[Federal Register Volume 72, Number 247 (Thursday, December 27, 2007)]
[Proposed Rules]
[Pages 73285-73304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-25056]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 121, 125, 127, and 134

RIN 3245-AF40


Women-Owned Small Business Federal Contract Assistance Procedures

AGENCY: U.S. Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: The U.S. Small Business Administration (SBA) proposes to amend 
its regulations governing small business contracting procedures. This 
proposed rule would add a new part that would implement procedures to 
increase procurement opportunities for

[[Page 73286]]

Women-Owned Small Business Concerns, as authorized under the Small 
Business Act. It would also make the relevant conforming amendments to 
SBA's current procurement regulations.

DATES: Comments must be received on or before February 25, 2008.

ADDRESSES: You may submit comments, identified by 3245-AF40, by any of 
the following methods:
     Federal eRulemaking Portal: http://www.reglations.gov. 
Follow the instructions for submitting comments.
     Mail, Hand Delivery/Courier: Robert C. Taylor, Office of 
Contract Assistance, Office of Government Contracting, U.S. Small 
Business Administration, 409 3rd Street, SW., Washington, DC 20416.
    All comments will be posted on http://www.reglations.gov. If you 
wish to submit confidential business information (CBI) as defined in 
the User Notice at http://www.reglations.gov, please submit the 
comments to Robert C. Taylor and highlight the information that you 
consider to be CBI and explain why you believe this information should 
be held confidential. SBA will make a final determination as to whether 
the comments will be published or not.

FOR FURTHER INFORMATION CONTACT: Robert C. Taylor, Office of Contract 
Assistance, Office of Government Contracting, 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    Women-owned businesses have been regarded as the fastest growing 
segment of the business community in the United States. Although 
between 1997 and 2002 the growth rate in the number of women-owned 
small businesses (WOSBs) was almost twice that of all firms, WOSBs have 
not generally received a commensurate increase in their share of 
Federal contracting dollars.
    Several congressional and executive efforts over the years to 
increase Federal contracting with WOSBs have not enhanced the WOSB 
share of Federal contracting dollars as much as anticipated. For 
example, in 1979, when Executive Order 12138 charged Federal agencies 
with responsibility for providing procurement assistance to women-owned 
businesses, WOSBs received only 0.2 percent of all Federal 
procurements. More than 9 years later, the percentage of WOSB Federal 
procurements had grown to only one percent. Similarly, in 1988, the 
Women's Business Ownership Act, Public Law 100-588 (Oct. 25, 1988), was 
enacted to assist women in starting, managing and growing small 
businesses. This program has been successful in assisting thousands of 
women in obtaining business financing and in business formation, but 
has enjoyed less success in the Federal procurement arena.
    Section 7106 of the Federal Acquisition Streamlining Act (FASA), 
Public Law 103-355 (Oct. 13, 1994), amended the Small Business Act (the 
Act) by establishing a target that would result in greater 
opportunities for women to compete for Federal contracts. FASA, among 
other things, established a government-wide goal for participation by 
WOSBs in procurement contracts of not less than 5 percent of the total 
value of all prime contract and subcontract awards for each fiscal 
year. FASA also directed that WOSBs, like other small businesses and 
small disadvantaged businesses (SDBs), have the maximum practicable 
opportunity to become subcontractors for Federal contracts exceeding 
$100,000, and it mandated that WOSBs be included in subcontracting 
plans required under Section 8(d) of the Act, 15 U.S.C. 637(d).
    Federal Procurement Data System (FPDS) data indicates that since 
fiscal year (FY) 1996, Federal agencies have not met the separate 5 
percent government-wide WOSB goal for prime contracts and subcontracts. 
However, the share of Federal prime contracting dollars to WOSBs has 
increased over the years. For example, in FY 2000, WOSBs received 2.3 
percent of the approximately $200 billion in Federal prime contract 
awards. The share of WOSB prime contract awards increased to 2.49 
percent in FY 2001, and again to 2.90, 2.98, and 3.03 percent in FYs 
2002, 2003 and 2004, respectively. In FY 2005, WOSB prime contract 
awards increased to 3.18 percent and in FY 2006, increased again to 
3.41 percent of prime contract awards. Nonetheless, the total percent 
of WOSB prime contract awards stills falls short of the statutory goal 
of 5 percent.
    The Government Accountability Office (GAO) published a report in 
February 2001 discussing the trends and obstacles in Federal 
contracting with WOSBs since FY 1996. See Trends and Challenges in 
Contracting With Women-Owned Small Businesses, GAO-01-346. In that 
report, GAO noted that contracting officials complain that one of the 
primary obstacles in achieving the statutory five percent WOSB goal was 
the absence of a ``targeted government program for contracting with 
WOSBs.''
    Section 811 of the Small Business Reauthorization Act of 2000, 
Public Law 106-554, provided such a mechanism. Section 811, enacted on 
December 21, 2000, amended the Act by adding a new section 8(m), 15 
U.S.C. 637(m), authorizing contracting officers to restrict competition 
to eligible WOSBs for certain Federal contracts in certain industries. 
Due to an apparent drafting error in the cross-reference and the inter-
relationships between subparagraphs (2)(C), (3) and (4) of 15 U.S.C. 
637(m), subparagraph (2)(C) literally appears to authorize set-asides 
for Federal contracts only in industries in which WOSBs are determined 
to be substantially underrepresented. However, if the statute were 
construed by SBA not to authorize set-asides in industries in which 
WOSBs were underrepresented, the provision in the statute requiring SBA 
to conduct a study to determine industries in which WOSBs are 
underrepresented, as well as the section's waiver provision, would 
arguably be rendered inoperative or contradictory. Accordingly, SBA has 
drafted the proposed rule to account for this apparent drafting error 
based on its best understanding of the meaning and intent of section 
8(m) read as a whole and has interpreted the statute to authorize set 
asides for industries in which WOSBs are determined to be 
underrepresented or substantially underrepresented in Federal 
procurement. In the absence of corrective legislation clarifying the 
confusing cross-references among these provisions, however, some degree 
of uncertainty will remain with respect to the question of whether 
section 8(m) effectively authorizes appropriate set-asides in 
industries where WOSBs are merely underrepresented rather than 
substantially underrepresented.
    The new section 8(m) of the Act explicitly limits the contracting 
officer's authority to restrict competition to contracts not exceeding 
$3 million ($5 million for manufacturing). Furthermore, to be eligible 
as a WOSB under section 8(m) of the Act, the firm must be a ``small 
business concern owned and controlled by women'' as defined in section 
3(n) of the Act, 15 U.S.C. 632(n). Section 8(m) also requires that such 
concerns be at least 51 percent owned by one or more women who are 
economically disadvantaged, except with respect to procurements in 
industries in which SBA has determined that WOSBs are substantially 
underrepresented in Federal contracting and has waived the economically 
disadvantaged requirement.
    Moreover, section 8(m) of the Act requires SBA to establish 
standards for determining the eligibility of a concern as a WOSB or 
economically disadvantaged WOSB (EDWOSB). It also

[[Page 73287]]

charges SBA with responsibility for verifying a concern's eligibility 
and provides the penalties for a concern's misrepresentation of its 
status as an EDWOSB or WOSB.
    Lastly, section 8(m) requires SBA to conduct a study to identify 
the industries in which WOSBs are underrepresented and substantially 
underrepresented in Federal procurement and requires the head of any 
department or agency to provide SBA with any information that SBA deems 
necessary to conduct the study. SBA initially completed the 
legislatively mandated study in September 2001. However, in March 2005, 
the National Academy of Science (NAS) issued an independent evaluation 
determining that SBA's original study was ``fatally flawed.'' In 
response to the NAS's findings, SBA issued a solicitation in October 
2005 seeking a contractor to perform a revised study in accordance with 
the NAS report. In February 2006, SBA awarded a contract to the 
Kauffman-RAND Institute for Entrepreneurship Public Policy (RAND) to 
complete a revised study of the availability and utilization of WOSBs 
in prime contracts. The RAND report was published in April 2007 and is 
available to the public at http://www.RAND.org/pubs/technical_reports/TR442.
    On June 15, 2006, the SBA published in the Federal Register, 71 FR 
34550, a proposed rule, with request for comments, to amend its 
regulations in accordance with Sec.  8(m) of the Small Business Act. 
Based on SBA's evaluation of the public and inter-agency comments 
received, discussions with the Department of Justice (DOJ) and the 
Office of Federal Procurement Policy (OFPP), and further examination of 
Section 8(m), it has been determined that the June 15, 2006, proposed 
rule requires significant changes that warrant further public comment 
and consideration. In addition, rather than propose a separate 
rulemaking, SBA believes it would be expeditious to include in this 
proposed rule implementation of the RAND study results which identified 
the industries in which WOSBs are underrepresented and substantially 
underrepresented in Federal procurement.
    Whether SBA went forward with a final rule on WOSB status and 
procedures and simultaneously proposed a rule to implement the RAND 
Study results or combined the two rules into one comprehensive rule, 
any potential set-asides under the procedures could not be made until 
the RAND report rule had been finalized. Therefore, SBA's action of 
combining the RAND report rule with this re-proposed June 15, 2006 rule 
not only obviates the need for a separate rulemaking but significantly, 
will not delay the implementation of the WOSB procedures.

II. RAND Report Results

    The RAND report outlined several approaches to identify 
underrepresentation of WOSBs in Federal procurement, each of which 
yields a different result. SBA has preliminarily adopted the approach 
set forth below.
    RAND's report identifies 28 different approaches to determine 
underrepresentation and substantial underrepresentation. Twenty of 
these approaches compare FY 2006 Central Contractor Registration (CCR) 
registration data to FY 2005 Federal Procurement Data System/Next 
Generation (FPDS/NG) procurement data, while eight (8) compare the 2002 
Survey of Business Owners (SBO) from the five-year Economic Census to 
FYs 2002/2003 FPDS/NG procurement data.
    SBA eliminated the eight approaches based on a comparison of the 
2002 SBO data to FYs 2002/2003 FPDS/NG procurement data for the 
following reasons: (1) The SBO does not distinguish between WOSBs and 
women-owned businesses (large and small), while the procedures 
authorized by Congress are specifically targeted towards WOSBs (only 
small businesses); (2) since the SBO is generally not available for two 
years after the survey is completed, the SBO is never current; and 
lastly (3) the SBO cannot fine-tune the industry groupings beyond the 
two-digit NAICS level.
    In its 2005 report examining SBA's 2001 methodology, the NAS 
criticized SBA's use of the two-digit Major Group Standard Industrial 
Classification (SIC) industry classification as inadequate. The two-
digit Major Group SIC designation corresponds to the current three-
digit Subsector NAICS designation. Thus, while the NAS criticized SBA's 
use of two-digit SIC information, the SBO two-digit NAICS data is even 
less precise than the two-digit SIC data. Both the CCR and FPDS-NG, on 
the other hand, provide the capability to use four-digit NAICS 
classifications. For this reason, SBA also eliminated 16 approaches 
based on CCR comparisons to FPDS/NG 2005 procurement data which used 
two and three-digit NAICS codes.
    As a result, four approaches were left as possibly viable, all 
based on 2004 CCR and 2005 procurement data and four-digit NAICS codes. 
Two of the four approaches were based on the dollar value of contracts 
awarded and the other two were based on the number of contracts 
awarded. SBA eliminated the two approaches based on the number of the 
contracts awarded. When discussing whether to use dollars or numbers as 
the measure of underrepresentation, it was necessary to evaluate the 
benefits and limitations of either choice. After careful analysis, it 
was decided to adopt an approach consistent with Congressional 
measures, which use dollars. Congress appropriates Federal funding in 
dollars, the Federal budget is divided in dollars, all Federal 
government contracts are awarded in dollars, and the accounting and 
auditing processes focus on how these dollars are spent. Dollar amounts 
can easily be compared across agencies, programs and NAICS codes. 
Tracking dollar amounts also avoids problems that arise from the 
contracting nuances of the individual agencies. Contract actions do not 
allow for an accurate accounting of the financial benefits and business 
development that occur when small businesses receive a Federal 
contract.
    Finally and perhaps most importantly, Congress, through the Small 
Business Act, has given direction only in dollars. Section 15(g)(1) is 
the section in the Act that provides direction on counting small 
business goals. All of those goals are aimed at achieving a dollar 
amount (total value) relative to all dollars expended in Federal 
procurement. In particular, the goal for small business concerns owned 
and controlled by women states that: ``The Government-wide goal for 
participation by small business concerns owned and controlled by women 
shall be established at not less than 5 percent of the total value of 
all prime contract and subcontract awards for each fiscal year.'' 
Congress authorized the contracting assistance procedures in Section 
8(m) as a result of the Federal Government's persistent deficiencies in 
achieving this goal. Thus, the disparity measure based on contract 
dollars is consistent with the five percent goal, which is also based 
on contract dollars.
    Accordingly, two approaches remained available for SBA to use to 
determine underrepresentation. Of these two approaches, one was based 
on a full sample, and the other was based on a trimmed sample 
(eliminating the top and bottom 0.5 percent of the data). RAND stated 
in its report that it found little benefit to trimming the sample and 
that it puts more weight on the full-sample results (Chapter 4, 
Results, page 22). Accordingly, SBA eliminated the trimmed-sample 
results.
    The four industries identified using the adopted approach from the 
RAND

[[Page 73288]]

report (NAICS codes 9281--National Security and International Affairs, 
3328--Coating, Engraving, Heat Treating, and Allied Activities, 3371--
Household and Institutional Furniture and Kitchen Cabinet 
Manufacturing, and 4412--Other Motor Vehicle Dealers) are those 
industries in which WOSBs are underrepresented or substantially 
underrepresented in government-wide Federal procurement. The RAND 
report does not, however, expressly find discrimination in the 
identified industries. The equal protection requirements of the Fifth 
Amendment prohibit Federal agencies from discriminating on the basis of 
sex in awarding contracts unless the preference furthers important 
governmental objectives and the means employed are substantially 
related to the achievement of those objectives. See United States v. 
Virginia, 518 U.S. 515, 533 (1996). This standard, which requires an 
``exceedingly persuasive justification,'' id., is commonly referred to 
as ``intermediate scrutiny.'' In applying this standard, Federal courts 
have generally required that the government establish probative 
evidence of discrimination in the relevant industry in order to justify 
sex-based contracting preferences. See, e.g., Engineering Contractors 
Ass'n of South Florida v. Metropolitan Dade County, 122 F.3d 895, 910 
(11th Cir. 1998). Based on these precedents, the Department of Justice 
has advised SBA that before a contracting officer may restrict 
competition to WOSBs under section 8(m), the concerned agency must 
determine through appropriate analysis (including analysis of its own 
procurement history) that the set-aside will be consistent with the 
foregoing constitutional standards. In particular, to ensure 
uniformity, SBA proposes that the agency must determine whether the 
set-aside is substantially related to remedying sex discrimination in 
that industry.

