstrated a
pattern of certifying concerns that SBA
later determines to be ineligible for
certification.
(b) Third-party certifiers’ certification
process must comply with SBAapproved certification standards and
track the WOSB or EDWOSB eligibility
requirements set forth in subpart B of
this part.
(c) In order for SBA to enter into an
agreement with a third-party certifier,
the entity must establish the following:
(1) It will render fair and impartial
WOSB/EDWOSB Federal Contract
Program eligibility determinations;
(2) It will provide the approved
applicant a valid certificate for entering
into the SBA electronic platform, and
will retain documents used to determine
eligibility for a period of six (6) years to
support SBA’s responsibility to conduct
a status protest, eligibility examination,
agency investigation, or audit of the
third party determinations;
(3) Its certification process will
require applicant concerns to register in
SAM (or any successor system) and
submit sufficient information as
determined by SBA to enable it to
determine whether the concern qualifies
as a WOSB. This information must
include documentation demonstrating
whether the concern is:
(i) A small business concern under
the SBA size standard corresponding to
the concern’s primary industry, as
defined in § 121.107 of this part;
(ii) At least 51 percent owned and
controlled by one or more women who
are United States citizens; and
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(4) It will not decline to accept a
concern’s application for WOSB/
EDWOSB certification on the basis of
race, color, national origin, religion, age,
disability, sexual orientation, marital or
family status, or political affiliation.
§ 127.355 How will SBA ensure that
approved third-party certifiers are meeting
the requirements?
(a) SBA will require third-party
certifiers to submit monthly reports to
SBA. These reports will contain
information including the number of
applications received, number of
applications approved and denied, and
other information that SBA determines
may be helpful for ensuring that thirdparty certifiers are meeting their
obligations or information or data that
may be useful for improving the
program.
(b) SBA will conduct periodic
compliance reviews of third-party
certifiers and their underlying
certification determinations to ensure
that they are properly applying SBA’s
WOSB/EDWOSB requirements and
certifying concerns in accordance with
those requirements.
(1) SBA will conduct a full
compliance review on every third-party
certifier at least once every three years.
(2) At the conclusion of each
compliance review, SBA will provide
the third-party certifier with a written
report detailing SBA’s findings with
regard to the third-party certifier’s
compliance with SBA’s requirements.
The report will include
recommendations for possible
improvements, and detailed
explanations for any deficiencies
identified by SBA.
(c) If SBA determines that a thirdparty certifier is not properly applying
SBA’s eligibility requirements, SBA may
revoke the approval of that third-party
certifier.
khammond on DSKJM1Z7X2PROD with RULES
§ 127.356 How does a concern obtain
certification from an approved certifier?
(a) A concern that seeks WOSB or
EDWOSB certification from an SBAapproved third-party certifier must
submit its application directly to the
approved certifier in accordance with
the specific application procedures of
the particular certifier.
(b) The concern must register in the
System for Award Management (SAM),
or any successor system.
(c) The approved certifier must ensure
that all documents used to determine
that a concern is approved for
certification are uploaded in https://
certify.sba.gov or any successor system.
■ 18. Effective October 15, 2020,
§§ 127.400 and 127.401 are revised to
read as follows:
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16:07 May 08, 2020
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§ 127.400 How does a concern maintain its
WOSB or EDWOSB certification?
(a) Any concern seeking to remain a
certified WOSB or EDWOSB must
annually represent to SBA that it
continues to meet all WOSB/EDWOSB
eligibility criteria.
(1) Except as provided in paragraph
(b) of this section, unless SBA has
reason to question the concern’s
representation of its continued
eligibility, SBA will accept the
representation without requiring the
certified WOSB or EDWOSB to submit
any supporting information or
documentation.
(2) The concern’s recertification must
be submitted within 30 days of the
anniversary date of its original
certification. The date of certification is
the date specified in the concern’s
certification letter. If the concern fails to
recertify, SBA may propose the concern
for decertification pursuant to § 127.405.
(b) Any concern seeking to remain a
certified WOSB or EDWOSB must
undergo a program examination and
recertify its continued eligibility to SBA
every three years.
(1) SBA or a third-party certifier will
conduct a program examination three
years after the concern’s initial WOSB
or EDWOSB certification (whether by
SBA or a third-party certifier) or three
years after the date of the concern’s last
program examination, whichever date is
later.
(i) Example 1. Concern A is certified
by SBA to be eligible for the WOSB
program on July 20, 2021. Concern A
must recertify its eligibility to SBA
between June 20, 2022 and July 19,
2022. Concern A will continue to be a
certified WOSB that is eligible to receive
WOSB contracts (as long as it is small
for the size standard corresponding to
the NAICS code assigned to the
contract) through July 19, 2023. Concern
A must recertify its eligibility to SBA
between June 20, 2023 and July 19,
2023. Concern A will continue to be a
certified WOSB that is eligible to receive
WOSB contracts (as long as it is small
for the size standard corresponding to
the NAICS code assigned to the
contract) through July 19, 2024. Concern
A must recertify its eligibility to SBA
between June 20, 2024 and July 19,
2024. Because three years have elapsed
since its application and original
certification, SBA will conduct a
program examination of Concern A at
that time. In addition to its
representation that it continues to be an
eligible WOSB, Concern A must provide
additional information as requested by
SBA to demonstrate that it continues to
meet all the eligibility requirements of
the WOSB Program.
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27663
(ii) Example 2. Concern B is certified
by a third-party certifier to be eligible
for the WOSB program on September
27, 2021. Concern B must recertify its
eligibility to SBA between August 28,
2022 and September 26, 2022. Concern
B will continue to be a certified WOSB
that is eligible to receive WOSB
contracts (as long as it is small for the
size standard corresponding to the
NAICS code assigned to the contract)
through September 26, 2023. On March
31, 2023, Concern B is awarded a WOSB
set-aside contract. Subsequently,
Concern B’s status as an eligible WOSB
is protested. On June 28, 2023, Concern
B receives a positive determination from
SBA confirming that it is an eligible
WOSB. Concern B’s new certification
date is June 28, 2023. Concern B must
recertify its eligibility to SBA between
May 29, 2024 and June 27, 2024.
Concern B will continue to be a certified
WOSB that is eligible to receive WOSB
contracts (as long as it is small for the
size standard corresponding to the
NAICS code assigned to the contract)
through June 27, 2025. Concern B must
recertify its eligibility to SBA between
May 29, 2025 and June 27, 2025.
Concern B will continue to be a certified
WOSB that is eligible to receive WOSB
contracts (as long as it is small for the
size standard corresponding to the
NAICS code assigned to the contract)
until June 27, 2026. Concern B must
recertify its eligibility to SBA between
May 29, 2026 and June 27, 2025.
Because three years have elapsed since
its certification date of June 28, 2022,
Concern B must seek a program
examination, by SBA or a third-party
certifier, between May 29, 2025 and
June 27, 2026. In addition to its
representation that it continues to be an
eligible WOSB, Concern B must provide
additional information as requested by
SBA or a third-party certifier to
demonstrate that it continues to meet all
the eligibility requirements of the
WOSB Program.
(2) The concern must either request a
program examination from SBA or
notify SBA that it has requested a
program examination by a third-party
certifier no later than 30 days prior to
its certification anniversary. Failure to
do so will result in the concern being
decertified.
§ 127.401 What are a WOSB’s and
EDWOSB’s ongoing obligations to SBA?
Once certified, a WOSB or EDWOSB
must notify SBA of any material
changes that could affect its eligibility
within 30 calendar days of any such
change. Material change includes, but is
not limited to, a change in the
ownership, business structure, or
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Federal Register / Vol. 85, No. 91 / Monday, May 11, 2020 / Rules and Regulations
management. The notification must be
in writing and must be uploaded into
the concern’s profile with SBA. The
method for notifying SBA can be found
on https://certify.sba.gov. A concern’s
failure to notify SBA of such a material
change may result in decertification and
removal from SAM and DSBS (or any
successor system) as a designated
certified WOSB/EDWOSB concern. In
addition, SBA may seek the imposition
of penalties under § 127.700.
■ 19. Section 127.402 is revised to read
as follows:
§ 127.402 What is a program examination,
who will conduct it, and what will SBA
examine?
(a) A program examination is an
investigation by SBA officials or
authorized third-party certifier that
verifies the accuracy of any certification
of a concern issued in connection with
the concern’s WOSB or EDWOSB status.
Thus, examiners may verify that the
concern currently meets the program’s
eligibility requirements, and that it met
such requirements at the time of its
application for certification, its most
recent recertification, or its certification
in connection with a WOSB or
EDWOSB contract.
(b) Examiners may review any
information related to the concern’s
eligibility requirements. SBA may also
conduct site visits.
(c) It is the responsibility of program
participants to ensure the information
provided to SBA is kept up to date and
is accurate. SBA considers all required
information and documents material to
a concern’s eligibility and assumes that
all information and documentation
submitted are up to date and accurate
unless SBA has information that
indicates otherwise.
■ 20. Effective October 15, 2020,
§ 127.403 is revised to read as follows:
khammond on DSKJM1Z7X2PROD with RULES
§ 127.403 When will SBA conduct program
examinations?
(a) SBA may conduct a program
examination at any time after the
concern submits its application, during
the processing of the application, and at
any time while the concern is a certified
WOSB or EDWOSB.
(b) SBA will conduct program
examinations periodically as part of the
recertification process set forth in
§ 127.400.
■ 21. Section 127.404 is revised to read
as follows:
§ 127.404 May SBA require additional
information from a WOSB or EDWOSB
during a program examination?
At the discretion of the D/GC, SBA
has the right to require that a WOSB or
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16:07 May 08, 2020
Jkt 250001
EDWOSB submit additional information
at any time during the program
examination. SBA may draw an adverse
inference from the failure of a concern
to cooperate with a program
examination or provide requested
information.
■ 22. Effective October 15, 2020,
§ 127.405 is revised to read as follows:
§ 127.405 What happens if SBA
determines that the concern is no longer
eligible for the program?
If SBA believes that a concern does
not meet the program eligibility
requirements, the concern fails to
recertify in accordance with the
requirements in § 127.400, or the
concern has failed to notify SBA of a
material change, SBA will propose the
concern for decertification from the
program.
(a) Proposed decertification. The D/
GC or designee will notify the concern
in writing that it has been proposed for
decertification. This notice will state the
reasons why SBA has proposed
decertification, and that the WOSB or
EDWOSB must respond to each of the
reasons set forth.
(1) The WOSB or EDWOSB must
respond in writing to a proposed
decertification within 20 calendar days
from the date of the proposed
decertification.
(2) If the initial certification was done
by a third-party certifier, SBA will also
notify the third-party certifier of the
proposed decertification in writing.
(b) Decertification. The D/GC or
designee will consider the reasons for
proposed decertification and the
concern’s response before making a
written decision whether to decertify.
The D/GC may draw an adverse
inference where a concern fails to
cooperate with SBA or provide the
information requested. The D/GC’s
decision is the final agency decision.
(c) Reapplication. A concern
decertified pursuant to this section may
reapply to the program pursuant to
§ 127.305.
■ 23. Amend § 127.503 by adding a
sentence at the end of paragraph (h)(2)
to read as follows:
§ 127.503 When is a contracting officer
authorized to restrict competition or award
a sole source contract or order under this
part?
*
*
*
*
*
(h) * * *
(2) * * * If the business is unable to
recertify its WOSB/EDWOSB status, the
procuring agency may no longer be able
to count the options or orders issued
pursuant to the contract, from that point
PO 00000
Frm 00020
Fmt 4700
Sfmt 4700
forward, towards its women-owned
small business goals.
*
*
*
*
*
24. Effective October 15, 2020, amend
§ 127.504 by revising paragraph (a),
redesignating paragraphs (b) and (c) as
paragraphs (c) and (d) respectively, and
adding a new paragraph (b).
The revision and addition read as
follows:
■
§ 127.504 What additional requirements
must a concern satisfy to submit an offer
on an EDWOSB or WOSB requirement?
(a) In order for a concern to submit an
offer on a specific EDWOSB or WOSB
set-aside requirement, the concern must
qualify as a small business concern
under the size standard corresponding
to the NAICS code assigned to the
contract, and either be a certified
EDWOSB or WOSB pursuant to
§ 127.300, or represent that it has
submitted a complete application for
WOSB or EDWOSB certification to SBA
or a third-party certifier and has not
received a negative determination
regarding that application from SBA or
the third party certifier.
(1) If a concern becomes the apparent
successful offeror while its application
for WOSB or EDWOSB certification is
pending, either at SBA or a third-party
certifier, the contracting officer for the
particular contract must immediately
inform SBA’s D/GC. SBA will then
prioritize the concern’s WOSB or
EDWOSB application and make a
determination regarding the firm’s
status as a WOSB or EDWOSB within 15
calendar days from the date that SBA
received the contracting officer’s
notification. Where the application is
pending with a third-party certifier,
SBA will immediately contact the thirdparty certifier to require the third-party
certifier to complete its determination
within 15 calendar days.
(2) If the contracting officer does not
receive an SBA or third-party certifier
determination within 15 calendar days
after the SBA’s receipt of the
notification, the contracting officer may
presume that the apparently successful
offeror is not an eligible WOSB or
EDWOSB and may make award
accordingly, unless the contracting
officer grants an extension to the 15-day
response period.