III. Summary of Regulations

    To implement the new section 8(m) of the Act, this proposed rule 
would establish procedures that will assist WOSBs in procuring 
contracting opportunities with the Federal Government. Although these 
procedures would be considered part of SBA's government contracting 
programs set forth under part 125 of title 13 of the Code of Federal 
Regulations (CFR), for ease of reference, the proposed WOSB procedures 
would be contained in a new part 127 of title 13. As proposed, the 
regulations provide the general definitions and clarifications of the 
procedures and eligibility requirements under subparts A and B of this 
rule. The regulations also provide the certification procedures and the 
process for appealing WOSB status protest determinations to SBA's 
Office of Hearings and Appeals (OHA). These proposed regulations also 
provide the specific eligibility requirements for qualification as an 
EDWOSB or WOSB and state the requirement for each agency to conduct the 
appropriate analysis (including analysis of its own procurement 
history) to ensure that the set-aside will be consistent with 
constitutional standards.
    This rule would also modify the process for reserving contract 
opportunities in industries in which SBA and agencies determine that 
WOSBs are substantially underrepresented in Federal procurement. To 
provide procuring activities greater flexibility in structuring their 
procurements to achieve WOSB Federal contracting goals, this rule would 
grant contracting officers the discretion to waive the requirement for 
competition by EDWOSBs in those industries in which WOSBs are 
determined to be substantially underrepresented. The rule also provides 
conforming amendments necessary to integrate these proposed procedures 
into SBA's size and government contracting regulations.
    SBA invites comment on all aspects of this proposed rule.

IV. Section-by-Section Analysis

    The following is a section-by-section analysis of the proposed 
rule.

A. Conforming Amendments to Parts 121 and 125

    The authority citation for 13 CFR part 121 would be revised to 
include 15 U.S.C. 637(m), since part 121 would be amended to include 
references to the WOSB Procurement Opportunity Procedures (Procedures) 
Section 121.401 would be amended to add the procedures governing women-
owned contracting requirements to the list of government procurement 
programs subject to size determinations. This would subject EDWOSBs and 
WOSBs to size protests and determinations under part 121 of title 13.
    Section 121.1001 would be amended by adding a new paragraph (a)(9) 
to describe who may initiate a size protest in connection with a 
particular requirement set-aside for women-owned small business 
concerns. That section would provide that any concern that submits an 
offer for a specific requirement set-aside under the authority of Sec.  
8(m) of the Act, the contracting officer, SBA Government Contracting 
Area Director and the Director for Government Contracting or designee, 
may protest the size of another offeror for the particular requirement.
    Section 121.1008 would be amended by adding a sentence that 
requires the SBA Government Contracting Area Director, or designee, to 
notify SBA's Director, Office of Government Contracting, of receipt of 
a size protest involving a concern that is designated in the Central 
Contractor Registration (CCR) as a certified EDWOSB or WOSB.
    Section 125.6 would be amended to provide that EDWOSBs and WOSBs 
awarded a set-aside contract using these procedures must satisfy 
certain requirements if they intend to subcontract. These 
subcontracting limitations are the same limitations that are currently 
in place for an 8(a) contract or an unrestricted procurement where a 
concern has claimed a small disadvantaged price evaluation preference.

B. Addition of a New Part 127

    A new part 127 would be added to title 13 of the CFR to implement 
the procedures that are required under the statute. Subpart A provides 
background information concerning contracting opportunities for women-
owned small business concerns. Specifically, Sec. Sec.  127.100 and 
127.101 describe the purpose, legal basis and assistance available to 
eligible WOSBs. Section 127.102 defines the relevant terms used in part 
127. Many of those definitions are identical to or derived from the 
definitions provided in parts 121 and 124 of this title, governing 
SBA's size, 8(a) Business Development (BD) and SDB programs.
    The proposed rule also uses several newly defined terms which SBA 
developed for ease of reference to various statutory requirements. For 
example, the proposed rule uses the term ``economically disadvantaged 
WOSB'' or ``EDWOSB'' to refer to the Act's requirement that certain 
WOSBs be not less than 51 percent owned and controlled by one or more 
women who are U.S. citizens and economically disadvantaged. This rule 
also defines what constitutes ``underrepresented'' and ``substantially 
underrepresented.'' SBA has defined the terms ``underrepresentation'' 
and ``substantial underrepresentation'' in this proposed rule to be a 
disparity ratio representing either the WOSB share of Federal prime 
contract dollars divided by the WOSB share of total business receipts. 
If the disparity ratio falls between 0.5 and 0.8, underrepresentation 
is found. If the disparity ratio falls between 0.0 and 0.5,

[[Page 73289]]

substantial underrepresentation is found.
    These disparity ratios were found to be reasonable by the NAS in 
its 2005 report analyzing the preliminary study conducted by SBA in 
2001. See The National Academies Press, Analyzing Information on Women-
Owned Small Business in Federal Contracting (2005), available at http://www.nasonline.com. SBA adopted the threshold value of 0.8 based in 
part on the Equal Employment Opportunity Commission's use of that 
threshold as a rule of thumb for defining underrepresentation in 
enforcing antidiscrimination employment laws. The threshold value of 
0.8 also has the advantage, compared with a higher value, of reducing 
classification errors due to sampling variability or other sources of 
errors within the underlying procurement data. SBA adopted the 
threshold value of 0.5 largely because it is sufficiently below 0.8 and 
sufficiently higher than zero to distinguish substantial from less than 
substantial underrepresentation.
    Subpart B describes the eligibility requirements for qualification 
as an EDWOSB or WOSB. Because these qualifications entail similar 
ownership, control and economic disadvantage criteria as used in the 
8(a) BD and SDB programs, this proposed rule similarly requires that 
the concern be at least 51 percent unconditionally owned and controlled 
by one or more women who are United States citizens. For reasons of 
consistency, the economic disadvantage requirement in Sec.  127.203 
also has the same $750,000 threshold for personal net worth as does the 
8(a) BD program and the SDB program for purposes of determining a 
program participant's continuing eligibility. In order to qualify as an 
EDWOSB, the concern must also prove that it is economically 
disadvantaged. One notable exception is with respect to the application 
of community property laws. The Act explicitly provides that ownership 
shall be determined without regard to any community property laws. As a 
result, Sec.  127.201 precludes the application of community property 
laws in WOSB ownership determinations.
    Subpart C of the proposed rule sets forth the self-certification 
requirements for concerns that submit offers on procurements set aside. 
Section 8(m)(2)(F)(i) of the Act authorizes certification by ``a 
Federal agency, a State government, or a national certifying entity'' 
approved by SBA. Consistent with that provision, subpart C of this 
proposed rule establishes the procedures for obtaining EDWOSB or WOSB 
certification from SBA.
    Specifically, proposed Sec.  127.300 provides that at the time a 
concern submits an offer on a specific contract reserved for 
competition under these procedures, it must be registered in the CCR 
and have a current self-certification posted on the Online 
Representations and Certifications Application (ORCA) indicating that 
it qualifies as an EDWOSB or WOSB. That section would further detail 
the specific representations concerns must include as part of their 
self-certification, including that: (1) The firm is a small business 
concern under the size standard assigned to the particular procurement; 
(2) it is at least 51 percent owned and controlled by one or more women 
who are United States citizens or it is at least 51 percent owned and 
controlled by one or more women who are United States citizens and are 
economically disadvantaged; and (3) neither SBA nor an SBA-approved 
certifier has determined that the concern does not currently qualify as 
an EDWOSB or WOSB. Because ORCA is generally the accepted 
representations process that concerns currently follow to self-certify 
other forms of small business status in Federal procurements, using 
that system for the WOSB self-certification process would minimize 
interference with the procurement process and the burden on contracting 
officers.
    Sections 127.301 through 127.303 provide the specific procedures 
for obtaining EDWOSB and WOSB certification. SBA believes that the 
self-certification process set forth in this rule is consistent with 
the statutory framework of Section 8(m) and with prevailing Supreme 
Court precedent. It also would minimize delays and disruption to the 
contracting process by utilizing the existing system of representations 
and certifications in Federal procurement and by not requiring 
contracting officers to review voluminous documents supporting a 
concern's self-certification.
    Proposed Sec.  127.301 describes the circumstances under which a 
contracting officer may accept a concern's self-certification for the 
particular procurement for which the self-certification is made. That 
section would provide that when a contracting officer receives an 
EDWOSB or WOSB status protest from another offeror, or when the 
contracting officer has information that calls into question the 
eligibility of a concern, the contracting officer must refer the matter 
to SBA for verification of the concern's eligibility pursuant to the 
WOSB status protest procedures under Subpart F.
    To minimize interference with the procurement process, this rule 
would also recognize a concern's certification as an EDWOSB or WOSB by 
an entity approved by SBA. In particular, Sec. Sec.  127.300 and 
127.302 would provide that a concern may use a certification by another 
entity as evidence of its status as a qualified EDWOSB or WOSB in 
support of its representations in ORCA if the concern: (1) Has a 
current, valid SBA certification as an 8(a) BD or SDB women-owned 
concern in good standing under those programs; (2) has a current valid 
certification as a woman-owned business under DOT's DBE program; or (3) 
has a current valid certification by an entity designated as an SBA-
approved certifier on SBA's Web site located at http://www.sba.gov/GC. 
Sections 127.303 and 127.304 explain how entities are selected and 
identified as approved certifiers and how concerns may obtain 
certifications from such entities. Because all certifying entities may 
not use the same eligibility criteria applicable to EDWOSBs and WOSBs 
as provided under Subpart B of this rule, SBA does not intend to 
automatically accept third-party certifications for purposes of 
contracting with WOSBs. Rather, once SBA has determined that a 
certifier uses the same criteria and follows appropriate procedures and 
standards, SBA may designate that entity as an approved certifier. The 
Agency will maintain a list of all approved certifiers on its Web site.
    Section 127.305 would explain the extent to which concerns that are 
determined not to qualify as an EDWOSB or WOSB may submit a self-
certification under Sec.  127.300(b). Specifically, under Sec.  
127.305, a concern that SBA or an SBA-approved certifier determines is 
not a qualified EDWOSB or WOSB would be prohibited from self-certifying 
unless SBA subsequently determines that the concern qualifies as an 
EDWOSB or WOSB pursuant to the examination procedures under Sec.  
127.405. Those procedures specifically allow concerns determined to be 
an ineligible EDWOSB or WOSB to request that SBA conduct an examination 
to determine their eligibility at any time the concern believes in good 
faith that it satisfies all of the eligibility requirements.
    Together, Sec. Sec.  127.300 through 127.305 describe the 
streamlined representations concerns must provide to contracting 
officers to certify eligibility and authorize contracting officers to 
refer questionable self-certifications to SBA for verification of 
eligibility pursuant to the protest procedures. Robust protest 
procedures coupled with the provisions for appropriate examinations to 
monitor