(b) In order for a concern to seek a
specific sole source EDWOSB or WOSB
requirement, the concern must be a
certified EDWOSB or WOSB pursuant to
§ 127.300 and qualify as small under the
size standard corresponding to the
requirement being sought.
*
*
*
*
*
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Federal Register / Vol. 85, No. 91 / Monday, May 11, 2020 / Rules and Regulations
§ 127.505
[Removed and Reserved]
25. Effective October 15, 2020, remove
and reserve § 127.505.
■
§ 127.603
[Amended]
26. Effective October 15, 2020, amend
§ 127.603 by removing the next to last
sentence in paragraph (d).
■ 27. Effective October 15, 2020, amend
§ 127.604 by revising paragraph (f)(4) to
read as follows:
■
§ 127.604 How will SBA process an
EDWOSB or WOSB status protest?
*
*
*
*
*
(f) * * *
(4) A concern that has been found to
be ineligible will be decertified from the
program and may not submit an offer as
a WOSB or EDWOSB on another
procurement until it is recertified. A
concern may be recertified by
reapplying to the program pursuant to
§ 127.305.
Jovita Carranza,
Administrator.
[FR Doc. 2020–09022 Filed 5–8–20; 8:45 am]
BILLING CODE 8026–03–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2019–0827; Product
Identifier 2019–SW–014–AD; Amendment
39–21120; AD 2020–10–02]
RIN 2120–AA64
Airworthiness Directives; Airbus
Helicopters (Type Certificate
Previously Held by Eurocopter France)
Helicopters
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
AGENCY:
The FAA is superseding
Airworthiness Directive (AD) 2011–12–
07 for Eurocopter France (now Airbus
Helicopters) Model SA–365C, SA–
365C1, SA–365C2, SA–365N, SA–
365N1, AS–365N2, AS 365 N3, and SA–
366G1 helicopters. AD 2011–12–07
required repetitively inspecting the
adhesive bead between the bushings
and the Starflex star (Starflex) arms and
the Starflex arm ends. This new AD
retains the requirements of AD 2011–
12–07 while omitting helicopters with
an improved Starflex installed from the
applicability. This AD was prompted by
the development of the improved
Starflex by Airbus Helicopters. The
actions of this AD are intended to
khammond on DSKJM1Z7X2PROD with RULES
SUMMARY:
VerDate Sep<11>2014
16:07 May 08, 2020
Jkt 250001
address an unsafe condition on these
products.
DATES: This AD is effective June 15,
2020.
The Director of the Federal Register
approved the incorporation by reference
of certain publications listed in this AD
as of June 15, 2020.
ADDRESSES: For service information
identified in this final rule, contact
Airbus Helicopters, 2701 N Forum
Drive, Grand Prairie, TX 75052;
telephone 972–641–0000 or 800–232–
0323; fax 972–641–3775; or at https://
www.airbus.com/helicopters/services/
technical-support.html. You may view
this service information at the FAA,
Office of the Regional Counsel,
Southwest Region, 10101 Hillwood
Pkwy., Room 6N–321, Fort Worth, TX
76177. It is also available on the internet
at https://www.regulations.gov by
searching for and locating Docket No.
FAA–2019–0827.
Examining the AD Docket
You may examine the AD docket on
the internet at https://
www.regulations.gov in Docket No.
FAA–2019–0827; or in person at Docket
Operations between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal
holidays. The AD docket contains this
AD, the European Aviation Safety
Agency (now European Union Aviation
Safety Agency) (EASA) AD, any service
information that is incorporated by
reference, any comments received, and
other information. The street address for
Docket Operations is U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
FOR FURTHER INFORMATION CONTACT: Matt
Fuller, Senior Aviation Safety Engineer,
Safety Management Section, Rotorcraft
Standards Branch, FAA, 10101
Hillwood Pkwy., Fort Worth, TX 76177;
telephone 817–222–5110; email
matthew.fuller@faa.gov.
SUPPLEMENTARY INFORMATION:
Discussion
The FAA issued a notice of proposed
rulemaking (NPRM) to amend 14 CFR
part 39 to remove AD 2011–12–07,
Amendment 39–16714 (76 FR 35346,
June 17, 2011) (‘‘AD 2011–12–07’’) and
add a new AD. AD 2011–12–07 applied
to Eurocopter France (now Airbus
Helicopters) Model SA–365C, SA–
365C1, SA–365C2, SA–365N, SA–
365N1, AS–365N2, AS 365 N3, and SA–
366G1 helicopters and required a
repetitive inspection of the adhesive
bead between the bushing and the
Starflex arm for a crack, a gap, or loss
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Sfmt 4700
27665
of the adhesive bead and the Starflex
arm ends for delamination. AD 2011–
12–07 was prompted by three cases of
deterioration of a Starflex arm end. In
two of these cases, the deterioration
caused high amplitude vibrations in
flight, compelling the pilot to make a
precautionary landing.
The NPRM published in the Federal
Register on November 1, 2019 (84 FR
58638). The NPRM proposed to retain
the requirements of AD 2011–12–07 but
omit helicopters with an improved
Starflex installed from the applicability.
The NPRM was prompted by EASA
AD No. 2008–0165R1, dated June 30,
2017 (EASA AD 2008–0165R1), issued
by EASA, which is the Technical Agent
for the Member States of the European
Union, to correct an unsafe condition
for Airbus Helicopters Model SA 365 N,
SA 365 N1, AS 365 N2, AS 365 N3, SA
365 C, SA 365 C1, SA 365 C2, SA 365
C3 and SA 366 G1 helicopters, except
helicopters with MOD 0762C37
installed in production. EASA advises
that the Airbus Helicopters Starflex
manufactured with improved materials
make the 10-hour repetitive inspections
specified in the original issue of its AD,
EASA AD No. 2008–0165, dated August
28, 2008 (EASA AD 2008–0165),
unnecessary. EASA AD 2008–0165R1
retains the repetitive inspections from
EASA AD 2008–0165 but does not apply
to helicopters with the new Starflex
installed.
Comments
The FAA gave the public the
opportunity to participate in developing
this AD, but did not receive any
comments on the NPRM.
FAA’s Determination
These helicopters have been approved
by EASA and are approved for operation
in the United States. Pursuant to the
FAA’s bilateral agreement with the
European Union, EASA has notified the
FAA of the unsafe condition described
in its AD. The FAA is issuing this AD
after evaluating all information
provided by EASA and determining the
unsafe condition exists and is likely to
exist or develop on other helicopters of
these same type designs and that air
safety and the public interest require
adopting the AD requirements as
proposed.
Differences Between This AD and the
EASA AD
The EASA AD uses the word ‘‘check,’’
whereas this AD uses the word
‘‘inspect’’ instead. In some ADs, the
FAA uses the word ‘‘check’’ to designate
specific actions that may be performed
by the owner/operator (pilot). An
E:\FR\FM\11MYR1.SGM
11MYR1
Agencies
[Federal Register Volume 85, Number 91 (Monday, May 11, 2020)]
[Rules and Regulations]
[Pages 27650-27665]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09022]
[[Page 27650]]
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SMALL BUSINESS ADMINISTRATION
13 CFR Parts 124, 125, 126, and 127
RIN 3245-AG75
Women-Owned Small Business and Economically Disadvantaged Women-
Owned Small Business Certification
AGENCY: U.S. Small Business Administration.
ACTION: Final rule.
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SUMMARY: The Small Business Administration (SBA or the Agency) amends
its regulations to implement a statutory requirement to certify Women-
Owned Small Business Concerns (WOSBs) and Economically Disadvantaged
Women-Owned Small Business Concerns (EDWOSBs) participating in the
Procurement Program for Women-Owned Small Business Concerns (the
Program). The certification requirement applies only to those
businesses wishing to compete for set-aside or sole source contracts
under the Program, and to those seeking to be awarded multiple award
contracts for pools reserved for WOSBs and EDWOSBs. Once this rule is
effective, WOSBs and EDWOSBs that are not certified will not be
eligible for contracts under the Program. Other women-owned small
business concerns that do not participate in the Program may continue
to self-certify their status, receive contract awards outside the
Program, and count toward an agency's goal for awards to WOSBs. For
those purposes, contracting officers would be able to accept self-
certifications without requiring them to verify any documentation. In
this rule, SBA implements the statutory mandate to provide
certification, to accept certification from certain identified
government entities, and to allow certification by SBA-approved third-
party certifiers. As part of the changes necessary to implement a
certification program, this final rule amends SBA's regulations with
regard to continuing eligibility and program examinations. This rule
also adjusts the economic disadvantage thresholds for determining
whether an individual qualifies as economically disadvantaged. The new
thresholds will be used for assessing the economic disadvantage of
applicants to the 8(a) Business Development (BD) Program, as well as
applicants seeking EDWOSB status.
DATES: This rule is effective on July 15, 2020, except for the
amendments to Sec. Sec. 127.300, 127.304, 127.305, the addition of
Sec. 127.351, and the amendments to Sec. Sec. 127.400, 127.401,
127.403, 127.405, 127.504, 127.505, 127.603, and 127.604, which are
effective on October 15, 2020. The addition of Sec. 127.355 is delayed
indefinitely and we will publish a document in the Federal Register
announcing the effective date.
FOR FURTHER INFORMATION CONTACT: Nikki Burley, U.S. Small Business
Administration, Office of Policy, Planning and Liaison, 409 Third
Street SW, Washington, DC 20416; (202) 205-6459; sba.gov">[email protected]sba.gov.
SUPPLEMENTARY INFORMATION: As set forth in section 8(m) of the Small
Business Act, 15 U.S.C. 637(m), the Program authorizes Federal
contracting officers to restrict competition to eligible WOSBs or
EDWOSBs for Federal contracts in certain industries. Section 825 of the
National Defense Authorization Act for Fiscal Year 2015, Public Law
113-291, 128 Stat. 3292 (December 19, 2014) (2015 NDAA), amended the
Small Business Act to grant contracting officers the authority to award
sole source awards to WOSBs and EDWOSBs. In addition, section 825 of
the 2015 NDAA amended the Small Business Act to create a requirement
that a concern be certified as a WOSB or EDWOSB by a Federal agency, a
State government, SBA, or a national certifying entity approved by SBA,
in order to be awarded a set aside or sole source contract under the
authority of section 8(m) of the Small Business Act. 15 U.S.C.
637(m)(2)(E). SBA believes that certification is also required where an
agency establishes a pool of WOSBs or EDWOSBs on a multiple award
contract and intends to set-aside or reserve one or more orders for
WOSBs or EDWOSBs.
On September 14, 2015, SBA published in the Federal Register a
final rule to implement the sole source authority for WOSBs and
EDWOSBs. 80 FR 55019 (effective October 14, 2015). SBA did not address
the certification portion of the 2015 NDAA in that final rule because
its implementation could not be accomplished by merely incorporating
the statutory language into the regulations and would have delayed the
implementation of the sole source authority. SBA notified the public
that because it did not want to delay the implementation of the WOSB
sole source authority, it would implement the certification requirement
through a separate rulemaking.
As part of the process to draft the regulations governing the WOSB/
EDWOSB certification program, SBA published an Advance Notice of
Proposed Rulemaking in the Federal Register on December 18, 2015 (80 FR
78984) and a proposed rule in the Federal Register on May 14, 2019 (84
FR 21256). The proposed rule solicited public comments to assist SBA in
drafting a final rule to implement a WOSB/EDWOSB certification program.
SBA received 898 comments from 307 commenters in response to the
proposed rule (Regulations.Gov Docket #SBA-2019-0003). SBA has reviewed
all input from interested stakeholders while drafting this rule.
The proposed rule also revised Sec. 124.104(c) to make the
economic disadvantage requirements for the 8(a) BD Program consistent
with the economic disadvantage requirements for women-owned small
businesses seeking EDWOSB status. The proposed change eliminated the
distinction in the 8(a) BD Program for initial entry into and continued
eligibility for the program.
Economic Disadvantage
Currently, the economic disadvantage criteria for EDWOSBs is
$750,000, which is the same as the continuing eligibility threshold for
the 8(a) BD program, but higher than the $250,000 initial eligibility
threshold for that program. A concern applying for EDWOSB and 8(a) BD
status simultaneously could thus be found economically disadvantaged
for EDWOSB purposes, but not economically disadvantaged for the 8(a) BD
Program. This result would introduce unnecessary confusion and
uncertainty into the application and certification processes. To remedy
this, this final rule makes economic disadvantage consistent across
programs.
SBA commissioned a study to assist the Office of Business
Development in defining or establishing criteria for determining what
constitutes ``economic disadvantage'' for purposes of firms applying to
the 8(a) BD program. The study concluded that the available data
support an economic disadvantage threshold between $375,000 and $1.2
million. This range reflects the complexity of establishing a threshold
that considers the ability of disadvantaged business owners to compete
in the free enterprise system, as well as those individuals' access to
credit and capital. That inherent complexity is evident in the varied
economic disadvantage thresholds established by other Federal and state
programs. For example, the Disadvantaged Business Enterprise Program
(DBE), administered by agencies authorized by the U.S. Department of
Transportation (DOT), uses a $1.32 million economic disadvantage
threshold. States with similar programs for ``minority and
[[Page 27651]]
women business enterprises'' have economic disadvantage thresholds up
to $1.6 million. The study commissioned by SBA did not come to a
definitive conclusion on which threshold the Agency should use. One
suggestion was to use a $1.1 million ``unadjusted'' (home and business
equity included) personal net worth standard, which would be equal to a
$375,000 ``adjusted'' (home and business equity excluded) standard. The
study did not, however, consider differences in economic disadvantage
between applying to the 8(a) BD program and continuing in the program
once admitted, nor did it consider economic disadvantage in the context
of EDWOSB eligibility. Because SBA believes that it is important to
have the same economic disadvantage criteria for the 8(a) BD program as
for the EDWOSB program to avoid confusion and inconsistency between the
programs, SBA considered applying a $375,000 net worth standard to both
the 8(a) BD and EDWOSB programs. SBA requested comments on whether the
$375,000 net worth standard or the $750,000 net worth standard should
be used for the EDWOSB and 8(a) BD and Programs.