[[Page 73290]]

the eligibility of firms that self-certify their status under Subpart 
D, will minimize the potential for fraud and abuse. These procedures 
will also assist in ensuring that only eligible WOSBs receive the 
benefits consistent with prevailing Supreme Court precedent.
    Proposed Sec. Sec.  127.400 through 127.405 under subpart D discuss 
the examination process for determining the continuing eligibility of a 
firm that is designated on CCR as a certified EDWOSB or WOSB. Those 
sections explain when and how SBA will conduct the examination and the 
decertification procedures SBA will follow when it is unable to verify 
that a concern qualifies as an EDWOSB or WOSB.
    Proposed Sec.  127.401 also explains the distinctions between the 
examination process and the EDWOSB and WOSB protest mechanism provided 
under the proposed subpart F. The proposed Sec.  127.401 makes clear 
that the examination process is intended to verify the continuing 
EDWOSB or WOSB eligibility of a concern generally, while an EDWOSB or 
WOSB status protest is designed to determine the EDWOSB or WOSB 
eligibility of a concern for a specific procurement. The separate WOSB 
or EDWOSB examination procedures will assist in maintaining the 
integrity of the certification process by subjecting certified concerns 
to examinations of their EDWOSB and WOSB eligibility certifications. 
Consequently, examinations will serve to supplement the protest 
mechanism by monitoring the continuing eligibility of firms that claim 
EDWOSB and WOSB status.
    Moreover, Sec.  127.401(a) further provides that if SBA is 
conducting an examination of a concern that has submitted an offer on a 
pending EDWOSB or WOSB requirement and SBA has credible information 
that the concern may not qualify as an EDWOSB or WOSB, SBA may file a 
protest under Sec.  127.600 to challenge the concern's eligibility for 
award for the specific requirement.
    The provisions governing the available Federal contract assistance 
for WOSBs and EDWOSBs are set forth in proposed subpart E. Sections 
127.500 through 127.502 discuss the industries in which contracting 
officers are authorized to restrict competition to EDWOSBs and WOSBs. 
Section 127.500 explains that contracting officers may only restrict 
competition to EDWOSBs and WOSBs in industries in which (1) SBA has 
determined that WOSBs are either underrepresented or substantially 
underrepresented in Federal procurement and (2) the procuring agency 
has found, through appropriate analysis of its own procurement history, 
that the set-aside would satisfy the equal protection requirements of 
the Due Process Clause of the Fifth Amendment of the Constitution. 
Sections 127.501 and 127.502 indicate how SBA will determine, identify 
and provide public notice of those industries. Those sections, like 
section 8(m) of the Act, do not specify how SBA will determine whether 
WOSBs are underrepresented or substantially underrepresented in a 
particular industry. Instead, Sec.  127.501 provides generally that at 
least every five years SBA, or another entity authorized to act on its 
behalf (e.g., a contractor), will conduct a study to identify the 
underrepresented or substantially underrepresented industries. The 
study will include an analysis of the extent of disparity of WOSBs in 
Federal contracting. Based upon that analysis, SBA will designate by 4-
digit NAICS Industry Subsector industries in which WOSBs are 
underrepresented or substantially underrepresented.
    Under Sec.  127.501(b), where an agency seeks to reserve a 
requirement for WOSBs or EDWOSBs in one of the industries identified by 
SBA as being an industry in which WOSBs are underrepresented or 
substantially underrepresented government-wide, the agency must ensure 
that the set-aside meets the equal protection requirements of the Due 
Process Clause of the Fifth Amendment to the Constitution. It must 
conduct an analysis of the agency's past procurement activities and 
make a finding of discrimination by that agency in that particular 
industry sufficient to ensure that the set-aside is substantially 
related to an important governmental objective. As the agency primarily 
charged with implementing this and other set-aside programs under 
section 8 of the Act, SBA proposes this requirement on contracting 
agencies to ensure that this program is implemented uniformly across 
the government and in a manner that ensures it will be constitutional 
under the current Supreme Court jurisprudence.
    Section 127.502 indicates that SBA will post a list of the 
designated industries on its Internet Web site. The list of designated 
industries also may be obtained from the local SBA district office and 
may be posted on the General Services Administration Internet Web site.
    Section 127.503 addresses when a contracting officer is authorized 
to restrict competition to WOSBs or EDWOSBs. It establishes a similar 
``rule-of-two'' standard as used in small business set-asides. This 
standard requires the contracting officer to reasonably expect that at 
least two eligible companies would bid if the contract is set aside, 
based on market research. That section further makes clear that a 
contracting officer may not restrict competition to eligible EDWOSBs or 
WOSBs if an 8(a) BD Participant is currently performing the requirement 
under the 8(a) BD Program or SBA has accepted the requirement for 
performance under the authority of the 8(a) BD program, unless SBA 
consented to release the requirement from the 8(a) BD program. Because 
this limitation on the restriction of competition serves to reconcile 
the ``goal'' requirements of 15 U.S.C. 644(g) with the requirements of 
section 8(m), it is authorized by the Administrator's general authority 
to ``make such rules and regulations as he deems necessary to carry out 
the authority vested in him by or pursuant to this chapter'' and is 
intended to clarify that the implementation of this program does not 
affect the Administrator's authority or responsibilities under the 8(a) 
BD program. 15 U.S.C. 634(b)(6). SBA does not intend to imply through 
lack of mention other programs, such as HUBZone set-asides or service-
disabled veteran-owned small business set-asides, that contract 
requirements currently being fulfilled through other set-aside programs 
must be brought into this program or that this program should be give 
preference over other set-aside programs.
    Sections 127.504 and 127.505 describe the additional requirements a 
concern must satisfy to submit an offer on an EDWOSB or WOSB 
requirement. Section 127.504 indicates that in addition to the 
certification requirements under subpart C, offerors on EDWOSB or WOSB 
requirements must also certify that they are small under the size 
standard for the procurement and that they will comply with the 
limitations on subcontracting rule set forth in Sec.  125.6 of this 
title. Section 127.505 explains that an EDWOSB or WOSB that is a non-
manufacturer, as defined in Sec.  121.406(b), may submit an offer for 
an EDWOSB or WOSB requirement if it meets the requirements of Sec.  
121.406(b). Proposed Sec.  127.506 governs what is required of joint 
venture relationships involving WOSBs when submitting an offer on an 
EDWOSB or WOSB contract.
    The proposed Subpart F sets forth the procedures for protesting the 
status of a concern as an EDWOSB or WOSB, including the procedures for 
filing protests, for rendering protest determinations and for appealing 
those determinations to SBA's Office of

[[Page 73291]]

Hearings and Appeals (OHA). Sections 127.600 through 127.602 describe 
who is authorized to file and decide EDWOSB and WOSB status protests 
and the permissible grounds for filing protests.
    Sections 127.603 through 127.606 prescribe format, and applicable 
deadlines for filing and determining EDWOSB and WOSB protests and for 
appealing SBA's protest determinations. Unlike eligibility examinations 
under the proposed subpart D, protests are time-sensitive because they 
are tied to a particular procurement. As a result, Sec. Sec.  127.604 
and 127.605 prescribe filing and decision deadlines to minimize undue 
interruptions in the underlying procurement.
    The final section of the proposed part 127, subpart G, Sec.  
127.700, prescribes the applicable penalties that may be imposed on any 
person or concern that misrepresents the status of a concern as an 
EDWOSB or WOSB for purposes of receiving a Federal procurement.

C. Amendments to Part 134

    SBA is also proposing to amend Part 134 to include procedures for 
an EDWOSB or WOSB to appeal a protest determination under Part 127 of 
this Chapter. Specifically, Sec.  134.102 would be amended to give OHA 
jurisdiction to hear appeals on WOSB or EDWOSB protests. Further, Sec.  
134.515 would be revised to reflect a change in when a judge may 
reconsider an appeal.
    A new subpart, Subpart G, would be added to prescribe the 
procedures for filing and processing the appeals before OHA. This 
subpart will only apply to appeals to OHA from formal protest 
determinations made by the Director, Office of Government Contracting 
(D/GC) in connection with a WOSB or EDWOSB status protest. Procedures 
for size determination protests and NAICS code designations are 
governed by Subpart C of this part.
    Proposed Sec.  134.701 outlines the scope of the rules under this 
subpart. Sections 134.702 and 134.703 describe who may appeal a protest 
determination and when that person must file an appeal. Under Sec.  
134.702, the protested concern, the protestor, or the contracting 
officer responsible for the procurement affected by the protest 
determination may file an appeal with OHA. Section 134.703 allows for 
an appeal petition to be made within 10 business days after the 
appellant receives the protest determination.
    Section 134.704 describes the effects that the appeal will have on 
the procurement at issue. If OHA determines that a concern is 
ineligible then the contracting officer may terminate the contract.
    Sections 134.705, 134.706 and 134.707 set out the requirements for 
an appeal petition, what the service and filing requirements are and 
when the D/GC transmits the protest file and to whom. The standard of 
review is found in Sec.  134.707. The standard is whether the D/GC's 
determination was based on clear error of fact or law.
    Under Sec.  134.709 the Judge is able to dismiss an appeal if it is 
untimely filed or has already been adjudicated by a court of competent 
jurisdiction over such matters. Section 134.710 sets out the 
requirements of who can file a response to an appeal petition. Sections 
134.711-712 discuss discovery and limitations on new evidence. No 
discovery is permitted and no new evidence will be allowed to be 
admitted. Sections 134.713 and 134.714 set out the timing for the 
appeal petition. Under Section 134.713 the record will close when the 
time to file a response to an appeal petition expires pursuant to 13 
CFR 134.710. Under Sec.  134.714, the Judge must issue a decision 
within 15 business days after close of the record.
    Section 134.715 allows for the OHA Judge to reconsider an appeal 
decision within 20 calendar days after issuance of the written 
decision. Any party who has appeared in the proceeding, or SBA, can 
request reconsideration by filing with the Judge and serving a petition 
for reconsideration on all the parties to the appeal within 20 calendar 
days after service of the written decision.
    Compliance with Executive Orders 12866, 12988, and 13132, 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 under Executive Order 
12866. The Regulatory Impact Analysis is set forth below.

Regulatory Impact Analysis

1. Necessity of Regulation

    This regulatory action implements section 8(m) of the Act, which 
was enacted as part of section 811 of the Small Business 
Reauthorization Act of 2000, Public Law 106-554. Section 8(m) 
authorizes the creation of the set-aside procurement mechanism 
described in this regulation. Under this regulation contracting 
officers will be allowed to restrict competition to EDWOSBs or WOSBs in 
industries in which SBA has determined that WOSBs are underrepresented 
and when the procuring agency has conducted an appropriate analysis of 
the agency's procurement history and made a determination that there is 
sufficient evidence of relevant discrimination in that industry by that 
agency. This proposed rule will establish the requirements and 
procedures necessary to administer these restricted competitions.

2. Alternative Approaches to Proposed Rule

    In developing this proposed rule, SBA considered the costs and 
benefits of the alternatives for certification of small business 
concerns that claim EDWOSB or WOSB status, particularly the 
alternatives provided by section 8(m) of the Act. Specifically, section 
8(m)(2)(F) provides that in order to qualify as a WOSB or EDWOSB, a 
concern must either be certified by a Federal agency, a State 
government, or a national certifying entity approved by the 
Administrator, or, alternatively, must certify to the contracting 
officer that they are a small business concern owned and controlled by 
women. In light of this provision, SBA considered performing the 
certifications by requiring each concern to submit a formal application 
to SBA for a determination of its status. That approach would have 
entailed the electronic or paper submission of written documentation to 
support the concern's claim that it meets the eligibility criteria for 
being designated a WOSB or EDWOSB. SBA decided against utilizing this 
certification process as the method to establish WOSB or EDWOSB status 
primarily because of the paperwork burden and other costs that approach 
would impose on WOSBs.
    However, as an additional approach to self-certification, SBA is 
proposing to permit contracting activities to accept formal 
certification gained by WOSBs and EDWOSBs as a result of their 
participation in Federal small business programs. This may be 
accomplished by designating as WOSB or EDWOSB-certified all those 
concerns that at the time of procurement: (1) Were SBA certified as 
8(a) BD or SDB women-owned concerns in good standing; (2) held a 
current certification as a disadvantaged business enterprise (DBE) from 
a certifying entity of a Department of Transportation grant recipient; 
or (3) were certified by an SBA-approved certifier. SBA has rejected 
them as primary methods for WOSB or EDWOSB certification in favor of a 
self-certification process. In the event of a protest SBA will 
recognize these certifications as evidence of a concern's

[[Page 73292]]

representation in ORCA that it is a qualified EDWOSB or WOSB. The 
standards for meeting this requirement are discussed in more detail in 
the body of this proposed regulation.
    SBA believes that the proposed self-certification process would be 
the most beneficial and cost-effective approach for the small business 
concerns because they will not have to submit formal applications to 
SBA to become eligible for restricted competition for WOSB and EDWOSB 
procurements. As proposed, the self-certification process is similar to 
the one that is used in other existing SBA set-aside programs. For 
example, the SBA programs for small businesses and service-disabled 
veteran-owned small businesses permit those concerns to self-represent 
their size and socio-economic status when bidding on Federal contracts. 
The set-aside program for small businesses has worked well for decades. 
The set-aside program for service-disabled veteran-owned small 
businesses, while more recent, is also working well. Both of these set-
aside programs are credible because they are supported by robust 
protest procedures. In other words, when an interested party such as an 
unsuccessful offeror believes that the apparent successful bidder or 
offeror on a Federal contract is not a small business, or not a 
service-disabled veteran-owned small business in the case of a set-
aside for service-disabled veteran-owned small businesses, there is a 
formal process by which the interested party may submit a protest to 
SBA. This action halts the procurement until SBA investigates the 
allegations and reaches a decision. The subject proposed rule adopts 
the same approach, whereby interested parties may submit protests to 
SBA.
    The self-certification alternative will leverage two existing 
Federal electronic databases, the Central Contractor Registration (CCR) 
and the On-line Representations and Certifications Application (ORCA), 
to facilitate the self-certification process. The approach is also 
consistent with SBA's statutory responsibilities under section 8(m) of 
the Act to establish certification standards and procedures.

3. What Are the Potential Benefits and Costs of This Regulatory Action?

    This rule directs benefits to EDWOSBs and WOSBs at a cost to 
concerns ineligible for the program and at some cost to the taxpayer 
through restrictions on competition, resulting in increased contract 
prices and decreased selection of products and services and new 
administrative costs of managing a Federal procurement set-aside 
program and the eligibility determination processes. Generally, the 
cost of transferring a contract from one business to another has 
minimal cost to society as a whole, but the loss of efficiency through 
restrictions in contracting has broader impacts that depend highly on 
the use of this program by contracting officers and the availability of 
competition among EDWOSBs and WOSBs.
    The most significant effect of this rule will be the transfer of 
contract dollars to EDWOSBs and WOSBs through the contracting officers' 
ability to restrict competition to EDWOSBs or WOSBs in industries in 
which SBA has determined that WOSBs are underrepresented and 
substantially underrepresented and where certain threshold 
determinations are made by an agency. It is difficult to estimate the 
total number of potential beneficiaries or losers that will be eligible 
for Federal small business assistance as a result of this proposed 
rule. Based on the four NAICS codes (9281--National Security and 
International Affairs, 3328--Coating, Engraving, Heat Treating, and 
Allied Activities, 3371--Household and Institutional Furniture and 
Kitchen Cabinet Manufacturing, and 4412--Other Motor Vehicle Dealers) 
identified in the RAND study, utilizing the Dynamic Small Business 
Search (DSBS) engine in CCR, 1209 women-owned small businesses were 
identified as recipients of Federal contracts in these 4 NAICS codes. 
It is expected that the number of awards to EDWOSBs and WOSBs will 
increase within these NAICS codes, should an agency restrict 
competition to only those groups in accordance with the procedures in 
this proposed rule. This estimate is based on an analysis of EDWOSB and 
WOSB participation in Federal contracting and the industry market share 
identified in the RAND report. In addition, one purpose of this program 
is to draw additional EDWOSBs and WOSBs into Federal procurement 
through restricted competition in the identified NAICS codes. However, 
any such economic incentive to enter Federal procurement may represent 
a cost to the taxpayer and society in the form of higher contract 
prices or fewer choices of quality.
    From the point of view of Federal procurement policy, as set by 
statute, Federal agencies may benefit from the increased availability 
of EDWOSBs and WOSBs in order to meet their statutory goals. However, 
in the short term, restriction of competition raises the cost of 
contracts and limits the selection of products available. As more 
EDWOSBs and WOSBs enter into the Federal arena, competition will likely 
increase, lowering the cost of the program and ultimately eliminating 
underrepresentation within those industries and the industry's 
participation in the program. In the long run, even with the 
elimination of underrepresentation in all industries, small business 
opportunities may be enhanced by the experience gained in Federal 
contracting through set-asides under this program, but taxpayers 
ultimately bear the cost of small businesses inexperienced in Federal 
contracting learning through limited competition set-asides.
    Further, large businesses serving the Federal government as prime 
contractors with small business subcontracting goals may also benefit 
from a larger pool of WOSBs by enabling them to better achieve their 
subcontracting goals and at lower prices. No estimate of cost savings 
from these contracting decisions can be made since data are not 
available to directly measure price or competitive trends on Federal 
contracts.
    To the extent that additional firms become active in Government 
programs, this may entail some additional administrative costs to the 
Federal Government associated with additional bidders for Federal small 
business procurement programs, additional firms seeking SBA guaranteed 
lending programs, and additional firms eligible for enrollment in SBA's 
Dynamic Small Business Search data base. Among businesses in this group 
seeking SBA assistance, there will be some additional costs associated 
with compliance and verification associated with certification of small 
business status and protests of small business status. However, these 
activities are likely to generate minimal incremental costs since 
mechanisms are currently in place to handle these administrative 
requirements. In addition, SBA attempted to calculate the cost to 
agencies when determining if there has been discrimination against 
WOSBs or EDWOSBs in the designated industry groups. However, SBA does 
not have access to agency presolicitation market research or any other 
agency maintained data that would reveal the extent of an agency's 
efforts to consider or reject out-of-hand the offers of WOSBs or 
EDWOSBs in a post-contract award environment. SBA can however, state 
that the Government-wide study conducted by the Rand Corporation to 
determine industries where WOSBs were underrepresented cost 
approximately $250,000.00. SBA estimates that similar studies conducted 
by agencies in this regard should not exceed that figure, if they must 
seek outside assistance to make their determinations.

[[Page 73293]]

    This regulatory action promotes the Administration's objectives. 
One of SBA's goals in support of the Administration's objectives is to 
help individual small businesses succeed through fair and equitable 
access to capital and credit, government contracts, and management and 
technical assistance. Implementation of this proposed rule ensures that 
the intended beneficiaries have access to small business programs 
designed to assist them. This proposed rule does not interfere with 
state, local, and tribal governments in the exercise of their 
government functions. In a few instances, state and local governments 
have voluntarily adopted SBA's regulations for their programs to 
eliminate the need to establish an administrative mechanism for 
developing their own size standards.

Executive Order 12988

    This action meets applicable standards set forth in Sec. Sec.  3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

Executive Order 13132

    This rule does not have federalism implications as defined in the 
Executive Order. It 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 levels of government, as specified in Executive Order 13132.
    In the event of a protest, this proposed rule will allow a WOSB 
concern to substantiate its self-certifications by submitting an 
existing certification from an SBA approved State Government certifier. 
In order for SBA to accept a State's certification, the State must show 
that its certification process meets certain standards, including a 
showing that its process is based on the same criteria for WOSB or 
EDWOSB eligibility, as set forth in this regulation. However, this 
proposed rule will not mandate how the States conduct their 
certification processes, and as such the rule will not have a direct 
effect on the States. Therefore, for the purposes of Executive Order 
13132, SBA determines that this proposed rule has no federalism 
implications warranting preparation of a federalism assessment.

Paperwork Reduction Act (PRA)

    For purposes of the Paperwork Reduction Act, 44 U.S.C. chapter 35, 
SBA has determined that this proposed rule does not impose any new 
reporting or recordkeeping requirements. The certification process 
described in Subpart C, Sec. Sec.  127.300 to 127.305, is not an 
information collection. In general, certifications are not subject to 
the PRA notice and review requirements unless such certifications are 
used as a substitute for collecting information. The proposed self-
certification process does not require any concern seeking to benefit 
from Federal contracting opportunities designated for WOSBs or EDWOSBs 
to submit or maintain any information. Rather, the concerns will use 
the existing electronic contracting system (i.e., ORCA) to confirm the 
following statements, under penalty of perjury:
    (1) The concern is certified as a EDWOSB or WOSB by a certifying 
entity approved by SBA and there have been no changes in its 
circumstances affecting its eligibility since certification; or
    (2) The concern meets each of the applicable individual eligibility 
requirements described in subpart B, including that:
    (i) It is a small business concern under the size standard assigned 
to the particular procurement;
    (ii) It is at least 51 percent owned and controlled by one or more 
women who are United States citizens, or it is at least 51 percent 
owned and controlled by one or more women who are United States 
citizens and are economically disadvantaged; and
    (iii) Neither SBA, in connection with an examination or protest, 
nor an SBA-approved certifier has issued a decision currently in effect 
finding that it does not qualify as a EDWOSB or WOSB. The process for 
the annual recertification is similar in nature and as such also does 
not require any reporting or recordkeeping.
    The only occasion on which concerns would have to submit 
information to SBA would be in the context of a protest or examination, 
when SBA might request that a particular WOSB submit documentation to 
substantiate its claim. This proposed rule does not require the WOSBs 
to maintain any specific information for this purpose. Further, any 
request for substantiation would not be standardized but rather would 
be specific to a WOSB's particular status, and as such are also not 
subject to the PRA. Nonetheless, SBA would welcome any comments on the 
process as described.

Regulatory Flexibility Act

    SBA has determined that this proposed rule establishing a set-aside 
mechanism for WOSBs may have a significant economic impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act (RFA), 5 U.S.C. 601, et seq. Accordingly, 
SBA has prepared an Initial Regulatory Flexibility Analysis (IRFA) 
addressing the impact of this Rule in accordance with section 603, 
title 5, of the United States Code. The IRFA examines the objectives 
and legal basis for the proposed rule; the kind and number of small 
entities that may be affected; the projected recordkeeping, reporting, 
and other requirements; whether there are any Federal rules that may 
duplicate, overlap, or conflict with the proposed rule; and whether 
there are any significant alternatives to the proposed rule.

1. What are the Reasons for, and Objectives of, the Proposed Rule?

    SBA is establishing procedures whereby Federal procuring agencies 
may use restricted competition in industries where WOSBs are 
underrepresented in Federal procurement and when certain other 
conditions are met. The purpose of the proposed rule is to create an 
initial framework and infrastructure for implementing these new 
procedures, thereby providing a tool for Federal agencies to increase 
Federal contracting to WOSBs.
    The objective of this proposed rule is to increase the amount of 
Federal contract dollars awarded to WOSBs in industries where they are 
currently underutilized. These procedures will assist Federal agencies 
in achieving the Federal Government's goal of awarding five percent of 
Federal contract dollars to WOSBs, as provided in the Federal 
Acquisition Streamlining Act of 1994. Federal procurement was just over 
$340 billion in FY 2006, the most recent fiscal year for which 
procurement data are available, and only $11.6 billion, or barely more 
than 3.4 percent, was awarded to WOSBs.

2. What is the Legal Basis for the Proposed Rule?

    SBA is proposing this regulation pursuant to section 8(m) of the 
Small Business Act, 15 U.S.C. 637(m), which authorizes the creation and 
implementation of a new mechanism for Federal contracting with WOSBs.

3. What is SBA's Description and Estimate of the Number of Small 
Entities to Which the Rule will Apply?

    The RFA directs agencies to provide a description, and where 
feasible, an estimate of the number of small business concerns that may 
be affected by the rule. This proposed rule will ultimately establish 
in the Federal

[[Page 73294]]

Acquisition Regulation (FAR) a new procurement mechanism to benefit 
WOSBs. Therefore, WOSBs that compete for Federal contracts are the 
specific group of small business concerns most directly affected by 
this rule. The rule may also affect other small businesses to the 
extent that small businesses not owned and controlled by women may be 
excluded from competing for certain Federal contracting opportunities.
    A survey of WOSBs in the CCR DSBS on September 19, 2007, identified 
a total of 1,208 WOSBs in the four industries identified by the RAND 
Corporation as those in which WOSBs are underrepresented or 
substantially underrepresented. The actual number of WOSBs in these 
industries may be less than 1,208 since some firms may have appeared 
under more than one industry search, and there is no simple method of 
determining how many firms, if any, appeared more than once. In 
addition, many otherwise-qualified EDWOSBs and WOSBs will not find it 
advantageous to pursue set-asides for WOSBs, since the industries in 
which they do business are not one of the four industries that RAND has 
identified in its study that may eventually be eligible for set-asides. 
However, the actual number may be more if SBA approves additional 
industries for set-aside procurements under these procedures.
    This proposed rule may also have a substantially adverse impact on 
small businesses other than WOSBs that are excluded from competition 
for Federal contracts that are set aside exclusively for WOSBs. Non-
WOSB small businesses in the four designated industries identified in 
the Rand Corporation study may lose contracting opportunities when 
contracts are re-competed or may be excluded from opportunities from 
which they would have otherwise benefited. This would be particularly 
harmful for non-WOSBs in these industries that derive a significant 
portion of their business from Federal contracting. The number of small 
businesses that would be excluded under the proposed determination of 
eligible industries or future such determinations is not known at this 
time, but it could be a substantial number. SBA is seeking public 
comment on the adverse effects of this program on non-WOSB small 
business concerns through this proposed rule.
    Additional contracting opportunities identified by Federal agencies 
as candidates to set aside for WOSBs will come from new contracting 
requirements and contracts currently performed by small and large 
businesses. At this time, SBA cannot accurately predict how the 
existing distribution of contracts by business type may change by this 
rule. However, SBA does not expect many, if any, contracts awarded 
through the 8(a), HUBZone, or SDVOSB Programs ($22.6 billion in FY 
2006) to be re-competed as WOSB or EDWOSB set-aside contracts because 
those programs also support other socioeconomic goals that agencies 
strive to achieve through their contracting activities.