In response, SBA received 146 comments that supported $750,000 as
the appropriate economic disadvantage threshold. Of these, a
substantial number explicitly expressed support for changing the
regulations to make the economic disadvantage threshold consistent
between programs, while the rest expressed support more broadly for
maintaining EDWOSB's economic disadvantage threshold of $750,000. SBA
did not receive any comments supporting a common $375,000 net worth
standard for the EDWOSB and 8(a) BD programs. SBA also received four
comments that offered alternative methods to establish an economic
threshold. One argued that the standard should be variable and based on
inflation, one thought the standard should be locality-based, and two
suggested a tiered system. Three additional commenters opposed an
economic disadvantage threshold of $750,000. One recommended an
economic disadvantage threshold of $1 million, one opposed having an
economic disadvantage threshold at all, and the third merely thought
that $750,000 was inappropriate. SBA believes that varying the economic
disadvantage threshold depending on fluid external factors such as
inflation, or applying different thresholds depending on locality,
would introduce too much volatility and confusion into the application
process and lead to inconsistency between programs. Increasing the
economic disadvantage threshold to $1 million or abolishing economic
disadvantage thresholds altogether were not contemplated in the
proposed rule and are not under consideration now. Based on the study's
conclusion that SBA could set an economic disadvantage threshold
between $375,000 and $1.2 million, stakeholders' clear affirmation of a
$750,000 economic disadvantage threshold, and the preference for
uniform standards across programs, SBA is keeping the EDWOSB economic
disadvantage threshold and adjusting the 8(a) BD economic disadvantage
thresholds accordingly.
SBA also received comments regarding how economic disadvantage
would be assessed going forward. Specifically, commenters asked about
whether there is any difference between the EDWOSB and the 8(a) BD
regulations governing how retirement accounts are calculated when
determining an economically disadvantaged individual's net worth, and
if the change in the economic disadvantage threshold will affect that
calculation. In light of this feedback, SBA has revised Sec.
124.104(c)(2)(ii) and Sec. 127.203(b)(3) in the final rule to note
that retirement accounts will now be excluded from calculations of an
economically disadvantaged individual's net worth, irrespective of the
individual's age. SBA has previously contemplated this change,
believing that it accords with the valuable public policy of
incentivizing, rather than punishing, saving for retirement. It also
expands the pool of potential EDWOSB and 8(a) BD participants because
retirement-age small business owners will no longer be ineligible
solely due to their retirement savings. Changing the EDWOSB and 8(a) BD
net worth provisions now, in conjunction with the changes to the
economic disadvantage threshold for both programs, furthers SBA's long-
term aim of promoting regulatory consistency and continuity.
Women-Owned Small Business Certification Program
The 2015 NDAA amended the Small Business Act to require that
concerns participating in the Program must be certified by SBA, a
Federal agency, a state government, or an approved national certifying
entity. In response, SBA proposed amending the regulations in part 127
to remove references to self-certification with respect to the award of
WOSB/EDWOSB contracts. The certification requirement applies only to
participants wishing to compete for set-aside or sole source contracts
under the Program. Once this rule is effective, WOSBs and EDWOSBs that
are not certified will not be eligible for contracts under the Program.
Other women-owned small business concerns that do not participate in
the Program may continue to self-certify their status, receive contract
awards outside the Program, and count toward an agency's goal for
awards to WOSBs. The final rule adds a new Sec. 127.200(c) to make
clear that a concern may continue to self-certify as a WOSB for goaling
purposes. Revised Sec. 127.300 establishes options for small business
concerns seeking certification as WOSBs or EDWOSBs: Applying via SBA's
free online application, submitting evidence of certification from
another approved Government entity, or submitting evidence of
certification from an approved third-party certifier.
SBA received over 400 comments on the proposed revisions to Sec.
127.300(a) and (b), which detail the options for certification. Of
these, 170 commenters expressed a general sentiment that there should
be ``a fair and unified set of requirements and application processes
for all participants'' and ``the process of submitting an application .
. . should be fully uniform and completed at certify.sba.gov.'' An
additional sixteen commenters explicitly supported the proposed
processes, and two commenters opposed them.
SBA shares the view that certification requirements must be fair
and consistently applied. To ensure this consistency, SBA is the final
authority for all of the certification processes. Congress' intent in
allowing SBA to delegate certification to other authorized parties was
to ensure that the public has access to the broadest range of
certification options while at the same time ensuring that consistent
Program eligibility requirements are met. There will naturally be
differences between each of the processes because they will be
administered by different entities, but the foundation for all the
processes is SBA's Program eligibility requirements. Each applicant
will be providing evidence to SBA that it meets these requirements; the
application processes outlined in Sec. Sec. 127.300-127.305 differ
primarily in what kind of documentation demonstrates eligibility.
Based on the comments received, SBA understands that many
stakeholders harbor reservations about the fairness and uniformity of
the application process. As such, the final rule will clarify in
subpart C, ``Certification of WOSB or EDWOSB Status,'' that there is no
distinction between ``Certification by SBA'' and ``Certification by
Third Party,'' as written in the proposed rule.
[[Page 27652]]
Instead, the regulations will refer to all the provisions covering the
different application processes in Sec. Sec. 127.300-127.305 as
``Certification.'' SBA also removed references to SBA in the headings
for Sec. Sec. 127.301-127.305 so that concerns understand that the
regulations apply to all applicants, regardless of how they opt to seek
certification. The rules for third-party certifiers, covered
extensively in new Sec. Sec. 127.350-127.356, will be labeled as
``Requirements for Third-Party Certifiers.'' SBA believes this will
reaffirm that ``Certification'' is a unitary process, that all concerns
must meet the same eligibility requirements, and that the only
difference is in how they can present evidence that they have met those
requirements.
SBA received four comments regarding the proposed change to Sec.
127.300(a)(1), which specifies that concerns can apply for WOSB
certification from SBA. Three commenters were supportive. The fourth
opposed the provision because it believes that concerns should continue
to have the option to self-certify. Because the statutory language
mandates the methods for certification, SBA has no authority to retain
self-certification as an option for concerns seeking to compete for
WOSB and EDWOSB set-aside procurements (as noted above, concerns can
still self-certify for non-WOSB and non-EDWOSB set-aside procurements,
still self-identify as women-owned small businesses, and awards to
firms self-identifying as WOSBs may be counted by a procuring agency
towards its WOSB goal). SBA adopts the proposed language as final.
SBA received 12 comments that specifically touched on Sec.
127.300(a)(2), which outlines the options for non-SBA, government-
entity certification options. The proposed rule stated that a concern
could submit evidence that it was a certified participant of the 8(a)
BD Program or the DBE Program, or that it was certified as a Veteran-
Owned or Service-Disabled Veteran-Owned Small Business by the U.S.
Department of Veterans Affairs (VA) Center for Verification and
Evaluation (CVE). The Supplementary Information in the proposed rule
also contemplated potentially accepting evidence that a concern
participated in SBA's HUBZone Program.
The final rule removes reference to the 8(a) BD Program in Sec.
127.300(a)(2) and instead includes it only in Sec. 127.300(b)(2),
which details EDWOSB certification. Every current 8(a) BD participant
that is 51% owned and controlled by a woman or women is an EDWOSB
because economic disadvantage is a component of 8(a) BD eligibility,
and all EDWOSBs are WOSBs. As such, including this information in the
EDWOSB certification sub-section covers both EDWOSB and WOSB
participation.
The final rule also omits reference to the HUBZone Program in that
section. While evidence of HUBZone participation would indicate a
concern is small, it would not provide any of the other information to
demonstrate WOSB/EDWOSB eligibility. Specifically, a firm need not
demonstrate that it is owned and controlled by a specific individual in
order to be eligible for the HUBZone program. Thus, such a
certification does not include a finding by SBA of any ownership and
control. The purpose of Sec. 127.300(a)(2) and (b)(2) is to expand the
options for concerns to demonstrate Program eligibility as efficiently
as possible. A certification option that necessitates submitting
documentation of all but one of the elements of Program eligibility
does not meaningfully effectuate this purpose. Similarly, the final
rule removes DBE certification from the list of options. After
discussions with stakeholders, SBA concluded that evidence of DBE
certification would not provide the requisite level of certainty that a
concern was eligible for the Program. While the DOT DBE regulations
refer back to SBA's size regulations at 13 CFR part 121, concerns would
still need to provide documentation to confirm they met SBA's distinct
requirements for ownership and control by one or more women, or that
they met SBA's economic disadvantage criteria if they were seeking
EDWOSB certification. As with HUBZone Program participation, evidence
of DBE participation would not help small businesses demonstrate
eligibility as efficiently and easily as possible while still ensuring
the requirements are met. In contrast, the governing regulations for
the CVE program (38 CFR 74.2-74.4) refer to SBA's standards for size,
socioeconomic status, ownership, and control. Documentation of CVE
certification, along with confirmation that the concern was owned and
controlled by one or more women, would demonstrate that a concern had
met all the eligibility requirements for the Program. To help concerns
better understand how to demonstrate their Program eligibility with
their CVE certification, the final rule details the application process
in Sec. 127.303.
SBA received 188 comments on Sec. 127.300(a)(3), which provides
that a concern may submit evidence that it has been certified as an
eligible Program participant by a Third-Party Certifier. Of these, 170
stated generally that SBA should have oversight of third-party
certifiers and implement standards for certifiers. SBA agrees with
these commenters and Sec. Sec. 127.350-127.356, discussed below,
detail requirements for third-party certifiers. These commenters also
requested that SBA update SAM.gov to reflect that they are certified,
including third-party certified. SBA does not oversee SAM.gov but will
maintain its own internal records that will reflect up-to-date
information and that information will be relayed to the General
Services Administration, the agency that maintains SAM.gov.
Fifteen commenters opposed proposed Sec. 127.300(a)(3) for a wide
variety of reasons. One commenter stated that there should not be
``required'' third-party certification. SBA believes that this
commenter misinterpreted the rule. As outlined in the rule, there are
several different certification options, and concerns are not required
to choose third-party certification. Which way to seek WOSB or EDWOSB
certification is a business decision up to discretion of each firm.
Three commenters said all certification should be handled by SBA,
rather than by third-party certifiers that may have differing
standards. In response, SBA notes that Congress specifically enumerated
several different certification options in the statutory language,
making clear that SBA should not be the sole entity processing
certification applications. However, SBA retains responsibility for
overseeing the Program eligibility requirements, and these requirements
are the standards by which all applicants will be assessed. Certifiers
will not be able to impose their own application standards for Program
applicants.
Six commenters opposed third-party certification because of the
associated fees, which commenters perceived as prohibitively expensive
for many small businesses. Both Congress and SBA understand the
importance of ensuring certification is available to every eligible
concern. As such, Congress authorized several free certification
options, and SBA will not distinguish between concerns based on how
they were certified. No firm will be required to pay a fee for
certification. Again, it is up to each firm seeking WOSB or EDWOSB
certification to determine which method of certification makes sense
for it. One commenter opposed third-party certification because of the
``frequency of certification'' associated with third-party certifiers.
Currently, third-party-
[[Page 27653]]
certified concerns are recertified annually. Under the new regulations,
all concerns, whether certified directly by SBA or otherwise, will be
required to attest to SBA annually that they remain eligible for the
Program and undergo a full program examination every three years. As
such, third-party-certified concerns will not face a greater
administrative burden than concerns certified via other processes. SBA
updated subpart D to discuss the requirements for recertification, and
these changes are discussed in greater detail below.
SBA received six comments on Sec. 127.300(b), which discusses how
SBA will certify concerns as EDWOSBs. One commenter supported having an
array of certification options. Two others requested clarification
about how SBA will accept certification from other government entities.
SBA has provided additional detail about what applicants must submit in
order to demonstrate certification via non-SBA government entity
certifiers in Sec. 127.303.
SBA received seven comments related to Sec. 127.300(b)(2), which
states that a woman- or women-owned business that is a certified 8(a)
BD participant qualifies as an EDWOSB. One commenter said that EDWOSB
should be a ``sub-set'' of the 8(a) BD Program. Another commenter said
that EDWOSB certification should automatically confer 8(a) BD
certification. There is significant overlap between the eligibility
requirements of the two programs, but they are not identical. The most
important difference is that a concern can participate in the WOSB
Program for as long as it is eligible, whereas participation in the
8(a) BD Program is limited to nine years. Further, the 8(a) BD Program
has unique eligibility requirements that do not apply to the WOSB
Program. In particular, the 8(a) BD Program requires the principal of a
business to be socially disadvantaged in order to qualify for
participation, and women as a group are not presumed to be socially
disadvantaged. An individual seeking to qualify as socially
disadvantaged based on her status as a woman must demonstrate that she
personally has suffered discrimination or bias that has adversely
affected her entry into or advancement in the business world.