4. What are the Projected Reporting, Recordkeeping, Paperwork Reduction 
Act and Other Compliance Requirements?

    WOSBs are not required to be certified as such in order to contract 
with the Federal Government. This will still be true if the proposed 
rule is adopted. However, for a WOSB to be eligible for Federal 
contracts restricted to WOSBs or EDWOSBs, it will have to self-certify 
its status as a WOSB. This requirement ensures that participation in 
certain contracting opportunities is restricted to qualified WOSBs 
according to the terms of section 8(m) of the Act and the criteria in 
this proposed rule. Similar eligibility requirements apply to WOSBs 
desiring to participate in SBA's 8(a) or SDB programs or the Department 
of Transportation's Disadvantaged Business Enterprise program. Further, 
SBA proposes to accept for WOSB-restricted contracts, those WOSBs 
currently certified for those programs.
    However, some WOSBs may choose to participate in procurements 
restricted for competition to WOSBs or EDWOSBs and may decide to pursue 
formal certification under one of the programs referred to in the 
previous paragraph to: (1) Obtain the additional benefits afforded to 
them by those Federal programs; and (2) to use that formal 
certification as an assurance that they are qualified for participation 
in procurements restricted to WOSBs and EDWOSBs.
    This formal certification requirement will have associated costs, 
i.e., labor costs, for participating WOSBs. At a minimum, potential 
participants must complete specific forms and provide adequate 
documentation of their qualifications. Documents may include what a 
business would normally have on hand, e.g., ownership records, tax 
records, etc. Firms applying for certification will have to locate copy 
and submit supporting documents. SBA estimates that the cost to 
complete these activities based on similar requirements for other SBA 
programs, will be approximately $150.00 per hour. After the tax and 
other business papers for documentation are assembled, completing the 
process application is estimated to take about 2.5 hours. An estimated 
2,000 firms per year are expected to apply using this process and thus, 
the total cost is estimated to be $750,000 per year. The paperwork 
burden on the WOSB applying for certification is estimated from SBA's 
experience with SDB and 8(a) applications that require similar 
documentation to support the claim of economic disadvantage and 51 
percent ownership and control of the firm.
    As noted earlier in this rule, WOSBs and EDWOSBs will not be 
required to submit any information to SBA to participate in restricted 
competition, or to maintain any additional information as a result of 
this rule. Therefore, SBA does not anticipate any reporting or 
recordkeeping burden directly associated with this proposed rule. Any 
costs associated with the concerns use of CCR or ORCA to complete their 
self-certifications would be de minimis.

5. What Relevant Federal Rules May Duplicate, Overlap, or Conflict With 
This Rule?

    SBA has not identified any relevant Federal rules currently in 
effect that duplicate or conflict with this rule. The restricted-
competition feature of the set-aside mechanism for WOSBs will be an 
addition to the existing preference programs that agencies currently 
administer, such as small business set-asides, HUBZone set-asides, 
service-disabled veteran-owned small business set-asides, and contracts 
reserved for the 8(a) Business Development program. For any particular 
contract, a contracting officer may have a range of set-aside options 
from which to select. Because any contract awarded to a WOSB will also 
count towards an agency's small business goal, these procedures may 
lead a contracting officer to select this program in lieu of another.
    Therefore, although there may be some overlap, the addition of the 
set-aside mechanism for women-owned small business should complement 
rather than conflict with the goals of existing set-aside programs.

6. What Significant Alternatives Did SBA Consider That Accomplish the 
Stated Objectives and Minimize Any Significant Economic Impact on Small 
Entities?

    The Regulatory Flexibility Act (RFA) requires agencies to identify 
alternatives to the rule in an effort to minimize any significant 
economic impact of the rule on small entities. SBA has determined that 
the rule may have a significant economic impact on a substantial number 
of small entities.

[[Page 73295]]

    This rule will implement the set-aside mechanism for WOSBs, as 
established by Sec.  8(m) of the Act. All of the provisions of this 
rule reflect requirements under that statute. The legislation does 
provide SBA with alternative approaches, however, for the certification 
of WOSBs. Specifically, a WOSB may be certified by a Federal agency, a 
State government, or a national certifying entity approved by the 
Administrator; or, alternatively, a WOSB may self-certify to the 
contracting officer that it is a small business concern owned and 
controlled by women, along with adequate documentation in accordance 
with standards established by the Administration. As discussed earlier, 
SBA will allow EDWOSBs and WOSBs to self-certify their status in the 
existing CCR and ORCA databases. An alternative approach would have 
been to require EDWOSBs and WOSBs to apply to SBA or some other entity 
for formal certification. For the reasons discussed earlier, SBA has 
ruled out this approach as unnecessary and too costly. SBA believes 
that eligibility examinations and protest procedures incorporated into 
the proposed rule will minimize the likelihood of fraud and 
misrepresentation of WOSB and EDWOSB status.
    In addition, SBA attempted to calculate the cost to agencies when 
determining if there has been discrimination against WOSBs or EDWOSBs 
in the designated industry groups. However, SBA does not have access to 
agency presolicitation market research or any other agency maintained 
data that would reveal the extent of an agency's efforts to consider or 
reject out-of-hand the offers of WOSBs or EDWOSBs in a post-contract 
award environment. SBA can, however, state the Government-wide study 
conducted by the Rand Corporation to determine industries where WOSBs 
were underrepresented cost approximately $250,000.00. SBA estimates 
that similar studies conducted by agencies in this regard should not 
exceed that figure, if they must seek outside assistance to make their 
determinations.
    SBA estimates that implementation of this regulation will require 
no additional proposal costs for WOSBs, as compared to submitting 
proposals under any other small business set-aside program. Moreover, 
WOSBs currently represent their status for purposes of data collection 
that is needed to implement 15 U.S.C. 644(g); therefore, the self-
certification process of this proposed rule imposes no additional 
requirement on WOSBs.

List of Subjects

13 CFR Part 121

    Government procurement, Government property, Grant programs--
business, Individuals with disabilities, Loan programs--business, Small 
businesses.

13 CFR Part 125

    Government contracts, Government procurement, Reporting and 
recordkeeping requirements, Small businesses, Technical assistance.

13 CFR Part 127

    Government procurement, Reporting and recordkeeping requirements, 
Small businesses.

13 CFR Part 134

    Administrative practice and procedure, Claims, Equal access to 
justice, Lawyers, Organization and functions, Rules of practice for 
appeals, appeals of size determinations, appeals of NAICS code 
designations, appeals under the 8(a) Program, appeals from service-
disabled veteran-owned small business concerns protests.
    Accordingly, for the reasons stated in the preamble, SBA amends 13 
CFR parts 121, 125, 127 and 134 as follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

    1. The authority citation for 13 CFR part 121 is revised to read as 
follows:

    Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637, 644, and 
662(5); and Public Law 105-135, sec. 401 et seq., 111 Stat. 2592.


Sec.  121.401  [Amended]

    2. Amend Sec.  121.401 by adding the phrase ``the Women-Owned Small 
Business (WOSB) Federal Contract Assistance Procedures,'' after the 
phrase ``SBA's HUBZone Program''.
    3. Amend Sec.  121.1001 by adding a new paragraph (a)(9) to read as 
follows:


Sec.  121.1001  Who may initiate a size protest or request a formal 
size determination?

    (a) * * *
    (9) For SBA's WOSB Federal Contracting Assistance Procedures, the 
following entities may protest:
    (i) Any concern that submits an offer for a specific requirement 
set aside for WOSBs or WOSBs owned by one or more women who are 
economically disadvantaged (EDWOSB);
    (ii) The contracting officer;
    (iii) The SBA Government Contracting Area Director; and
    (iv) The Director for Government Contracting, or designee.
* * * * *
    4. Amend Sec.  121.1008(a) by adding a new sentence after the 
second sentence to read as follows:


Sec.  121.1008  What happens after SBA receives a size protest or a 
request for a formal size determination?

    (a) * * * If the protest pertains to a requirement set aside for 
WOSBs or EDWOSBs, the Area Director will also notify SBA's Director for 
Government Contracting of the protest. * * *

PART 125--GOVERNMENT CONTRACTING PROGRAMS

    5. The authority citation for 13 CFR part 125 continues to read as 
follows:

    Authority: 15 U.S.C. 632(p), (q), 634 (b)(6), 637, 644, and 
657f.
    6. Amend Sec.  125.6 by revising paragraph (a) introductory text to 
read as follows:


Sec.  125.6  Prime contractor performance requirements (limitations on 
subcontracting).

    (a) In order to be awarded a full or partial small business set-
aside contract, an 8(a) contract, a WOSB or EDWOSB contract pursuant to 
part 127 of this chapter, or an unrestricted procurement where a 
concern has claimed a 10 percent small disadvantaged business (SDB) 
price evaluation preference, a small business concern must agree that:
* * * * *
    7. Add a new part 127 to read as follows:

PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT ASSISTANCE 
PROCEDURES

Subpart A--General Provisions
Sec.
127.100 What is the purpose of this part?
127.101 What type of assistance is available under this part?
127.102 What are the definitions of the terms used in this part?
Subpart B--Eligibility Requirements To Qualify as an EDWOSB or WOSB
127.200 What are the requirements a concern must meet to qualify as 
an EDWOSB or WOSB?
127.201 What are the requirements for ownership of an EDWOSB and 
WOSB?
127.202 What are the requirements for control of an EDWOSB or WOSB?
127.203 What are the rules governing the requirement that 
economically disadvantaged women must own EDWOSBs?
Subpart C--Certification of EDWOSB or WOSB Status
127.300 How is a concern certified as an EDWOSB or WOSB?
127.301 When may a contracting officer accept a concern's self-
certification?

[[Page 73296]]

127.302 What third-party certifications may a concern use as 
evidence of its status as a qualified EDWOSB or WOSB?
127.303 How will SBA select and identify approved certifiers?
127.304 How does a concern obtain certification from an approved 
certifier?
127.305 May a concern determined not to qualify as an EDWOSB or WOSB 
submit a self-certification for a particular EDWOSB or WOSB 
requirement?
Subpart D--Eligibility Examinations
127.400 What is an eligibility examination?
127.401 What is the difference between an eligibility examination 
and an EDOWSB or WOSB status protest pursuant to subpart F of this 
part?
127.402 How will SBA conduct an eligibility examination?
127.403 What happens if SBA verifies the concern's eligibility?
127.404 What happens if SBA is unable to verify a concern's 
eligibility?
127.405 What is the process for requesting an eligibility 
examination?
Subpart E--Federal Contract Assistance
127.500 In what industries is a contracting officer authorized to 
restrict competition under this part?
127.501 How will SBA and the agencies determine the industries in 
which WOSBs are underrepresented or substantially underrepresented?
127.502 How will SBA identify and provide notice of the designated 
industries?
127.503 When is a contracting officer authorized to restrict 
competition under this part?
127.504 What additional requirements must a concern satisfy to 
submit an offer on an EDWOSB or WOSB requirement?
127.505 May a non-manufacturer submit an offer on an EDWOSB or WOSB 
requirement for supplies?
127.506 May a joint venture submit an offer on an EDWOSB or WOSB 
requirement?
Subpart F--Protests
127.600 Who may protest the status of a concern as an EDWOSB or 
WOSB?
127.601 May a protest challenging the size and status of a concern 
as an EDWOSB or WOSB be filed together?
127.602 What are the grounds for filing an EDWOSB or WOSB status 
protest?
127.603 What are the requirements for filing an EDWOSB or WOSB 
protest?
127.604 How will SBA process an EDWOSB or WOSB status protest?
127.605 What are the procedures for appealing an EDWOSB or WOSB 
status protest decision?
Subpart G--Penalties
127.700 What penalties may be imposed under this part?

    Authority: 15 U.S.C. 632, 634(b)(6), 637(m), and 644.

Subpart A--General Provisions


Sec.  127.100  What is the purpose of this part?

    Section 8(m) of the Small Business Act authorizes certain 
procurement mechanisms to increase Federal contracting opportunities 
for women-owned small businesses (WOSBs) and to assist agencies in 
achieving their WOSB participation goals mandated under Section 15(g) 
of the Small Business Act.


Sec.  127.101  What type of assistance is available under this part?

    This part authorizes contracting officers to restrict competition 
to eligible WOSBs for certain Federal contracts in industries in which 
the Small Business Administration (SBA) has determined that WOSBs are 
underrepresented or substantially underrepresented in Federal 
procurement and the procuring agency has satisfied itself through 
appropriate analysis (including analysis of its own procurement 
history), that the set-aside would meet all applicable legal 
requirements, including the equal protection requirements of the Due 
Process Clause of the Fifth Amendment of the Constitution.


Sec.  127.102  What are the definitions of the terms used in this part?

    For purposes of this part:
    8(a) Business Development (8(a) BD) concern means a concern that 
SBA has certified as an 8(a) BD program participant.
    AA/GC&BD means SBA's Associate Administrator for Government 
Contracting and Business Development.
    Central Contractor Registration (CCR) means the system that 
functions as the central registration and repository of contractor data 
for the Federal government. CCR also serves as the single portal for 
conducting searches of small business contractors. Prospective Federal 
contractors must be registered in CCR prior to award of a contract or 
purchase agreement, unless the award results from a solicitation issued 
on or before May 31, 1998.
    Citizen means a person born or naturalized in the United States. 
Resident aliens and holders of permanent visas are not considered to be 
citizens.
    Concern means a firm that satisfies the requirements in Sec.  
121.105 this chapter.
    Contracting officer has the meaning given to that term in Section 
27(f)(5) of the Office of Federal Procurement Policy Act (codified at 
41 U.S.C. 423(f)(5)).
    D/GC means SBA's Director for Government Contracting.
    Economically disadvantaged WOSB (EDWOSB) means a concern that is 
small pursuant to part 121 of this title and that is at least 51% owned 
and controlled by one or more women who are U.S. citizens and who are 
economically disadvantaged in accordance with Sec. Sec.  127.200, 
127.201, 127.202 and 127.203. An EDWOSB automatically qualifies as a 
WOSB.
    EDWOSB requirement means a Federal requirement for services or 
supplies for which a contracting officer has restricted competition to 
EDWOSBs.
    Immediate family member means father, mother, husband, wife, son, 
daughter, brother, sister, grandfather, grandmother, grandson, 
granddaughter, father-in-law, mother-in-law, son-in-law, and daughter-
in-law.
    Interested party means any concern that submits an offer for a 
specific EDWOSB or WOSB requirement, the contracting activity's 
contracting officer, or SBA.
    ORCA means the Online Representations and Certifications 
Application at https://orca.bpn.gov, a required registration for 
contractors interested in bidding on most Federal contracts.
    Primary industry classification means the six-digit North American 
Industry Classification System (NAICS) code designation that best 
describes the primary business activity of the concern. The NAICS code 
designations are described in the NAICS manual available via the 
Internet at http://www.census.gov/NAICS. In determining the primary 
industry in which a concern is engaged, SBA will consider the factors 
set forth in Sec.  121.107 of this chapter.
    Small disadvantaged business (SDB) means a concern that SBA has 
certified in accordance with subpart B of part 124 of this chapter, and 
is designated on CCR as an SDB.
    Substantial underrepresentation means a disparity ratio between 0.0 
and 0.5; i.e., the ratio representing the WOSB share of Federal prime 
contract dollars divided by the WOSB share of total business receipts.
    Underrepresentation means a disparity ratio between 0.5 and 0.8; 
i.e., the ratio representing the WOSB share of Federal prime contract 
dollars divided by the WOSB share of total business receipts.
    WOSB means a concern that is small pursuant to part 121 of this 
chapter, and that is at least 51% owned and controlled by one or more 
women in accordance with Sec. Sec.  127.200, 127.201 and 127.202.
    WOSB requirement means a Federal requirement for services or 
supplies for which a contracting officer has restricted competition to 
eligible WOSBs.

[[Page 73297]]

Subpart B--Eligibility Requirements To Qualify as an EDWOSB or WOSB


Sec.  127.200  What are the requirements a concern must meet to qualify 
as an EDWOSB or WOSB?

    (a) Qualification as an EDWOSB. To qualify as an EDWOSB, a concern 
must be:
    (1) A small business as defined in part 121 of this chapter; and
    (2) Not less than 51 percent unconditionally and directly owned and 
controlled by one or more women who are United States citizens and are 
economically disadvantaged.
    (b) Qualification as a WOSB. To qualify as a WOSB, a concern must 
be:
    (1) A small business as defined in part 121 of this chapter; and
    (2) Not less than 51 percent unconditionally and directly owned and 
controlled by one or more women who are United States citizens.


Sec.  127.201  What are the requirements for ownership of an EDWOSB and 
WOSB?

    (a) General. To qualify as an EDWOSB or WOSB, one or more women 
must unconditionally and directly own at least 51 percent of the 
concern. Ownership will be determined without regard to community 
property laws.
    (b) Requirement for unconditional ownership. To be considered 
unconditional, the ownership must not be subject to any conditions, 
executory agreements, voting trusts, or other arrangements that cause 
or potentially cause ownership benefits to go to another. The pledge or 
encumbrance of stock or other ownership interest as collateral, 
including seller-financed transactions, does not affect the 
unconditional nature of ownership if the terms follow normal commercial 
practices and the owner retains control absent violations of the terms.
    (c) Requirement for direct ownership. To be considered direct, the 
qualifying women must own 51 percent of the concern directly. The 51 
percent ownership may not be through another business entity or a trust 
(including employee stock ownership trusts) that is, in turn, owned and 
controlled by one or more women or economically disadvantaged women. 
However, ownership by a trust, such as a living trust, may be treated 
as the functional equivalent of ownership by a woman or economically 
disadvantaged woman where the trust is revocable, and the woman is the 
grantor, a trustee, and the sole current beneficiary of the trust.
    (d) Ownership of a partnership. In the case of a concern that is a 
partnership, at least 51 percent of each class of partnership interest 
must be unconditionally owned by one or more women. The ownership must 
be reflected in the concern's partnership agreement. For purposes of 
this requirement, general and limited partnership interests are 
considered different classes of partnership interest.
    (e) Ownership of a limited liability company. In the case of a 
concern that is a limited liability company, at least 51 percent of 
each class of member interest must be unconditionally owned by one or 
more women.
    (f) Ownership of a corporation. In the case of a concern that is a 
corporation, at least 51 percent of each class of voting stock 
outstanding and 51 percent of the aggregate of all stock outstanding 
must be unconditionally owned by one or more women. In determining 
unconditional ownership of the concern, any unexercised stock options 
or similar agreements held by a woman will be disregarded. However, any 
unexercised stock option or other agreement, including the right to 
convert non-voting stock or debentures into voting stock, held by any 
other individual or entity will be treated as having been exercised.


Sec.  127.202  What are the requirements for control of an EDWOSB or 
WOSB?

    (a) General. To qualify as an EDWOSB or WOSB, the management and 
daily business operations of the concern must be controlled by one or 
more women. Control by one or more women means that both the long-term 
decision making and the day-to-day management and administration of the 
business operations must be conducted by one or more women.
    (b) Managerial position and experience. A woman must hold the 
highest officer position in the concern (usually President or Chief 
Executive Officer) and must have managerial experience of the extent 
and complexity needed to run the concern. The woman manager need not 
have the technical expertise or possess the required license to be 
found to control the concern if she can demonstrate that she has 
ultimate managerial and supervisory control over those who possess the 
required licenses or technical expertise. However, if a man possesses 
the required license and has an equity interest in the concern, he may 
be found to control the concern.
    (c) Limitation on outside employment. The woman who holds the 
highest officer position of the concern may not engage in outside 
employment that prevents her from devoting sufficient time and 
attention to the daily affairs of the concern to control its management 
and daily business operations.
    (d) Control over a partnership. In the case of a partnership, one 
or more women must serve as general partners, with control over all 
partnership decisions.
    (e) Control over a limited liability company. In the case of a 
limited liability company, one or more women must serve as management 
members, with control over all decisions of the limited liability 
company.
    (f) Control over a corporation. One or more women must control the 
Board of Directors of the concern. Women are considered to control the 
Board of Directors when either:
    (1) One or more women own at least 51 percent of all voting stock 
of the concern, are on the Board of Directors and have the percentage 
of voting stock necessary to overcome any super majority voting 
requirements; or
    (2) Women comprise the majority of voting directors through actual 
numbers or, where permitted by state law, through weighted voting.
    (g) Involvement in the concern by other individuals or entities. 
Men or other entities may be involved in the management of the concern 
and may be stockholders, partners or limited liability members of the 
concern. However, no males or other entity may exercise actual control 
or have the power to control the concern.


Sec.  127.203  What are the rules governing the requirement that 
economically disadvantaged women must own EDWOSBs?

    (a) General. To qualify as an EDWOSB, the concern must be at least 
51% owned by one or more women who are economically disadvantaged. A 
woman is economically disadvantaged if she can demonstrate that her 
ability to compete in the free enterprise system has been impaired due 
to diminished capital and credit opportunities as compared to others in 
the same or similar line of business.
    (b) Limitation on personal net worth. In order to be considered 
economically disadvantaged, the woman's personal net worth must be less 
than $750,000, excluding her ownership interest in the concern and 
equity in her primary personal residence.
    (c) Factors that may be considered. The personal financial 
condition of the woman claiming economic disadvantage, including her 
personal income for the past two years (including bonuses, and the 
value of company stock given in lieu of cash), her personal net worth 
and the fair market value of all of her assets, whether encumbered or 
not, may be considered in determining

[[Page 73298]]

whether she is economically disadvantaged.
    (d) Transfers within two years. Assets that a woman claiming 
economic disadvantage transferred within two years of the date of the 
concern's certification will be attributed to the woman claiming 
economic disadvantage if the assets were transferred to an immediate 
family member, or to a trust that has as a beneficiary an immediate 
family member. The transferred assets within the two-year period will 
not be attributed to the woman if the transfer was:
    (1) To or on behalf of an immediate family member for that 
individual's education, medical expenses, or some other form of 
essential support; or
    (2) To an immediate family member in recognition of a special 
occasion, such as a birthday, graduation, anniversary, or retirement.

Subpart C--Certification of EDWOSB or WOSB Status


Sec.  127.300  How is a concern certified as an EDWOSB or WOSB?

    (a) General. At the time a concern submits an offer on a specific 
contract reserved for competition under this Part, it must be 
registered in the Central Contractor Registration (CCR) and have a 
current self-certification posted on the Online Representations and 
Certifications Application (ORCA) that it qualifies as an EDWOSB or 
WOSB.
    (b) Form of certification. In conjunction with its required 
registration in the CCR database, the concern must submit a self-
certification to the electronic annual representations and 
certifications at http://orca.bpn.gov, that it is a qualified EDWOSB or 
WOSB. The self-certification must include a representation under the 
penalty of perjury that:
    (1) The concern is certified as a EDWOSB or WOSB by a certifying 
entity approved by SBA and there have been no changes in its 
circumstances affecting its eligibility since certification; or
    (2) The concern meets each of the applicable individual eligibility 
requirements described in subpart B of this part, including that:
    (i) It is a small business concern under the size standard assigned 
to the particular procurement;
    (ii) It is at least 51 percent owned and controlled by one or more 
women who are United States citizens, or it is at least 51 percent 
owned and controlled by one or more women who are United States 
citizens and are economically disadvantaged; and
    (iii) Neither SBA, in connection with an examination or protest, 
nor an SBA-approved certifier has issued a decision currently in effect 
finding that it does not qualify as a EDWOSB or WOSB.
    (c) Update of certification. The concern must update its EDWOSB and 
WOSB representations and self-certification on ORCA as necessary, but 
at least annually, to ensure they are kept current, accurate, and 
complete. The representations and self-certification are effective for 
a period of one year from the date of submission or update to ORCA.


Sec.  127.301  When may a contracting officer accept a concern's self-
certification?

    (a) General. A contracting officer may accept a concern's self-
certification on ORCA as accurate for a specific procurement reserved 
for award under this Part in the absence of a protest or other credible 
information that calls into question the concern's eligibility as a 
EDWOSB or WOSB. An example of such credible evidence includes 
information that the concern was determined by SBA or an SBA-approved 
certifier not to qualify as a EDWOSB or WOSB.
    (b) Referral to SBA. When the contracting officer has information 
that calls into question the eligibility of a concern as a EDWOSB or 
WOSB, the contracting officer must refer the concern's self-
certification to SBA for verification of the concern's eligibility by 
filing an EDWOSB or WOSB status protest pursuant to subpart F of this 
Part.


Sec.  127.302  What third-party certifications may a concern use as 
evidence of its status as a qualified EDWOSB or WOSB?

    (a) General. In order for a concern to use a certification by 
another entity as evidence of its status as a qualified EDWOSB or WOSB 
in support of its representations in ORCA pursuant to Sec.  127.300(b), 
the concern must have a current, valid certification from:
    (1) SBA as an 8(a) BD or SDB women-owned concern in good standing;
    (2) The Department of Transportation as a disadvantaged business 
enterprise (DBE) that is at least 51 percent owned and controlled by 
one or more women; or
    (3) An entity designated as an SBA-approved certifier on SBA's Web 
site located at http://www.sba.gov/GC.
    (b) [Reserved]


Sec.  127.303  How will SBA select and identify approved certifiers?