Determining whether an individual woman can demonstrate social
disadvantage requires fact-specific analysis and cannot be
automatically presumed. Thus, EDWOSB qualification does not
automatically confer 8(a) BD qualification, even though the converse is
true. In addition, the 8(a) BD certification process requires an
applicant to demonstrate that it possesses the necessary ``potential
for success,'' as defined in the 8(a) BD regulations, and WOSB
certification has no corresponding requirement.
Two commenters said that SBA should adjust goaling requirements so
that more 8(a) BD awards are apportioned for WOSBs/EDWOSBs. Goaling
thresholds are set by Congress and SBA establishes them in a way that
seeks to ensure that the statutory goal is met Government-wide.
Although SBA has some discretion in the setting of a particular
agency's goals, SBA cannot establish goals that do not meet the overall
Government-wide statutory goal. SBA is always seeking to enhance small
business participation in Federal contracting and will continue to do
so. One commenter suggested that the Program should mirror the outreach
and public education efforts of the 8(a) BD Program because the
contracting community is not aware of or familiar with WOSB and EDWOSB
opportunities. SBA hopes that the increased public outreach during the
rulemaking process has helped ameliorate this perceived lack of
awareness and that the certification application process will further
familiarize concerns with Program benefits and responsibilities. SBA
adopts the proposed language as final.
One commenter opposed Sec. 127.300(b)(3), specifically asking why
veteran-owned small business that are owned and controlled by women
could not be automatically certified as WOSBs, but rather had to submit
additional information to SBA to be so designated. CVE eligibility is
not based on gender and thus evidence of CVE certification would not
automatically communicate that an applicant had necessarily satisfied
all Program requirements, including 51% ownership and control by a
woman or women. A CVE certification demonstrates that a firm is owned
and controlled by one or more veterans or service-disabled veterans,
but not necessarily by women veterans or women service-disabled
veterans. The process for CVE-certified small businesses will be to
demonstrate that the individuals certified to own and control the
business concern are women and, if they seek EDWOSB status, that they
are economically disadvantaged. CVE certification alone would also not
demonstrate an applicant's economic disadvantage, which is a necessary
component of EDWOSB participation. SBA adopts the proposed language as
final.
SBA did not receive any comments on proposed Sec. 127.301, which
provides guidance on when concerns should apply for Program
certification. As such, SBA adopts it as final in this rule. SBA did,
however, receive comments regarding who will be deemed certified as a
WOSB or EDWOSB upon this rule becoming effective and, therefore, be
immediately eligible to be awarded set-aside and sole source WOSB and
EDWOSB contracts. SBA agrees that this is an important issue that
should be clarified.
Pursuant to the underlying statutory authority, a concern must be
certified as a WOSB or EDWOSB in order to be awarded a WOSB or EDWOSB
set-aside or sole-source contract. The change in the regulations
implementing that statutory provision does not affect contracts
previously awarded through the Program, so a concern that was
previously awarded a WOSB or EDWOSB contract may continue to perform
that contract and the procuring agency may continue to count the
contract towards its WOSB goal. Once this rule is effective, however, a
concern performing on a long-term WOSB or EDWOSB contract (i.e., one in
excess of five years) must represent that it is a certified WOSB or
EDWOSB in order for the award to continue to count towards an agency's
WOSB goal. For new WOSB and EDWOSB set-aside contracts, a concern must
be able to demonstrate that it has applied for certification before the
date it submitted a bid, and that it has not previously sought and been
denied certification. For new WOSB or EDWOSB sole-source contracts, a
concern must already be certified at the time it seeks to obtain the
sole-source contract. In both situations, the concern must be certified
prior to award. Concerns that are owned and controlled by one or more
women and certified through the 8(a) BD Program, concerns that are
third-party certified, and concerns that were subject to a program
examination or status protest and received a concomitant positive
decision in the three years prior to the rule's effective date will all
be considered certified the day the rule is effective. SBA trusts this
information will help concerns plan for when and how to apply for
certification so that they are ready to compete for new WOSB and EDWOSB
set-aside contracts and able to continue working on existing set-aside
contracts without interruption.
SBA received one comment on Sec. 127.302, which provides that
concerns will apply for certification on certify.sba.gov or any
successor system. The commenter opposed having an electronic-only
application process. SBA believes that an electronic process is the
most efficient and timely way to
[[Page 27654]]
process the number of applications SBA is expecting once the rule is
effective. In today's business environment, SBA believes that every
business concern seeking to contract with the Federal Government must
have access to a computer and that this is the easiest and best way to
transmit and process applications. SBA adopts the proposed language and
will remove ``from SBA'' from the heading in the final rule.
SBA did not receive any comments on Sec. 127.303, which outlines
what documentation concerns must submit for certification. Based on
questions and feedback received on related sections, SBA has expanded
Sec. 127.303 in the final rule. This section now refers to the
documentation applicants must submit for each of the certification
options detailed in Sec. 127.300(a) and (b). This additional
information is intended to help applicants better prepare their
applications and will hopefully facilitate a more efficient process.
SBA received two comments on Sec. 127.304, which discusses how SBA
will process applications. Both commenters opposed the 90-day timeframe
for making determinations after receipt of a completed application.
Neither commenter offered an alternative timeframe that would better
suit the needs of the small business community. This 90-day processing
time aligns with that of the 8(a) BD and HUBZone Programs, and SBA
believes that is appropriate for the WOSB Programs as well. As such,
SBA adopts the proposed language as final.
SBA received eight comments on Sec. Sec. 127.305 and 127.306,
which dealt with how and when applicants could reapply or seek
recertification after being declined or decertified. Five commenters
opposed the provisions, two were supportive, and one sought
clarification. The commenters in opposition vigorously disagreed with
the proposed one-year ``cooling-off'' period, during which time a
concern could not reapply for Program certification. One commenter
noted that not being able to appeal or rectify a negative certification
decision until a year has passed was ``the worst of both worlds.'' In
response to the comments, SBA has amended these provisions. The final
rule removes proposed Sec. 127.305 (reconsideration) and moves the
language in proposed Sec. 127.306 to that section. The final rule also
amends the language in proposed Sec. 127.306 (now Sec. 127.305) to
align with the HUBZone Program regulations, which do not have a
reconsideration or appeal process and instead allow concerns to remedy
their eligibility deficits and reapply after 90 days. In addition to
responding to industry concerns, mirroring the HUBZone Program
regulations has the added benefit of furthering SBA's aim of promoting
consistency between its programs.
Requirements for Third-Party Certifiers
SBA proposed to amend subpart C of part 127 to establish procedures
for Third-Party Certification in the context of a required
certification program. In Sec. 127.350, SBA proposed that all Third-
Party Certifiers must be approved by SBA. Under this rule, an approved
third-party certifier need not be a non-profit entity. SBA also
clarified that a third-party certifier is a non-governmental entity, in
contrast to the governmental certifications (8(a) BD and VA CVE) that
SBA will accept for WOSB/EDWOSB certification purposes. The proposed
rule also stipulated what concerns must do to be certified by a third-
party certifier.
SBA received five comments on revised Sec. Sec. 127.350-127.356.
One commenter said that new third-party certifiers must be
``credible.'' SBA does not have concerns about the credibility of
third-party certifiers. The statutory language stipulates that only
SBA-approved third-party certifiers are authorized to certify concerns.
There are currently four SBA-approved third-party certifiers. In
advance of effectuating the final rule, SBA has focused on providing
clarity and guidance on the certification process as a whole and not on
third-party certifiers specifically, but foresees expanding the list of
authorized third-party certifiers in the future. All third-party
certifiers participating in the Program are required to abide by both
the regulations in part 127, and their agreements with SBA. SBA
communicates regularly with third-party certifiers, collects monthly
data about the WOSBs and EDWOSBs they work with, and periodically
reviews their application processes. This is all intended to ensure
that SBA's eligibility requirements are consistently applied. As such,
SBA feels confident the third-party certifiers are, and will continue
to be, credible partners in the certification process.
Three other commenters sought clarification on different provisions
in this section. In response to Sec. 127.353(b), one commenter
suggested SBA provide language that third-party certifiers can use to
advise applicants that SBA offers a free certification option. SBA
agrees that providing that language would be helpful, but including it
in the regulations would preclude the Agency from refining the language
in response to feedback from applicants once the certification process
is underway. SBA will plan to communicate with third-party certifiers
in the coming months on what the advisory language should look like.
Similarly, another commenter requested additional detail about what
information SBA will require in reports from third-party certifiers
under Sec. 127.355(a). The proposed language was drafted deliberately
to allow for SBA to make determinations about what third-party
certifiers will have to submit regularly once the certification program
is underway and it becomes clear what type of information would be
helpful. A third commenter asked for clarification on the timeline for
periodic compliance reviews, which SBA believes is adequately spelled
out in Sec. 127.355(b)(1).
Finally, several commenters opposed this section on the grounds
that SBA should not allow for-profit entities to certify concerns, that
there will be too many discrepancies between third-party certification
and certification via other entities, and that ``SBA's failure to act
appropriately in the budgetary process'' deprived the Program of the
funds necessary to manage a certification process. On the first point,
the authorizing legislation does not limit third-party certifier
participation to entities that are non-profit, so going forward, SBA
will not require third-party certifiers to maintain non-profit status.
In response to the second concern, SBA reiterates that all certifying
entities will assess applicants against the same eligibility
requirements. The third point, which expressed concern that the
certification program was not appropriately funded, was echoed by many
commenters. All of these commenters used identical language to urge SBA
to, ``act immediately to move budgetary (taxpayer) funds from programs
that have not been sanctioned by Congress towards the full and
effective implementation of this nearly twenty-year-old
Congressionally-mandated program and advise Congress of the full budget
needed so that SBA may receive the necessary funding to assure this
program is well run.'' SBA appreciates these commenters' sense of
urgency about the implementation of the certification program and
understands commenters' frustrations. SBA notes, however, that the
requirement that a concern must be certified as a WOSB or EDWOSB in
order to be awarded a set-aside or sole source contract under the
Program was enacted as part of 2015 NDAA. Further, the Agency's ability
to spend funds that ``have not been sanctioned by Congress'' is
proscribed by law, and its ability to shift money
[[Page 27655]]
between unrelated programs is limited. SBA believes Congress is well-
apprised of the scope and breadth of the certification program. The
plan continues to be to stand up Program certification by leveraging
existing resources.
SBA did not receive specific comments on Sec. 127.354, but in
light of the broader concerns expressed about discrepancies between
third-party certification and certification by a government entity, the
final rule revises the heading of this paragraph to emphasize that SBA
will require third-party certifiers to follow detailed, uniform
guidance to demonstrate capability to certify concerns.
Proposed Sec. 127.357(a) permitted a concern found to be
ineligible by a third-party certifier to request reconsideration and a
redetermination. Proposed Sec. 127.357(c) prohibited a declined
concern from reapplying for WOSB or EDWOSB certification by SBA or a
third-party certifier for a one-year period, and proposed Sec.
127.357(d) prohibited concerns from reapplying through another third-
party certifier during that time. In light of the changes to Sec.
127.305, which shortens the reapplication timeframe from one year to 90
days, Sec. 127.357 is omitted in the final rule. As discussed, SBA's
aim is to ensure consistency and uniformity between the certification
options, both as a policy matter and in response to the 168 commenters
who stressed the importance of, ``a fair and unified set of
requirements and application processes for all participants.'' Allowing
concerns that opt for third-party certification to seek reconsideration
if they are declined would privilege them over concerns that apply for
certification from SBA or another government entity, because the latter
groups will not have a reconsideration option. Removing this proposed
section better facilitates alignment between the certification options
and is responsive to stakeholders' concerns.
SBA received eight comments on proposed Sec. 127.400, which
requires that concerns recertify eligibility every three years. Four
commenters supported recertification every three years and four
opposed. Of the four commenters opposed, three suggested annual
recertification because that is what SBA's other programs require. SBA
believes that a helpful comparison is to look at the requirements of
the HUBZone Program. Per the HUBZone Program regulations at Sec.
126.500, SBA conducts a program examination and recertification of each
HUBZone concern every three years, and concerns are required to
represent annually that they continue to meet all program criteria. In
contrast, proposed Sec. 127.400 would only have required WOSBs and
EDWOSBs to recertify every three years. In an effort to more closely
align the WOSB Program regulations with other SBA regulations, and in
response to the commenters concerned that recertification every three
years is insufficient, the final rule revises Sec. 127.400 to require
concerns to annually attest to SBA that they meet the Program
requirements, and undergo a full program examination and
recertification every three years. SBA added two examples to this
section to help illustrate the recertification requirements detailed in
the final rule.
Proposed Sec. 127.401 provided that all certified concerns have an
affirmative duty to notify SBA of any material changes in writing. SBA
did not receive any comments on this section and adopts the proposed
language as final.
Proposed Sec. 127.402 addressed the failure of a concern to
recertify every three years or to notify SBA of a material change. SBA
did not receive any comments on this section. In light of the changes
to the rest of this subpart, Sec. 127.402 is omitted in the final rule
and the subsequent sections have been renumbered. The information
detailed in proposed Sec. 127.402 is included in Sec. 127.405
(formerly Sec. 127.406) in the final rule, which discusses the
consequences if SBA is unable to determine a concern's eligibility or
determines that a concern is no longer eligible for the Program.
Proposed Sec. 127.403 detailed how SBA would conduct program
examinations and specifically how program examinations would change
after the certification process is implemented. SBA did not receive any
comments on this section. To align with the changes discussed above,
SBA has renumbered sections Sec. Sec. 127.403-127.406. Aside from
renumbering, SBA adopts as final the language in proposed Sec. 127.403
(now Sec. 127.402).
Proposed Sec. 127.404 detailed when SBA was authorized to conduct
program examinations. SBA did not receive any comments on this section.
SBA revised this section in the final rule to reflect that concerns
will undergo program examinations every three years in accordance with
the recertification process set forth in Sec. 127.400. SBA also
renumbered this section to Sec. 127.403 in the final rule. SBA adopts
as final the revised and renumbered paragraph.
Proposed Sec. 127.405 authorized SBA to request additional
information, in addition to material already submitted, when conducting
a program examination. SBA did not receive any comments on this
section. SBA renumbered this section to Sec. 127.404 in the final
rule. SBA adopts as final the proposed language and renumbered
paragraph.
Proposed Sec. 127.406 authorized SBA to decertify concerns that
fail to provide or maintain the required certifications or documents.
SBA did not receive any comments on this section. This section has been
renumbered to Sec. 127.405 in the final rule. SBA also revised this
provision in the final rule to more clearly lay out the causes for
which SBA can propose decertification, including a failure to follow
the recertification processes in Sec. 127.400. Paragraph (a) describes
the steps SBA will take to propose decertification and how a concern
must respond to a notice of proposed decertification. Paragraph (b)
states that SBA's decision on decertification is final and cannot be
appealed, and paragraph (c) permits concerns to reapply to the Program
after decertification. SBA adopts as final the revised and renumbered
paragraph.
The final rule revises Sec. 127.503(h)(2) to confirm that if a
concern cannot recertify as a WOSB or EDWOSB by the end of the fifth
year of a long-term contract, the procuring agency can no longer count
awards made pursuant to that contract as WOSB/EDWOSB awards. SBA's
rules have long required recertification of size for contracts with a
duration of more than five years. If a concern is unable to recertify
its size, the contracting officer could no longer consider awards to
that concern towards the procuring agency's small business goals. The
Agency's intent in drafting Sec. 127.503(h)(2), and its corresponding
paragraphs in Sec. Sec. 124.1015(f), 125.18(f), and 126.601(i), was to
mandate that contracting officers must request that a concern recertify
its status on long-term contracts, including Multiple Award Contracts.
If a concern were unable to recertify its status as a WOSB, for
example, the contracting officer could no longer consider awards to
that concern towards the procuring agency's WOSB goals. Procuring
agencies understood this was SBA's intent in drafting Sec. Sec.
124.1015, 125.18(e), 126.601(h), and 127.503(h)(2), and have read them
accordingly. The revision to these paragraphs in the final rule
confirms that agencies correctly deduced SBA's intent and brings the
regulatory text into alignment with already-existing practice, which
SBA believes will provide helpful clarity to small businesses and
contracting officers.
SBA proposed to remove Sec. 127.505, as the pertinent information
in this provision was already detailed in
[[Page 27656]]
Sec. 121.406(b). SBA did not receive any comments on this proposed
change and finalizes the deletion in the final rule.
SBA proposed to revise Sec. 127.604(f)(4) to clarify that concerns
found to be ineligible would need to reapply, rather than request a
reexamination. SBA did not receive any comments on this change and
adopts the proposed language as final, except for updating a citation
to the appropriate regulation for reapplication procedures (formerly at
Sec. 127.306 and now at Sec. 127.305).
Compliance With Executive Orders 12866, 13563, 12988, 13132, and 13771,
the Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory
Flexibility Act (5 U.S.C. 601-612)
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
rule is a significant regulatory action for the purposes of Executive
Order 12866. Accordingly, the next section contains SBA's Regulatory
Impact Analysis. This is not a major rule, however, under the
Congressional Review Act.
Regulatory Impact Analysis
1. Is there a need for the regulatory action?
The U.S. Small Business Administration (SBA) is required by statute
to administer the WOSB Federal Contract Program (WOSB Program). The
Small Business Act (Act) sets forth the certification criteria for the
WOSB Program. Specifically, the Act states that a WOSB or EDWOSB must,
``be certified by a Federal agency, a State government, the
Administrator, or a national certifying entity approved by the SBA
Administrator, as a small business concern owned and controlled by
women.'' 15 U.S.C. 637(m)(2)(E).
The Federal Acquisition Regulation (FAR) and SBA regulations
require that in order to be certified as a WOSB or EDWOSB a small
business concern must provide documents supporting its WOSB or EDWOSB
status to SBA. See 13 CFR 127.300 and FAR 19.1503(b)(3). The specific
documents concerns are required to provide are outlined in Sec.
127.303. The Act also states that the SBA is authorized to conduct
eligibility examinations of any certified WOSB or EDWOSB, and to handle
protests and appeals related to such certifications. 15 U.S.C.
637(m)(5)(A) and (5)(B).
Under the current system, WOSBs and EDWOSBs may be certified by
third-party certifiers, or they may essentially self-certify and upload
the required documents to sba.certify.gov. In order to award a WOSB
set-aside or sole source contract, the contracting officer must
document that the contracting officer reviewed the concern's
certifications and documentation. 13 CFR 127.503(g); FAR 19.1503(b)(3).
The lack of required certification, coupled with the requirement that
the contracting officer must verify that documents have been uploaded,
may contribute to reluctance by procuring agencies to use the program,
resulting in the failure to meet the statutory goal of 5% of all prime
contract dollars being awarded to WOSBs. In FY 2018, the government-
wide WOSB goal of 5% was not met with actual performance at 4.75%
($22.9B). The government has only met the goal once (FY 2015). While
the amount of dollars awarded to WOSBs under the set aside program is
trending up, they still account for less than 0.016% of dollars awarded
to WOSBs. A certification could help entice agencies to set aside more
contracts for WOSBs, so that the government can meet the statutory 5%
goal.
2. What are the potential benefits and costs of this regulatory action?
The benefit of this regulation is a significant improvement in the
confidence of contracting officers to make Federal contract awards to
eligible concerns. Under the existing system, the burden of eligibility
compliance is placed upon the awarding contracting officer. Contracting
officers must review the documentation of the apparent successful
offeror on a WOSB or EDWOSB contract. Under this rule, the burden is
placed upon SBA and/or third-party certifiers. All that a contracting
officer needs to do is to verify that the concern is in fact a
certified WOSB or EDWOSB in SAM. A contracting officer would not have
to look at any documentation provided by a concern or prepare any
internal memorandum memorializing any review. This will encourage more
contracting officers to set aside opportunities for WOSB Program
participants as the validation process will be controlled by SBA in
both SAM and DSBS. Increased procurement awards to WOSB concerns can
further close a gap of under-representation of women in industries
where in the aggregate WOSB represent 12 percent of all sales in
contrast with male-owned businesses that represent 79% of all sales
(per SBA Office of Advocacy Issue Brief Number 13, dated May 31, 2017
https://www.sba.gov/sites/default/files/advocacy/Womens-Business-Ownership-in-the-US.pdf).
Another benefit of this rule is to reduce the cost associated with
the time required for completing WOSB certification by replacing the
WOSB Program Repository with Certify.SBA.gov (``Certify'') in the
regulation. It is also anticipated that the WOSB certification
methodology and likely increased use of WOSB/EDWOSB set asides will
likely increase program participation levels. Under the prior WOSB
Program Repository, SBA determined that the average time required to
complete the process required by the WOSB Program Repository was two
hours, whereas the use of Certify requires only one hour. Across an
estimated 12,347 firms, the total cost savings is significant, as
discussed below. Another potential benefit is the reduction of time and
costs to WOSB firms through the reduction of program participation
costs. By successfully leveraging technology, SBA has reduced the total
cost of burden hours substantially.
Based on the calculations below, the total estimated number of
respondents (WOSBs and EDWOSBs) for this collection of information
varies depending upon the types of certification that a business
concern is seeking. For initial certification, the total estimated
number of respondents is 9,349. The total number was calculated using
the two-year average number of business concerns that have provided
information through Certify from March 2016 through February 2018. For
annual updates and new certifications, the total number is 12,347. For
examinations and protests, the total number is 130.
[[Page 27657]]
------------------------------------------------------------------------
Number of
Type of certification respondents Source
------------------------------------------------------------------------
Initial certification.......... 9,349 Average annual number
of respondents to
Certify between March
2016 and February
2018.
New certifications each year... 500 Program participation
is expected to remain
constant after initial
year of certification,
with 500 new
certifications
annually.
Annual updates to certification 11,847 Program participation
is expected to remain
constant after initial
year of certification,
with a reduction of
500 participants
annually through
attrition.
Total annual responses......... 12,347 Annual new
certifications plus
annual updates.
------------------------------------------------------------------------
Each respondent submits one response at the time of initial
certification and one at the time of annual update. Estimated burden
hours vary depending upon the type of certification that a WOSB or
EDWOSB pursues. SBA conducted a survey among a sample of entities that
assist WOSBs and EDWOSBs to provide information through Certify. The
majority of those surveyed stated that for initial certifications the
estimated time for completion is one hour per submission. For annual
updates, because of the need to submit little if any additional
information, the estimated burden is 0.5 hour per submission. For
examinations and protests, the estimated burden is 0.25, which is much
lower because firms have already provided the documentation referred to
in 13 CFR 127.303 through Certify. It is estimated that the initial
certification will involve 9,349 existing participants and 2,998 new
respondents in the first year. After the first year, initial
certifications are expected for 500 new respondents annually with an
additional 11,847 annual certifications for existing participants for a
total of 12,347 participants in each succeeding year. The participant
level is expected to remain stable at 12,347 participants annually with
500 new respondents and 500 attritions from the program annually. Based
on the number of protests and appeals received in years past, 130
respondents are expected to participate in protests and appeals. The
respondent's cost of burden hours for a five-year period and average is
provided in the following table and detailed below.
Cost of Burden Hours--5 Year Cost Estimate and Average
----------------------------------------------------------------------------------------------------------------
Initial-- Initial--new Protests and
existing 1 participants 1 Annual updates appeals .25
Year hour at hour at .5 hour at hour at Annual totals
$164.23 per $164.23 per $164.23 per $164.23 per
participant participant participant participant
----------------------------------------------------------------------------------------------------------------
Number of Program Participants
----------------------------------------------------------------------------------------------------------------
1............................... 9,349 2,998 .............. 130 12,477
2............................... .............. 500 11,847 130 12,477
3............................... .............. 500 11,847 130 12,477
4............................... .............. 500 11,847 130 12,477
5............................... .............. 500 11,847 130 12,477
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
1............................... $1,535,386 $492,362 .............. $5,337 $2,033,085
2............................... .............. 82,115 972,816 5,337 1,060,269
3............................... .............. 82,115 972,816 5,337 1,060,269
4............................... .............. 82,115 972,816 5,337 1,060,269
5............................... .............. 82,115 972,816 5,337 1,060,269
-------------------------------------------------------------------------------
5 Year Total................ .............. .............. .............. .............. 6,274,161
-------------------------------------------------------------------------------
Annual Cost Avg......... .............. .............. .............. .............. 1,254,832
----------------------------------------------------------------------------------------------------------------
Initial certification--transition of existing participants (one-
time cost):
Estimated officer's salary = $164.23/hour (based on General
Schedule 15 Step 10, Washington-Baltimore-Northern Virginia area, plus
an additional 100% to account for the cost of benefits and overhead,
which would be equivalent to a senior manager in an average small
business firm).
Total estimated burden: 9,349 x 1 hour x $164.23/hour = $1,535,386.
Initial certification--new participants (first year cost):
Estimated officer's salary = $164.23/hour (based on General
Schedule 15 Step 10, Washington-Baltimore-Northern Virginia area, plus
an additional 100% to account for the costs of benefits and overhead,
which would be equivalent to a senior manager in an average small
business firm).
Total estimated burden: 2998 x 1 hour x $164.23/hour = $492,362.
Initial certification--new participants (cost for each succeeding
year after initial year):
Estimated officer's salary = $164.23/hour (based on General
Schedule 15 Step 10, Washington-Baltimore-Northern Virginia area, plus
an additional 100% to account for the cost of benefits and overhead,
which would be equivalent to a senior manager in an average small
business firm).
Total estimated burden: 500 x 1 hour x $164.23/hour = $82,115.
Annual update:
Estimated officer's salary = $164.23/hour (based on General
Schedule 15 Step 10, Washington-Baltimore-Northern Virginia area, plus
an additional 100% to account for the cost of benefits and overhead,
which would
[[Page 27658]]
be equivalent to a senior manager in an average small business firm).
Total estimated burden: 11,847 x .5 hour x $164.23/hour = $72,816.
Examinations and Protests (each year):
Estimated officer's salary = $164.23/hour (based on General
Schedule 15 Step 10, Washington-Baltimore-Northern Virginia area, plus
an additional 100% to account for the cost of benefits and overhead,
which would be equivalent to a senior manager in an average small
business firm).
Total estimated burden: 130 x .25 hour x $164.23/hour = $5,337.