    (a) General. SBA may enter into written agreements to accept the 
EDWOSB or WOSB certification of a Federal agency or national certifying 
entity if SBA determines that the entity's certification process 
complies with SBA-approved certification standards and is based upon 
the same EDWOSB or WOSB eligibility requirements set forth in subpart B 
of this part. The written agreement will include a provision 
authorizing SBA to 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 EDWOSB 
or WOSB eligibility requirements as set forth in subpart B of this 
part.
    (b) Required certification standards. In order for SBA to enter 
into an agreement to accept the EDWOSB or WOSB certification of a 
Federal agency, state government, or national certifying entity, the 
entity must establish the following:
    (1) It will render fair and impartial EDWOSB or WOSB eligibility 
determinations.
    (2) Its certification process will require applicant concerns to 
pre-register on CCR and submit sufficient information to enable it to 
determine whether the concern qualifies as an EDWOSB or WOSB. This 
information must include documentation demonstrating whether the 
concern is:
    (i) A small business concern under SBA's size standards for its 
primary industry classification;
    (ii) At least 51 percent owned and controlled by one or more women 
who are United States citizens; and
    (iii) In the case of a concern applying for EDWOSB certification, 
at least 51 percent owned and controlled by one or more women who are 
United States citizens and economically disadvantaged.
    (3) It will not decline to accept a concern's application for 
EDWOSB or WOSB certification on the basis of race, color, national 
origin, religion, age, disability, sexual orientation, or marital or 
family status.
    (c) List of SBA-approved certifiers. SBA will maintain a list of 
approved certifiers on SBA's Internet Web site at http://www.sba.gov/GC. Any interested person may also obtain a copy of the list from the 
local SBA district office.


Sec.  127.304  How does a concern obtain certification from an approved 
certifier?

    A concern that seeks EDWOSB or WOSB certification from an SBA-
approved certifier must submit its application directly to the approved 
certifier in accordance with the specific application procedures of the 
particular certifier. Any interested party may obtain such 
certification information and application by contacting the approved 
certifier at the address

[[Page 73299]]

provided on SBA's list of approved certifiers.


Sec.  127.305  May a concern determined not to qualify as an EDWOSB or 
WOSB submit a self-certification for a particular EDWOSB or WOSB 
requirement?

    A concern that SBA or an SBA-approved certifier determines does not 
qualify as an EDWOSB or WOSB may not represent itself to be an EDWOSB 
or WOSB, as applicable, unless SBA subsequently determines that it is 
an eligible EDWOSB or WOSB pursuant to the examination procedures under 
Sec.  127.405 of subpart D, and there have been no material changes in 
its circumstances affecting its eligibility since SBA's eligibility 
determination. Any concern determined not to be a qualified EDWOSB or 
WOSB may request that SBA conduct an examination to determine its 
EDWOSB or WOSB eligibility at any time once it believes in good faith 
that it satisfies all of the eligibility requirements to qualify as an 
EDWOSB or WOSB.

Subpart D--Eligibility Examinations


Sec.  127.400  What is an eligibility examination?

    An eligibility examination is an investigation by SBA to verify 
that a concern meets the EDWOSB or WOSB eligibility requirements at the 
time of the examination. SBA may, in its sole discretion, perform an 
examination at any time after a concern self-certifies in CCR or ORCA 
that it is an EDWOSB or WOSB.


Sec.  127.401  What is the difference between an eligibility 
examination and an EDWOSB or WOSB status protest pursuant to subpart F 
of this part?

    (a) Eligibility examination. An eligibility examination is the 
formal process through which SBA verifies and monitors the continuing 
eligibility of a concern that is designated on CCR or ORCA as an EDWOSB 
or WOSB. For purposes of an examination, the D/GC will determine the 
eligibility of a concern as of the date SBA notifies the concern that 
it will conduct the examination. The D/GC's eligibility decision 
constitutes the final agency decision and will be effective and apply 
to all solicitations issued on or after the date of the decision issued 
pursuant to Sec. Sec.  127.403, 127.404(b), or 127.405(e). If SBA is 
conducting an eligibility examination on a concern that has submitted 
an offer on a pending EDWOSB or WOSB procurement and SBA has credible 
information that the concern may not qualify as an EDWOSB or WOSB, then 
SBA may initiate a protest pursuant to Sec.  127.600, to suspend award 
of the contract for 15 business days pending SBA's determination of the 
concern's eligibility.
    (b) EDWOSB or WOSB protests. An EDWOSB or WOSB status protest 
provides a mechanism for challenging or verifying the EDWOSB or WOSB 
eligibility of a concern in connection with a specific EDWOSB or WOSB 
requirement. SBA will process EDWOSB or WOSB protests in accordance 
with the procedures and timeframe set forth in subpart F, and will 
determine the EDWOSB or WOSB eligibility of the protested concern as of 
the date the concern represented its EDWOSB or WOSB status as part of 
its initial offer including price. SBA's protest determination will 
apply to the specific procurement to which the protest relates and to 
future procurements.


Sec.  127.402  How will SBA conduct an examination?

    (a) Notification. No less than 5 business days before commencing an 
examination, SBA will notify the concern in writing that it will 
conduct an examination to determine the status of the concern as an 
EDWOSB or WOSB. The notification also will advise the concern that its 
EDWOSB or WOSB eligibility will be determined based on the status of 
the concern on the date of the notification.
    (b) Request for information. SBA may request that the concern 
provide documentation and information related to the concern's EDWOSB 
or WOSB eligibility. SBA may draw an adverse inference where a concern 
fails to cooperate in providing the requested information.


Sec.  127.403  What happens if SBA verifies the concern's eligibility?

    If SBA verifies that the concern satisfies the applicable EDWOSB or 
WOSB eligibility requirements at the time of the eligibility 
examination, then the D/GC will send the concern a written decision to 
that effect and will allow the concern's EDWOSB or WOSB designation in 
CCR and ORCA to stand.


Sec.  127.404  What happens if SBA is unable to verify a concern's 
eligibility?

    (a) Notice of proposed determination of ineligibility. If SBA is 
unable to verify that the concern qualifies as an EDWOSB or WOSB at the 
time of the examination, then the D/GC will send the concern a written 
notice explaining the reasons SBA believes the concern does not qualify 
as an EDWOSB or WOSB. The notice will advise the concern that it has 15 
calendar days from the date it receives the notice to respond.
    (b) SBA determination. Following the 15-day response period, the D/
GC or designee will consider the reasons of proposed ineligibility and 
any information the concern submitted in response, and will send the 
concern a written decision finding that it either qualifies or does not 
qualify as an EDWOSB or WOSB.
    (1) If SBA verifies that the concern qualifies as an EDWOSB or WOSB 
at the time of the examination, then the D/GC will send the concern a 
decision to that effect and will allow the concern to continue to self-
certify its EDWOSB or WOSB status.
    (2) If SBA determines that the concern does not qualify as an 
EDWOSB or WOSB, then the D/GC will send the concern a written decision 
explaining the basis of ineligibility, and will require that the 
concern remove its EDWOSB or WOSB designation in the CCR and ORCA 
within five business days after the date of the decision.


Sec.  127.405  What is the process for requesting an eligibility 
examination?

    (a) General. A concern may request that SBA conduct an examination 
to verify its eligibility as an EDWOSB or WOSB at any time after it is 
determined by SBA or an SBA-approved certifier not to qualify as an 
EDWOSB or WOSB, if the concern believes in good faith that it satisfies 
all of the EDWOSB or WOSB eligibility requirements under subpart B of 
this part.
    (b) Format. The request for an examination must be in writing and 
must specify the particular reasons the concern was determined not to 
qualify as an EDWOSB or WOSB.
    (c) Submission of request. The concern must submit its request 
directly to the Director for Government Contracting, U.S. Small 
Business Administration, 409 Third Street, SW., Washington, DC 20416, 
or by fax to (202) 205-6390, marked ``Attn: Request for Women-Owned 
Small Business Procedures Examination.''
    (d) Notice of receipt of request. SBA will immediately notify the 
concern in writing once SBA receives its request for an examination. 
The notification will advise the concern that its eligibility will be 
determined based on the status of the concern on the date of the 
notification. SBA may request that the concern provide documentation 
and information related to the concern's EDWOSB or WOSB eligibility and 
may draw an adverse inference if the concern fails to cooperate in 
providing the requested information.

[[Page 73300]]

    (e) Determination of eligibility. The D/GC will send the concern a 
written decision finding that it either qualifies or does not qualify 
as an EDWOSB or WOSB.
    (1) If the D/GC determines that the concern does not qualify as an 
EDWOSB or WOSB, the decision will explain the specific reasons for the 
adverse determination and advise the concern that it is prohibited from 
self-certifying as an EDWOSB or WOSB. If the concern self-certifies as 
an EDWOSB or WOSB notwithstanding SBA's adverse determination, the 
concern will be subject to the penalties under subpart F of this part.
    (2) If the D/GC determines that the concern qualifies as an EDWOSB 
or WOSB, then the D/GC will send the concern a written decision to that 
effect and will advise the concern that it may self-certify as an 
EDWOSB or WOSB, as applicable.
    (f) Effect of decision. The D/GC's decision is effective as of the 
date of the decision and applies to all solicitations issued on or 
after the effective date.

Subpart E--Federal Contract Assistance


Sec.  127.500  In what industries is a contracting officer authorized 
to restrict competition under this part?

    A contracting officer may restrict competition under this part only 
in those industries in which SBA has determined that WOSBs are 
underrepresented or substantially underrepresented in Federal 
procurement, as specified in Sec.  127.501(a), and the procuring agency 
finds that a set-aside in that industry would be in accordance with the 
equal protection requirements of the Due Process Clause of the Fifth 
Amendment of the Constitution, as specified in Sec.  127.501(b).


Sec.  127.501  How will SBA determine the industries that are eligible 
for EDWOSB or WOSB requirements?

    (a) SBA determination of underrepresented or substantially 
underrepresented industries. (1) Approximately every five years, SBA 
will conduct a study to identify the industries in which WOSBs are 
underrepresented or substantially underrepresented in Federal 
contracting. The study will include an analysis of the extent of 
disparity of WOSBs in Federal contracting.
    (2) Data collection. In determining the extent of disparity of 
WOSBs in Federal contracting, SBA may request that the head of any 
Federal department or agency provide SBA, or other designated entity, 
data or information necessary to analyze the extent of disparity of 
WOSBs in Federal contracting.
    (3) Based upon its analysis, SBA will designate by 4-digit NAICS 
Industry Subsector industries in which WOSBs are underrepresented or 
substantially underrepresented.
    (b) Agency determination of discrimination. Each agency is 
responsible for carrying out analysis sufficient to justify a 
restriction on competition under the equal protection requirements of 
the Due Process Clause of the Fifth Amendment of the Constitution. 
Where an agency seeks to reserve a procurement for competition 
exclusively among WOSBs or EDWOSBs within an industry designated by SBA 
in paragraph (a)(3) of this section, the agency must conduct an 
appropriate analysis of the agency's procurement history and make a 
determination of whether there is evidence of relevant discrimination 
in that industry by that agency.


Sec.  127.502  How will SBA identify and provide notice of the 
designated industries?

    SBA will post on its Internet Web site a list of 4-digit NAICS 
Industry Subsector industries it designates under Sec.  127.501(a). The 
list of designated industries also may be obtained from the local SBA 
district office and may be posted on the General Services 
Administration Internet Web site.


Sec.  127.503  When is a contracting officer authorized to restrict 
competition under this part?

    (a) EDWOSB requirements. For requirements in industries designated 
by SBA pursuant to Sec.  127.501, a contracting officer may restrict 
competition to EDWOSBs if the contracting officer has a reasonable 
expectation based on market research that:
    (1) Two or more EDWOSBs will submit offers for the contract;
    (2) The anticipated award price of the contract (including options) 
does not exceed $5,000,000, in the case of a contract assigned an NAICS 
code for manufacturing; or $3,000,000, in the case of all other 
contracts; and
    (3) Contract award may be made at a fair and reasonable price.
    (b) WOSB requirements. If market research indicates that the 
criteria in paragraph (a) are not met for restricting competition to 
EDWOSBs, then the contracting officer may restrict competition to WOSBs 
if:
    (1) The requirement is in an industry that SBA has designated as 
substantially underrepresented; and
    (2) The contracting officer has a reasonable expectation based on 
market research that--
    (i) Two or more WOSBs will submit offers;
    (ii) The anticipated award price of the contract (including 
options) will not exceed $5,000,000, in the case of a contract assigned 
an NAICS code for manufacturing, or $3,000,000 in the case of all other 
contracts; and
    (iii) Contract award may be made at a fair and reasonable price.
    (c) 8(a) BD requirements. A contracting officer may not restrict 
competition to eligible EDWOSBs or WOSBs if an 8(a) BD Participant is 
currently performing the requirement under the 8(a) BD Program or SBA 
has accepted the requirement for performance under the authority of the 
8(a) BD program, unless SBA consented to release the requirement from 
the 8(a) BD program.
    (d) Contract file. When restricting competition to WOSBs in 
accordance with Sec.  127.503(b), the contracting officer must document 
the contract file accordingly, including the type and extent of market 
research and the fact that the NAICS code assigned to the contract is 
for an industry that SBA has designated as a substantially 
underrepresented industry.


Sec.  127.504  What additional requirements must a concern satisfy to 
submit an offer on an EDWOSB or WOSB requirement?