Previously, the estimated respondents' cost of burden hours was
determined to be $4,066,170 for the initial year of certification and
$2,120,538 in subsequent years. By successfully leveraging technology,
SBA has reduced the cost of burden hours substantially, from $4,066,170
to $2,033,085 in the initial year of certification, and from $2,120,538
to $1,060,269 in subsequent years. This results in annual savings of
$2,033,085 initially and $1,060,269 each year thereafter, with a total
five-year savings of $6,274,161 for WOSBs to redirect as revenue
generating resources to close the noted revenue disparity with male-
owned businesses. SBA believes that there are no additional capital or
start-up costs or operation and maintenance costs and purchases of
services costs to respondents as a result of this rule because there
should be no cost in setting up or maintaining systems to collect the
required information. As stated previously, the information requested
should be collected and retained in the ordinary course of business.
SBA estimates the cost to the government of implementing the
certification program to be $3,126,184 in the initial year of
certification, and approximately $2,704,140 annually thereafter. SBA is
currently working to enhance its existing information technology
infrastructure, Certify, to expand its capacity to support SBA's
government contracting certification programs. The cost to develop the
WOSB and EDWOSB certification processing systems in Certify is
$1,654,000. After the initial improvements, Certify should not require
a substantial investment of capital. In FY2020, SBA hired a Program
Lead, Team Lead, and two Analysts, and brought on via internal transfer
a third Analyst and a Marketing and Outreach specialist. The total cost
of bringing onboard the new hires and backfilling the positions left
vacant by the internal transfers is $1,472,184 (based on General
Schedule 13 Step 1 through General Schedule 15 Step 1, Washington-
Baltimore-Northern Virginia area plus 100% to account for the cost of
benefits and overhead). In the future, the Program hopes to hire an
additional six FTEs to further support Program Operations, the cost of
which would be $1,231,956 (based on General Schedule 13 Step 1,
Washington-Baltimore-Northern Virginia area plus 100% to account for
the cost of benefits and overhead).
3. What are the alternatives to this rule?
This rule is required to implement specific statutory provisions
which require promulgation of implementing regulations. One alternative
considered would be to rely solely on third-party certifiers to certify
WOSBs and EDWOSBs. However, there is a cost to small businesses for
third-party certifiers. Firms submit the same documentation to third-
party certifiers that would submit to SBA, but third-party certifiers
charge on average $380 annually. Consequently, the cost of relying
completely on third-party certifiers would be $3,552,620 a year (9,349
initial applicants x $380). If third-party certifiers were used for the
anticipated increase to 12,477 annual participants, the cost would be
$4,741,260. In addition, SBA maintains that certification for Federal
procurement purposes is an inherently governmental function.
Consequently, even if SBA utilized third-party certifiers for an
initial or preliminary review, SBA or a governmental entity would still
have to be involved in reviewing those certifications. In addition,
there is an intended benefit of certification. The intent is to
increase confidence in the eligibility of firms so that contracting
officers and activities utilize the sole source authority. Although
trending upwards, the government-wide WOSB goal of 5% was not met with
actual performance at 4.75%. In addition, WOSB/EDWOSB set-aside and
sole-source awards only accounted for 4.1% of total dollars awarded to
WOSBs in FY 2018. The Federal Government has met the statutory WOSB
goal of 5% of total dollars awarded to WOSBs only once (FY 2015).
Executive Order 13563
A description of the need for this regulatory action and the
benefits and costs associated with this action, including possible
distributional impacts that relate to Executive Order 13563, are
included above in the Regulatory Impact Analysis under Executive Order
12866. As part of its ongoing efforts to engage stakeholders in the
development of its regulations, SBA issued an Advance Notice of
Proposed Rulemaking (ANPR) on December 18, 2015. 80 FR 78984. The ANPR
solicited public comments to assist SBA in drafting a proposed rule to
implement a WOSB/EDWOSB certification program. SBA received 122
comments in response to the ANPR. SBA issued a Proposed Rule in the
Federal Register on May 14, 2019. 84 FR 21256. The Proposed Rule
solicited public comments to assist SBA in drafting a final rule to
implement a WOSB/EDWOSB certification program. SBA received 898
comments from 307 commenters in response to the Proposed Rule. SBA has
reviewed all the comments while drafting this final rule.
Executive Order 12988
For purposes of Executive Order 12988, SBA has drafted this rule,
to the extent practicable, in accordance with the standards set forth
in section 3(a) and 3(b)(2) of Executive Order 12988, to minimize
litigation, eliminate ambiguity, and reduce burden. This rule has no
preemptive or retroactive effect.
Executive Order 13132
For the purpose of Executive Order 13132, SBA has determined that
this rule will not have substantial direct effects on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various layers
of government. Therefore, SBA has determined that this rule has no
federalism implications warranting preparation of a federalism
assessment.
Executive Order 13771
This rule is an Executive Order 13771 regulatory action with
annualized net costs of $1,514,179 and a net present value of
$21,631,135, both in 2016 dollars. Details on the estimated costs of
this rule can be found in the rule's economic analysis. Table 1
summarizes the savings and costs of the first three years of
implementation, with the savings and costs in Year 3 expected to
continue into perpetuity. Table 2 presents the annualized savings in
perpetuity using a 7% discount rate, in 2016 dollars.
Table 1--Schedule of Costs/(Savings) Over 3 Year Horizon, Current
Dollars
------------------------------------------------------------------------
Savings Costs
------------------------------------------------------------------------
Year 1.................................. $(2,033,085) $3,126,184
Year 2.................................. (1,060,269) 2,704,140
Year 3.................................. (1,060,269) 2,704,140
------------------------------------------------------------------------
[[Page 27659]]
Table 2--Annualized Savings in Perpetuity With 7% Discount Rate, 2016
Dollars
------------------------------------------------------------------------
Estimate
------------------------------------------------------------------------
Annualized Savings...................................... (1,058,441)
Annualized Costs........................................ 2,572,621
Annualized Net Costs.................................... 1,514,179
------------------------------------------------------------------------
Paperwork Reduction Act, 44 U.S.C. Ch. 35
In carrying out its statutory mandate to provide oversight of
certification related to SBA's WOSB Federal Contract Program, SBA is
currently approved to collect information from the WOSB applicants or
participants through SBA Form 2413, and for EDWOSB applicants or
participants, through SBA Form 2414. (OMB Control Number 3245-0374,
Certification for the Women-Owned Small Business Federal Contract
Program). This collection of information also requires submission or
retention of documents that support the applicant's certification. The
information collected through Certify includes eligibility documents
previously collected in the WOSB Repository, and information collected
on SBA Form 2413 (WOSB) and SBA Form 2414 (EDWOSB). SBA revised this
information collection in 2018 to establish that the Agency has
discontinued these paper forms and will collect the information and
supporting documents electronically through Certify, as well as to make
minor changes to the requests for information.
As discussed above, this rule will fully implement the statutory
requirement for small business concerns to be certified by a Federal
agency, a State government, SBA, or a national certifying entity
approved by SBA, in order to be awarded a set-aside or sole source
contract under the WOSB program. As a result of these changes, the rule
eliminates the option to self-certify for WOSB/EDWOSB set-aside and
sole source contracts, permits applicants to provide their CVE
certification, along with documentation that they meet Program
eligibility requirements, as a certification option, and clarifies the
third-party certification requirements.
The clarifications for authorized Third-party certifiers impose an
additional reporting or recordkeeping requirements under the Paperwork
Reduction Act, 44 U.S.C. Chapter 35. A summary description of the
reporting requirement, description of respondents, and estimate of the
annual burden is provided below.
Summary Description of Compliance Information: Third-party
certifiers will be required to provide SBA with monthly reports that
include the number of applications received, number of applications
approved and denied, and other information that SBA determines may be
helpful for ensuring that third-party certifiers are meeting their
obligations or information or data that may be useful for improving the
program.
Description of and Estimated Number of Respondents: There are four
third-party certifiers authorized by SBA to certify WOSB and EDWOSB
applicants. The four third-party certifiers will be required to submit
reports to SBA monthly, for a total of 48 reports.
Respondents: 4.
Responses per respondent: 12.
Total annual responses: 48.
Preparation hours per response: 0.5 hour.
Total response burden hours: 24 hours.
Cost per hour: $67.78/hour (based on 2018 Median Pay for
accountants and auditors, Bureau of Labor Statistics, plus an
additional 100% to account for cost of benefits and overhead).
Total estimated annual cost burden: $1,626.72.
SBA will revise the information collection accordingly and resubmit
to OMB for review and approval.
Regulatory Flexibility Act, 5 U.S.C. 601-612
According to the Regulatory Flexibility Act (RFA), 5 U.S.C. 601,
when an agency issues a rulemaking, it must prepare a regulatory
flexibility analysis to address the impact of the rule on small
entities. However, section 605 of the RFA allows an agency to certify a
rule, in lieu of preparing an analysis, if the rulemaking is not
expected to have a significant economic impact on a substantial number
of small entities. The RFA defines ``small entity'' to include ``small
businesses,'' ``small organizations,'' and ``small governmental
jurisdictions.'' This rule concerns various aspects of SBA's
contracting programs. As such, the rule relates to small business
concerns, but would not affect ``small organizations'' or ``small
governmental jurisdictions.'' SBA's contracting programs generally
apply only to ``business concerns'' as defined by SBA regulations, in
other words, to small businesses organized for profit. ``Small
organizations'' or ``small governmental jurisdictions'' are non-profits
or governmental entities and do not generally qualify as ``business
concerns'' within the meaning of SBA's regulations.
As stated in the regulatory impact analysis, this rule will impact
approximately 9,000-12,000 women-owned small businesses. These
businesses will have to apply to be certified as WOSBs or EDWOSBs to
SBA or third-party certifiers in order to be eligible to be awarded any
WOSB or EDWOSB set-aside contract. However, SBA has minimized the
impact on WOSBs by accepting certifications already conferred by SBA
(through the 8(a) BD Program or a positive determination after a status
protest or program examination), VA, and third-party certifiers. The
costs to WOSBs for certification should be de minimis, because the
required documentation (articles of incorporation, bylaws, stock
ledgers or certificates, tax records, etc.) already exists. In
addition, this information is already required to be provided either to
third-party certifiers, governmental certifying entities, or to SBA
through Certify. SBA expects WOSBs to see a reduction in burden because
under the prior WOSB Program Repository, SBA determined that the
average time required to complete the process required by the WOSB
Program Repository was two hours, whereas the use of Certify results
requires only one hour due to technological improvements. Thus, the
Administrator certifies that the rulemaking is not expected to have a
significant economic impact on a substantial number of small entities.
List of Subjects
13 CFR Part 124
Administrative practice and procedure, Government procurement,
Minority businesses, Reporting and recordkeeping requirements,
Technical assistance.
13 CFR Part 125
Government contracts, Government procurement, Reporting and
recordkeeping requirements, Small business, Technical assistance,
Veterans.
13 CFR Part 126
Administrative practice and procedure, Government procurement,
Penalties, Reporting and recordkeeping requirements, Small business.
13 CFR Part 127
Government contracts, Reporting and recordkeeping requirements,
Small businesses.
For the reasons stated in the preamble, SBA amends 13 CFR parts
124, 125, 126, and 127 as follows:
[[Page 27660]]
PART 124--8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS
STATUS DETERMINATIONS
0
1. The authority citation for part 124 continues to read as follows:
Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d), and 644.
0
2. Amend Sec. 124.104 as follows:
0
a. Remove the first two sentences of paragraph (c)(2) introductory text
and add one sentence in their place;
0
b. Revise the first sentence of paragraph (c)(2)(ii);
0
c. Remove the first two sentences of paragraph (c)(3)(i) and add one
sentence in their place; and
0
d. Revise the first sentence of paragraph (c)(4).
The additions and revisions read as follows:
Sec. 124.104 Who is economically disadvantaged?
* * * * *
(c) * * *
(2) * * * The net worth of an individual claiming disadvantage must
be less than $750,000. * * *
* * * * *
(ii) Funds invested in an Individual Retirement Account (IRA) or
other official retirement account will not be considered in determining
an individual's net worth. * * *
* * * * *
(3) * * * (i) SBA will presume that an individual is not
economically disadvantaged if his or her adjusted gross income averaged
over the three preceding years exceeds $350,000. * * *
* * * * *
(4) * * * An individual will generally not be considered
economically disadvantaged if the fair market value of all his or her
assets (including his or her primary residence and the value of the
applicant/Participant firm) exceeds $6 million. * * *
0
3. Amend Sec. 124.1015 by adding a sentence at the end of paragraph
(f)(2) to read as follows:
Sec. 124.1015 What are the requirements for representing SDB status,
and what are the penalties for misrepresentation?
* * * * *
(f) * * *
(2) * * * If the business is unable to recertify its SDB status,
the procuring agency may no longer be able to count the options or
orders issued pursuant to the contract, from that point forward,
towards its SDB goals.
* * * * *
PART 125--GOVERNMENT CONTRACTING PROGRAMS
0
4. The authority citation for part 125 continues to read as follows:
Authority: 15 U.S.C. 632(p), (q), 634(b)(6), 637, 644, 657(f),
and 657r.
0
5. Amend Sec. 125.18 by adding a sentence at the end of paragraph
(e)(2) to read as follows:
Sec. 125.18 What requirements must an SDVO SBC meet to submit an
offer on a contract?
* * * * *
(e) * * *
(2) * * * If the business is unable to recertify its SDVO status,
the procuring agency may no longer be able to count the options or
orders issued pursuant to the contract, from that point forward,
towards its SDVO goals.
* * * * *
PART 126--HUBZONE PROGRAM
0
6. The authority citation for part 126 continues to read as follows:
Authority: 15 U.S.C. 632(a), 632(j), 632(p), 644 and 657a.
0
7. Amend Sec. 126.619 by adding a sentence at the end of paragraph (b)
introductory text to read as follows:
Sec. 126.619 When must a certified HUBZone small business concern
recertify its status for a HUBZone contract?
* * * * *
(b) * * * If the business is unable to recertify its HUBZone
status, the procuring agency may no longer be able to count the options
or orders issued pursuant to the contract, from that point forward,
towards its HUBZone goals.
* * * * *
PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT PROGRAM
0
8. The authority citation for part 127 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 637(m), 644 and 657r.
0
9. Amend Sec. 127.200 by adding paragraphs (c) and (d) to read as
follows:
Sec. 127.200 What are the requirements a concern must meet to
qualify as an EDWOSB or WOSB?
* * * * *
(c) WOSB and EDWOSB certifications. (1) A concern must be certified
as a WOSB or EDWOSB pursuant to Sec. 127.300 in order to be awarded a
WOSB or EDWOSB set-aside or sole-source contract.
(2) Other women-owned small business concerns that do not seek WOSB
or EDWOSB set-aside or sole-source contracts may continue to self-
certify their status, receive contract awards outside the Program, and
count toward an agency's goal for awards to WOSBs.
(d) Suspension and debarment. In order to be eligible for WOSB and
EDWOSB certification and to remain certified, the concern and any of
its owners must not have an active exclusion in the System for Award
Management at the time of application or recertification.
0
10. Amend Sec. 127.203 by revising the first sentence of paragraph
(b)(3) to read as follows:
Sec. 127.203 What are the rules governing the requirement that
economically disadvantaged women must own EDWOSBs?
* * * * *
(b) * * *
(3) Funds invested in an Individual Retirement Account (IRA) or
other official retirement account will not be considered in determining
an individual's net worth. * * *
* * * * *
Subpart C--[Amended]
0
11. Subpart C is amended by adding the undesignated center heading
``Certification'' above Sec. 127.300.
0
12. Effective October 15, 2020, Sec. 127.300 is revised to read as
follows:
Sec. 127.300 How is a concern certified as an WOSB or EDWOSB?
(a) WOSB certification. (1) A concern may apply to SBA for WOSB
certification. There is no cost to apply to SBA for certification. SBA
will consider the information provided by the concern in order to
determine whether the concern qualifies. SBA, in its discretion, may
rely solely upon the information submitted to establish eligibility,
may request additional information, or may verify the information
before making a determination. SBA may draw an adverse inference and
deny the certification where the concern fails to cooperate with SBA or
submit information requested by SBA.
(2) A concern may submit evidence to SBA that it is a women-owned
and controlled small business that is certified by the U.S. Department
of Veterans Affairs Center for Verification and Evaluation as a
Service-Disabled Veteran Owned Business or Veteran-Owned Business.
(3) A concern may submit evidence that it has been certified as a
WOSB by an approved Third-Party Certifier in accordance with this
subpart.
[[Page 27661]]
(b) EDWOSB certification. (1) A concern may apply to SBA for EDWOSB
certification. There is no cost to apply to SBA for certification. SBA
will consider the information provided by the concern in order to
determine whether the concern qualifies. SBA, in its discretion, may
rely solely upon the information submitted to establish eligibility,
may request additional information, or may verify the information
before making a determination. SBA may draw an adverse inference and
deny the certification where the concern fails to cooperate with SBA or
submit information requested by SBA.
(2) A concern that is a certified participant in the 8(a) BD
Program and owned and controlled by one or more women qualifies as an
EDWOSB.
(3) A concern may submit evidence to SBA that it is an economically
disadvantaged women-owned and controlled small business that is
certified by the U.S. Department of Veterans Affairs Center for
Verification and Evaluation as a Service-Disabled Veteran Owned
Business or Veteran-Owned Business.
(4) A concern may submit evidence that it has been certified as an
EDWOSB by a Third-Party Certifier under this subpart.
(c) SBA notification and designation. If SBA determines that the
concern is a qualified WOSB or EDWOSB, it will issue a letter of
certification and designate the concern as a certified WOSB or EDWOSB
on the Dynamic Small Business Search (DSBS) system, or successor
system.
0
13. Sections 127.301 through 127.303 are revised to read as follows:
Sec.
* * * * *
127.301 When may a concern apply for certification?
127.302 Where can a concern apply for certification?
127.303 What must a concern submit for certification?
* * * * *
Sec. 127.301 When may a concern apply for certification?
A concern may apply for WOSB or EDWOSB certification and submit the
required information whenever it can represent that it meets the
eligibility requirements, subject to the restrictions of Sec. 127.306.
All representations and supporting information contained in the
application must be complete and accurate as of the date of submission.
The application must be signed by an officer of the concern who is
authorized to represent the concern.
Sec. 127.302 Where can a concern apply for certification?
A concern seeking certification as a WOSB or EDWOSB may apply to
SBA for certification via https://certify.sba.gov or any successor
system. Certification pages must be validated electronically or signed
by a person authorized to represent the concern.
Sec. 127.303 What must a concern submit for certification?
(a)(1) SBA certification. (i) To be certified by SBA as a WOSB or
EDWOSB, a concern must provide documents and information demonstrating
that it meets the requirements set forth in part 127, subpart B. SBA
maintains a list of the minimum required documents that can be found at
https://certify.sba.gov or any successor system. A concern may submit
additional documents and information to support its eligibility. The
required documents must be provided to SBA during the application
process electronically. This may include, but is not limited to,
corporate records, business and personal financial records, including
copies of signed Federal personal and business tax returns, and
individual and business bank statements.
(ii) A concern that is certified by the 8(a) BD Program and is
owned and controlled by one or more women may use documentation of its
most recent annual review, or documentation of its 8(a) acceptance if
it has not yet had an annual review, in support of its application for
certification.
(iii) A concern that is certified through a program examination or
status protest may use the positive determination from SBA as evidence
for certification.
(2) CVE certification. (i) To be certified as a WOSB, a concern
that is certified by the U.S. Department of Veterans Affairs Center for
Verification and Evaluation may submit documentation of its most recent
certification, along with documentation confirming that it is owned and
controlled by one or more women, in support of its application for
certification.
(ii) To be certified as an EDWOSB, a concern that is certified by
the U.S. Department of Veterans Affairs Center for Verification and
Evaluation may submit documentation of its most recent certification,
along with documentation confirming that it is owned and controlled by
one or more women who are economically disadvantaged in accordance with
Sec. 127.203(b)(3), in support of its application for certification.
(3) Third-Party Certifier certification. A concern that is
certified by a Third-Party Certifier must provide a current, valid
certification from an entity designated as an SBA-approved certifier.
(b) In addition to the minimum required documents, SBA may request
additional information from applicants in order to verify eligibility.
(c) After submitting the required documentation, an applicant must
notify SBA of any changes that could affect its eligibility.
(d) If a concern was decertified or previously denied
certification, it must include with its application for certification a
full explanation of why it was decertified or denied certification, and
what, if any, changes have been made. If SBA is not satisfied with the
explanation provided, SBA will decline to certify the concern.
(e) If the concern was decertified for failure to notify SBA of a
material change affecting its eligibility pursuant to Sec. 127.401, it
must include with its application for certification a full explanation
of why it failed to notify SBA of the material change. If SBA is not
satisfied with the explanation provided, SBA will decline to certify
the concern.
0
14. Effective October 15, 2020, Sec. Sec. 127.304 and 127.305 are
revised to read as follows:
Sec. 127.304 How is an application for certification processed?
(a) The SBA's Director of Government Contracting (D/GC) or designee
is authorized to approve or decline applications for certification. SBA
must receive all required information and supporting documents before
it will begin processing a concern's application. SBA will not process
incomplete applications. SBA will advise each applicant within 15
calendar days after the receipt of an application whether the
application is complete and suitable for evaluation and, if not, what
additional information or clarification is required to complete the
application. SBA will make its determination within ninety (90)
calendar days after receipt of a complete package, whenever
practicable.
(b) SBA may request additional information or clarification of
information contained in an application or document submission at any
time.
(c) The burden of proof to demonstrate eligibility is on the
applicant concern. If a concern does not provide requested information
within the allotted time provided by SBA, or if it submits incomplete
information, SBA may presume that disclosure of the
[[Page 27662]]
missing information would adversely affect the business concern's
eligibility or demonstrate a lack of eligibility in the area or areas
to which the information relates.
(d) The applicant must be eligible as of the date it submitted its
application and up until the time the D/GC issues a decision. The
decision will be based on the facts contained in the application, any
information received in response to SBA's request for clarification,
and any changed circumstances since the date of application.
(e) Any changed circumstances occurring after an applicant has
submitted an application will be considered and may constitute grounds
for decline. After submitting the application and signed
representation, an applicant must notify SBA of any changes that could
affect its eligibility. The D/GC may propose decertification for any
EDWOSB or WOSB that fails to inform SBA of any changed circumstances
that affected its eligibility for the program during the processing of
the application.
(f) If SBA approves the application, SBA will send a written notice
to the concern and update https://certify.sba.gov or any successor
system, and update DSBS and the System for Award Management (or any
successor systems) to indicate the concern has been certified by SBA as
a WOSB and/or EDWOSB.
(g) A decision to deny eligibility must be in writing and state the
specific reasons for denial.
(h) SBA will send a copy of the decision letter to the electronic
mail address provided with the application. SBA will consider any
decision sent to this electronic mail address provided to have been
received by the applicant concern.
(i) The decision of the D/GC to decline certification is the final
agency decision. The concern can reapply for certification after ninety
(90) days, as set forth in Sec. 127.305.
Sec. 127.305 May declined or decertified concerns seek
recertification at a later date?
(a) A concern that SBA or a third-party certifier has declined or
that SBA has decertified may seek certification after ninety (90) days
from the date of decline or decertification if it believes that it has
overcome all of the reasons for decline or decertification and is
currently eligible. A concern that has been declined may seek
certification by any of the certification options listed in Sec.
127.300.
(b) A concern found to be ineligible during a WOSB/EDWOSB status
protest or program examination is precluded from applying for
certification for ninety (90) days from the date of the final agency
decision (the D/GC's decision if no appeal is filed or the decision of
SBA's Office of Hearings and Appeals (OHA) where an appeal is filed
pursuant to Sec. 127.605).
0
15. An undesignated center heading and Sec. 127.350 are added to
subpart C to read as follows:
Requirements for Third-Party Certifiers
Sec. 127. 350 What is a third-party certifier?
A third-party certifier is a non-governmental entity that SBA has
authorized to certify that an applicant concern is eligible for the
WOSB or EDWOSB contracting program. A third-party certifier may be a
for-profit or non-profit entity. The list of SBA-approved third-party
certifiers may be found on SBA's website at sba.gov.
0
16. Effective October 15, 2020, Sec. 127.351 is added to subpart C to
read as follows:
Sec. 127.351 What third-party certifications may a concern use as
evidence of its status as a qualified EDWOSB or WOSB?
In order for SBA to accept a third-party certification that a
concern qualifies as a WOSB or EDWOSB, the concern must have a current,
valid certification from an entity designated as an SBA-approved
certifier. The third-party certification must be submitted to SBA
through https://certify.sba.gov or a successor system.
0
17. Sections 127.352 through 127.356 are added to subpart C to read as
follows:
Subpart C--Certification of EDWOSB or WOSB Status
* * * * *
Sec.
127.352 What is the process for becoming a third-party certifier?
127.353 May third-party certifiers charge a fee?
127.354 What requirements must a third-party certifier follow to
demonstrate capability to certify concerns?
127.355 How will SBA ensure that approved third-party certifiers are
meeting the requirements?
127.356 How does a concern obtain certification from an approved
certifier?
Sec. 127.352 What is the process for becoming a third-party
certifier?
SBA will periodically hold open solicitations. All entities that
believe they meet the criteria to act as a third-party certifier will
be free to respond to the solicitation.
Sec. 127.353 May third-party certifiers charge a fee?
(a) Third-party certifiers may charge a reasonable fee, but must
notify applicants first, in writing, that SBA offers certification for
free.
(b) The method of notification and the language that will be used
for this notification must be approved by SBA. The third-party
certifier may not change its method or the language without SBA
approval.
Sec. 127.354 What requirements must a third-party certifier follow
to demonstrate capability to certify concerns?
(a) All third-party certifiers must enter into written agreements
with SBA. This agreement will detail the requirements that the third-
party certifier must meet. SBA may terminate the agreement if SBA
subsequently determines that the entity's certification process does
not comply with SBA-approved certification standards or is not based on
the same program eligibility requirements as set forth in subpart B of
this part or if, upon review, SBA determines that the third-party
certifier has demonstrated a pattern of certifying concerns that SBA
later determines to be ineligible for certification.
(b) Third-party certifiers' certification process must comply with
SBA-approved certification standards and track the WOSB or EDWOSB
eligibility requirements set forth in subpart B of this part.
(c) In order for SBA to enter into an agreement with a third-party
certifier, the entity must establish the following:
(1) It will render fair and impartial WOSB/EDWOSB Federal Contract
Program eligibility determinations;
(2) It will provide the approved applicant a valid certificate for
entering into the SBA electronic platform, and will retain documents
used to determine eligibility for a period of six (6) years to support
SBA's responsibility to conduct a status protest, eligibility
examination, agency investigation, or audit of the third party
determinations;
(3) Its certification process will require applicant concerns to
register in SAM (or any successor system) and submit sufficient
information as determined by SBA to enable it to determine whether the
concern qualifies as a WOSB. This information must include
documentation demonstrating whether the concern is:
(i) A small business concern under the SBA size standard
corresponding to the concern's primary industry, as defined in Sec.
121.107 of this part;
(ii) At least 51 percent owned and controlled by one or more women
who are United States citizens; and
[[Page 27663]]
(4) It will not decline to accept a concern's application for WOSB/
EDWOSB certification on the basis of race, color, national origin,
religion, age, disability, sexual orientation, marital or family
status, or political affiliation.
Sec. 127.355 How will SBA ensure that approved third-party
certifiers are meeting the requirements?
(a) SBA will require third-party certifiers to submit monthly
reports to SBA. These reports will contain information including the
number of applications received, number of applications approved and
denied, and other information that SBA determines may be helpful for
ensuring that third-party certifiers are meeting their obligations or
information or data that may be useful for improving the program.
(b) SBA will conduct periodic compliance reviews of third-party
certifiers and their underlying certification determinations to ensure
that they are properly applying SBA's WOSB/EDWOSB requirements and
certifying concerns in accordance with those requirements.
(1) SBA will conduct a full compliance review on every third-party
certifier at least once every three years.
(2) At the conclusion of each compliance review, SBA will provide
the third-party certifier with a written report detailing SBA's
findings with regard to the third-party certifier's compliance with
SBA's requirements. The report will include recommendations for
possible improvements, and detailed explanations for any deficiencies
identified by SBA.
(c) If SBA determines that a third-party certifier is not properly
applying SBA's eligibility requirements, SBA may revoke the approval of
that third-party certifier.
Sec. 127.356 How does a concern obtain certification from an
approved certifier?
(a) A concern that seeks WOSB or EDWOSB certification from an SBA-
approved third-party certifier must submit its application directly to
the approved certifier in accordance with the specific application
procedures of the particular certifier.
(b) The concern must register in the System for Award Management
(SAM), or any successor system.
(c) The approved certifier must ensure that all documents used to
determine that a concern is approved for certification are uploaded in
https://certify.sba.gov or any successor system.
0
18. Effective October 15, 2020, Sec. Sec. 127.400 and 127.401 are
revised to read as follows:
Sec. 127.400 How does a concern maintain its WOSB or EDWOSB
certification?
(a) Any concern seeking to remain a certified WOSB or EDWOSB must
annually represent to SBA that it continues to meet all WOSB/EDWOSB
eligibility criteria.
(1) Except as provided in paragraph (b) of this section, unless SBA
has reason to question the concern's representation of its continued
eligibility, SBA will accept the representation without requiring the
certified WOSB or EDWOSB to submit any supporting information or
documentation.
(2) The concern's recertification must be submitted within 30 days
of the anniversary date of its original certification. The date of
certification is the date specified in the concern's certification
letter. If the concern fails to recertify, SBA may propose the concern
for decertification pursuant to Sec. 127.405.
(b) Any concern seeking to remain a certified WOSB or EDWOSB must
undergo a program examination and recertify its continued eligibility
to SBA every three years.
(1) SBA or a third-party certifier will conduct a program
examination three years after the concern's initial WOSB or EDWOSB
certification (whether by SBA or a third-party certifier) or three
years after the date of the concern's last program examination,
whichever date is later.
(i) Example 1. Concern A is certified by SBA to be eligible for the
WOSB program on July 20, 2021. Concern A must recertify its eligibility
to SBA between June 20, 2022 and July 19, 2022. Concern A will continue
to be a certified WOSB that is eligible to receive WOSB contracts (as
long as it is small for the size standard corresponding to the NAICS
code assigned to the contract) through July 19, 2023. Concern A must
recertify its eligibility to SBA between June 20, 2023 and July 19,
2023. Concern A will continue to be a certified WOSB that is eligible
to receive WOSB contracts (as long as it is small for the size standard
corresponding to the NAICS code assigned to the contract) through July
19, 2024. Concern A must recertify its eligibility to SBA between June
20, 2024 and July 19, 2024. Because three years have elapsed since its
application and original certification, SBA will conduct a program
examination of Concern A at that time. In addition to its
representation that it continues to be an eligible WOSB, Concern A must
provide additional information as requested by SBA to demonstrate that
it continues to meet all the eligibility requirements of the WOSB
Program.
(ii) Example 2. Concern B is certified by a third-party certifier
to be eligible for the WOSB program on September 27, 2021. Concern B
must recertify its eligibility to SBA between August 28, 2022 and
September 26, 2022. Concern B will continue to be a certified WOSB that
is eligible to receive WOSB contracts (as long as it is small for the
size standard corresponding to the NAICS code assigned to the contract)
through September 26, 2023. On March 31, 2023, Concern B is awarded a
WOSB set-aside contract. Subsequently, Concern B's status as an
eligible WOSB is protested. On June 28, 2023, Concern B receives a
positive determination from SBA confirming that it is an eligible WOSB.
Concern B's new certification date is June 28, 2023. Concern B must
recertify its eligibility to SBA between May 29, 2024 and June 27,
2024. Concern B will continue to be a certified WOSB that is eligible
to receive WOSB contracts (as long as it is small for the size standard
corresponding to the NAICS code assigned to the contract) through June
27, 2025. Concern B must recertify its eligibility to SBA between May
29, 2025 and June 27, 2025. Concern B will continue to be a certified
WOSB that is eligible to receive WOSB contracts (as long as it is small
for the size standard corresponding to the NAICS code assigned to the
contract) until June 27, 2026. Concern B must recertify its eligibility
to SBA between May 29, 2026 and June 27, 2025. Because three years have
elapsed since its certification date of June 28, 2022, Concern B must
seek a program examination, by SBA or a third-party certifier, between
May 29, 2025 and June 27, 2026. In addition to its representation that
it continues to be an eligible WOSB, Concern B must provide additional
information as requested by SBA or a third-party certifier to
demonstrate that it continues to meet all the eligibility requirements
of the WOSB Program.
(2) The concern must either request a program examination from SBA
or notify SBA that it has requested a program examination by a third-
party certifier no later than 30 days prior to its certification
anniversary. Failure to do so will result in the concern being
decertified.
Sec. 127.401 What are a WOSB's and EDWOSB's ongoing obligations to
SBA?
Once certified, a WOSB or EDWOSB must notify SBA of any material
changes that could affect its eligibility within 30 calendar days of
any such change. Material change includes, but is not limited to, a
change in the ownership, business structure, or
[[Page 27664]]
management. The notification must be in writing and must be uploaded
into the concern's profile with SBA. The method for notifying SBA can
be found on https://certify.sba.gov. A concern's failure to notify SBA
of such a material change may result in decertification and removal
from SAM and DSBS (or any successor system) as a designated certified
WOSB/EDWOSB concern. In addition, SBA may seek the imposition of
penalties under Sec. 127.700.
0
19. Section 127.402 is revised to read as follows:
Sec. 127.402 What is a program examination, who will conduct it, and
what will SBA examine?
(a) A program examination is an investigation by SBA officials or
authorized third-party certifier that verifies the accuracy of any
certification of a concern issued in connection with the concern's WOSB
or EDWOSB status. Thus, examiners may verify that the concern currently
meets the program's eligibility requirements, and that it met such
requirements at the time of its application for certification, its most
recent recertification, or its certification in connection with a WOSB
or EDWOSB contract.
(b) Examiners may review any information related to the concern's
eligibility requirements. SBA may also conduct site visits.
(c) It is the responsibility of program participants to ensure the
information provided to SBA is kept up to date and is accurate. SBA
considers all required information and documents material to a
concern's eligibility and assumes that all information and
documentation submitted are up to date and accurate unless SBA has
information that indicates otherwise.
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20. Effective October 15, 2020, Sec. 127.403 is revised to read as
follows:
Sec. 127.403 When will SBA conduct program examinations?
(a) SBA may conduct a program examination at any time after the
concern submits its application, during the processing of the
application, and at any time while the concern is a certified WOSB or
EDWOSB.
(b) SBA will conduct program examinations periodically as part of
the recertification process set forth in Sec. 127.400.
0
21. Section 127.404 is revised to read as follows:
Sec. 127.404 May SBA require additional information from a WOSB or
EDWOSB during a program examination?
At the discretion of the D/GC, SBA has the right to require that a
WOSB or EDWOSB submit additional information at any time during the
program examination. SBA may draw an adverse inference from the failure
of a concern to cooperate with a program examination or provide
requested information.
0
22. Effective October 15, 2020, Sec. 127.405 is revised to read as
follows:
Sec. 127.405 What happens if SBA determines that the concern is no
longer eligible for the program?
If SBA believes that a concern does not meet the program
eligibility requirements, the concern fails to recertify in accordance
with the requirements in Sec. 127.400, or the concern has failed to
notify SBA of a material change, SBA will propose the concern for
decertification from the program.
(a) Proposed decertification. The D/GC or designee will notify the
concern in writing that it has been proposed for decertification. This
notice will state the reasons why SBA has proposed decertification, and
that the WOSB or EDWOSB must respond to each of the reasons set forth.
(1) The WOSB or EDWOSB must respond in writing to a proposed
decertification within 20 calendar days from the date of the proposed
decertification.
(2) If the initial certification was done by a third-party
certifier, SBA will also notify the third-party certifier of the
proposed decertification in writing.
(b) Decertification. The D/GC or designee will consider the reasons
for proposed decertification and the concern's response before making a
written decision whether to decertify. The D/GC may draw an adverse
inference where a concern fails to cooperate with SBA or provide the
information requested. The D/GC's decision is the final agency
decision.
(c) Reapplication. A concern decertified pursuant to this section
may reapply to the program pursuant to Sec. 127.305.
0
23. Amend Sec. 127.503 by adding a sentence at the end of paragraph
(h)(2) to read as follows:
Sec. 127.503 When is a contracting officer authorized to restrict
competition or award a sole source contract or order under this part?
* * * * *
(h) * * *
(2) * * * If the business is unable to recertify its WOSB/EDWOSB
status, the procuring agency may no longer be able to count the options
or orders issued pursuant to the contract, from that point forward,
towards its women-owned small business goals.
* * * * *
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24. Effective October 15, 2020, amend Sec. 127.504 by revising
paragraph (a), redesignating paragraphs (b) and (c) as paragraphs (c)
and (d) respectively, and adding a new paragraph (b).
The revision and addition read as follows:
Sec. 127.504 What additional requirements must a concern satisfy to
submit an offer on an EDWOSB or WOSB requirement?
(a) In order for a concern to submit an offer on a specific EDWOSB
or WOSB set-aside requirement, the concern must qualify as a small
business concern under the size standard corresponding to the NAICS
code assigned to the contract, and either be a certified EDWOSB or WOSB
pursuant to Sec. 127.300, or represent that it has submitted a
complete application for WOSB or EDWOSB certification to SBA or a
third-party certifier and has not received a negative determination
regarding that application from SBA or the third party certifier.
(1) If a concern becomes the apparent successful offeror while its
application for WOSB or EDWOSB certification is pending, either at SBA
or a third-party certifier, the contracting officer for the particular
contract must immediately inform SBA's D/GC. SBA will then prioritize
the concern's WOSB or EDWOSB application and make a determination
regarding the firm's status as a WOSB or EDWOSB within 15 calendar days
from the date that SBA received the contracting officer's notification.
Where the application is pending with a third-party certifier, SBA will
immediately contact the third-party certifier to require the third-
party certifier to complete its determination within 15 calendar days.
(2) If the contracting officer does not receive an SBA or third-
party certifier determination within 15 calendar days after the SBA's
receipt of the notification, the contracting officer may presume that
the apparently successful offeror is not an eligible WOSB or EDWOSB and
may make award accordingly, unless the contracting officer grants an
extension to the 15-day response period.
(b) In order for a concern to seek a specific sole source EDWOSB or
WOSB requirement, the concern must be a certified EDWOSB or WOSB
pursuant to Sec. 127.300 and qualify as small under the size standard
corresponding to the requirement being sought.
* * * * *
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Sec. 127.505 [Removed and Reserved]
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25. Effective October 15, 2020, remove and reserve Sec. 127.505.
Sec. 127.603 [Amended]
0
26. Effective October 15, 2020, amend Sec. 127.603 by removing the
next to last sentence in paragraph (d).
0
27. Effective October 15, 2020, amend Sec. 127.604 by revising
paragraph (f)(4) to read as follows:
Sec. 127.604 How will SBA process an EDWOSB or WOSB status protest?
* * * * *
(f) * * *
(4) A concern that has been found to be ineligible will be
decertified from the program and may not submit an offer as a WOSB or
EDWOSB on another procurement until it is recertified. A concern may be
recertified by reapplying to the program pursuant to Sec. 127.305.
Jovita Carranza,
Administrator.
[FR Doc. 2020-09022 Filed 5-8-20; 8:45 am]
BILLING CODE 8026-03-P