    In order for a concern to submit an offer on a specific EDWOSB or 
WOSB requirement, the concern must ensure that the appropriate 
representations and certifications on ORCA are accurate and complete at 
the time it submits its offer to the contracting officer, including, 
but not limited to, the fact that:
    (a) It is small under the size standard corresponding to the NAICS 
code assigned to the contract;
    (b) It is listed on CCR and ORCA as an EDWOSB or WOSB;
    (c) There has been no material change in any of its circumstances 
affecting its EDWOSB or WOSB eligibility; and
    (d) It will meet the applicable percentages of work requirement as 
set forth in Sec.  125.6 of this chapter (limitations on subcontracting 
rule).


Sec.  127.505  May a non-manufacturer submit an offer on an EDWOSB or 
WOSB requirement for supplies?

    An EDWOSB or WOSB that is a non-manufacturer, as defined in Sec.  
121.406(b) of this chapter, may submit an offer on an EDWOSB or WOSB 
contract for supplies, if it meets the requirements under the non-
manufacturer rule set forth in Sec.  121.406(b).

[[Page 73301]]

Sec.  127.506  May a joint venture submit an offer on an EDWOSB or WOSB 
requirement?

    A joint venture may submit an offer on an EDWOSB or WOSB contract 
if the joint venture meets all of the following requirements:
    (a) Except as provided in Sec.  121.103(h)(3) of this chapter, the 
combined annual receipts or employees of the concerns entering into the 
joint venture must meet the applicable size standard corresponding to 
the NAICS code assigned to the contract;
    (b) The EDWOSB or WOSB participant of the joint venture must be 
designated on the CCR and the ORCA as an EDWOSB or WOSB;
    (c) The EDWOSB or WOSB must be the managing venturer of the joint 
venture, and an employee of the managing venturer must be the project 
manager responsible for the performance of the contract;
    (d) The joint venture must perform the applicable percentage of 
work required of the EDWOSB or WOSB offerors in accordance with Sec.  
125.6 of this chapter (limitations on subcontracting rule); and
    (e) The EDWOSB or WOSB venturer must perform a significant portion 
of the contract.

Subpart F--Protests


Sec.  127.600  Who may protest the status of a concern as an EDWOSB or 
WOSB?

    An interested party may protest the EDWOSB or WOSB status of an 
apparent successful offeror on an EDWOSB or WOSB contract. Any other 
party or individual may submit information to the contracting officer 
or SBA in an effort to persuade them to initiate a protest or to 
persuade SBA to conduct an examination pursuant to subpart D of this 
part.


Sec.  127.601  May a protest challenging the size and status of a 
concern as an EDWOSB or WOSB be filed together?

    An interested party seeking to protest both the size and the EDWOSB 
or WOSB status of an apparent successful offeror on an EDWOSB or WOSB 
requirement must file two separate protests, one size protest pursuant 
to part 121 of this chapter and one EDWOSB or WOSB status protest 
pursuant to this subpart. An interested party seeking to protest only 
the size of an apparent successful EDWOSB or WOSB offeror must file a 
size protest to the contracting officer pursuant to part 121 of this 
chapter.


Sec.  127.602  What are the grounds for filing an EDWOSB or WOSB status 
protest?

    SBA will consider a protest challenging the status of a concern as 
an EDWOSB or WOSB if the protest presents credible evidence that the 
concern is not owned and controlled by one or more women who are United 
States citizens and, if the protest is in connection with an EDWOSB 
contract, that the concern is not at least 51% owned and controlled by 
one or more women who are economically disadvantaged.


Sec.  127.603  What are the requirements for filing an EDWOSB or WOSB 
protest?

    (a) Format. Protests must be in writing and must specify all the 
grounds upon which the protest is based. A protest merely asserting 
that the protested concern is not an eligible EDWOSB or WOSB, without 
setting forth specific facts or allegations, is insufficient.
    (b) Filing. Protestors may deliver their written protests in 
person, by facsimile, by express delivery service, or by U.S. mail 
(postmarked within the applicable time period) to the following:
    (1) To the contracting officer, if the protestor is an offeror for 
the specific contract; or
    (2) To the D/GC, if the protest is initiated by the contracting 
officer or SBA.
    (c) Timeliness. (1) For negotiated acquisitions, an interested 
party must submit its protest by the close of business on the fifth 
business day after notification by the contracting officer of the 
apparent successful offeror or notification of award.
    (2) For sealed bid acquisitions, an interested party must submit 
its protest by close of business on the fifth business day after bid 
opening.
    (3) Any protest submitted after the time limits is untimely, unless 
it is from SBA or the contracting officer. A contracting officer or SBA 
may file an EDWOSB or WOSB protest at any time after bid opening or 
notification of intended awardee, whichever applies.
    (4) Any protest received prior to bid opening or notification of 
intended awardee, whichever applies, is premature.
    (5) A timely filed protest applies to the procurement in question 
even if filed after award.
    (d) Referral to SBA. The contracting officer must forward to SBA 
any protest received, notwithstanding whether he or she believes it is 
premature, sufficiently specific, or timely. The contracting officer 
must send all protests, along with a referral letter, directly to the 
Director for Government Contracting, U.S. Small Business 
Administration, 409 Third Street, SW., Washington, DC 20416, or by fax 
to (202) 205-6390, Attn: Women-Owned Small Business Status Protest. The 
contracting officer's referral letter must include information 
pertaining to the solicitation that may be necessary for SBA to 
determine timeliness and standing, including: The solicitation number; 
the name, address, telephone number and facsimile number of the 
contracting officer; whether the protestor submitted an offer; whether 
the protested concern was the apparent successful offeror; when the 
protested concern submitted its offer; whether the procurement was 
conducted using sealed bid or negotiated procedures; the bid opening 
date, if applicable; when the protest was submitted to the contracting 
officer; when the protestor received notification about the apparent 
successful offeror, if applicable; and whether a contract has been 
awarded. The D/GC or designee will decide the merits of EDWOSB or WOSB 
status protests.


Sec.  127.604  How will SBA process an EDWOSB or WOSB status protest?

    (a) Notice of receipt of protest. Upon receipt of the protest, SBA 
will notify the contracting officer and the protestor of the date SBA 
received the protest and whether SBA will process the protest or 
dismiss it under paragraph (b) of this section.
    (b) Dismissal of protest. If SBA determines that the protest is 
premature, untimely, nonspecific, or is based on nonprotestable 
allegations, SBA will dismiss the protest and will send the contracting 
officer and the protestor a notice of dismissal, citing the reason(s) 
for the dismissal. Notwithstanding SBA's dismissal of the protest, SBA 
may, in its sole discretion, consider the protest allegations in 
determining whether to conduct an examination of the protested concern 
pursuant to subpart D of this part.
    (c) Notice to protested concern. If SBA determines that the protest 
is timely, sufficiently specific and is based upon protestable 
allegations, SBA will:
    (1) Notify the protested concern of the protest and of its right to 
submit information responding to the protest within five business days 
from the date of the notice; and
    (2) Forward a copy of the protest to the protested concern.
    (d) Time period for determination. SBA will determine the EDWOSB or 
WOSB status of the protested concern within 15 business days after 
receipt of the protest, or within any extension of that time that the 
contracting officer may grant SBA. If SBA does not issue its 
determination within the 15-day

[[Page 73302]]

period, the contracting officer may award the contract, unless the 
contracting officer has granted SBA an extension.
    (e) Notification of determination. SBA will notify the contracting 
officer, the protestor, and the protested concern in writing of its 
determination. If SBA sustains the protest, SBA will issue a decision 
explaining the basis of its determination and requiring that the 
concern remove its designation on the CCR and ORCA as an EDWOSB or 
WOSB, as appropriate.
    (f) Effect of determination. SBA's determination is effective 
immediately and is final unless overturned by OHA on appeal pursuant to 
Sec.  127.605 of this part.
    (1) The purpose of the protest process is to ensure that contracts 
are awarded to, and performed by, eligible WOSB and EDWOSB concerns. A 
contracting officer shall not award a contract to an ineligible 
concern, and shall not authorize an ineligible concern to begin 
performance.
    (2) Where award was made and performance commenced before receipt 
of a negative final agency decision, the contracting officer may 
terminate the contract, not exercise any option, or not award further 
task or delivery orders.
    (3) Whether or not a contracting officer decides to not allow an 
ineligible concern to fully perform a contract under paragraph (f)(2) 
of this section or under Sec.  134.704 of this title, the contracting 
officer cannot count the award as one to an EDWOSB or WOSB and must 
update the Federal Procurement Data System-Next Generation (FPDS-NG) 
and other databases from the date of award accordingly.
    (4) A concern that has been found to be ineligible may not 
represent itself as a WOSB or EDWOSB on another procurement until it 
cures the reason for its ineligibility. A concern that believes in good 
faith that it has cured the reason(s) for its ineligibility may request 
an examination under the procedures set forth in Sec.  127.405.


Sec.  127.605  What are the procedures for appealing an EDWOSB or WOSB 
status protest decision?

    The protested concern, the protestor, or the contracting officer 
may file an appeal of a WOSB or EDWOSB status protest determination 
with the SBA's Office of Hearings and Appeals (OHA) in accordance with 
part 134 of this chapter.

Subpart G--Penalties


Sec.  127.700  What penalties may be imposed under this part?

    Persons or concerns that falsely self-certify or otherwise 
misrepresent a concern's status as an EDWOSB or WOSB for purposes of 
receiving Federal contract assistance under this part are subject to:
    (a) Suspension and Debarment pursuant to the procedures set forth 
in the Federal Acquisition Regulations, subpart 9.4 of title 48 of the 
Code of Federal Regulations;
    (b) Administrative and civil remedies prescribed by the False 
Claims Act, 31 U.S.C. 3729-3733 and under the Program Fraud Civil 
Remedies Act, 31 U.S.C. 3801-3812;
    (c) Administrative and criminal remedies as described at Sections 
16(a) and (d) of the Small Business Act, 15 U.S.C. 645(a) and (d), as 
amended;
    (d) Criminal penalties under 18 U.S.C. 1001; and
    (e) Any other penalties as may be available under law.

PART 134--RULES OF PROCEDURE GOVERNING CASES BEFORE THE OFFICE OF 
HEARINGS AND APPEALS

    8. The Authority citation for 13 CFR continues to read as follows:

    Authority: 5 U.S.C. 504, 15 U.S.C. 632, 634(b)(6), 637(a), 
637(m), 648(l), 656(i) and 687(c); E.O. 12549, 51 FR 6370, 3 CFR, 
1986 Comp., p. 189.

Subpart A--General Rules

    9. Amend Sec.  134.102 by redesignating paragraph (s) as paragraph 
(t) and adding new paragraph (s) to read as follows:


Sec.  134.102  Jurisdiction of OHA

* * * * *
    (s) Appeals from Women-Owned Small Business or Economically-
Disadvantaged Women-Owned Small Business protest determinations under 
Part 127 of this chapter;
* * * * *

Subpart E--Rules of Practice for Appeals from Service-Disabled 
Veteran Owned Small Business Concern Protests

    10. Amend Sec.  134.515 by revising paragraph (b) to read as 
follows:


Sec.  134.515  What are the effects of the Judge's decision?

* * * * *
    (b) The Judge may reconsider an appeal decision within 20 calendar 
days after issuance of the written decision. Any party who has appeared 
in the proceeding, or SBA, may request reconsideration by filing with 
the Judge and serving a petition for reconsideration on all the parties 
to the appeal within 20 calendar days after service of the written 
decision. The request for reconsideration must clearly show an error of 
fact or law material to the decision. The Judge may also reconsider a 
decision on his or her own initiative.
* * * * *
    11. Add new subpart G to read as follows:

Subpart G--Rules of Practice for Appeals From Women-Owned Small 
Business Concern (WOSB) and Economically Disadvantaged WOSB Concern 
(EDWOSB) Protests

134.701 What is the scope of the rules in this subpart G?
134.702 Who may appeal?
134.703 When must a person file an appeal from an WOSB or EDWOSB 
protest determination?
134.704 What are the effects of the appeal on the procurement at 
issue?
134.705 What are the requirements for an appeal petition?
134.706 What are the service and filing requirements?
134.707 When does the D/GC transmit the protest file and to whom?
134.708 What is the standard of review?
134.709 When will a Judge dismiss an appeal?
134.710 Who can file a response to an appeal petition and when must 
such a response be filed?
134.711 Will the Judge permit discovery and oral hearings?
134.712 What are the limitations on new evidence?
134.713 When is the record closed?
134.714 When must the Judge issue his or her decision?
134.715 Can a Judge reconsider his decision?

Subpart G--Rules of Practice for Appeals From Women-Owned Small 
Business Concern (WOSB) and Economically Disadvantaged WOSB Concern 
(EDWOSB) Protests


Sec.  134.701  What is the scope of the rules in this subpart G?

    (a) The rules of practice in this subpart G apply to all appeals to 
OHA from formal protest determinations made by the Director for 
Government Contracting (D/GC) in connection with a Women-Owned Small 
Business (WOSB) or Economically Disadvantaged WOSB (EDWOSB) status 
protest. Appeals under this subpart include issues related to whether 
the concern is owned and controlled by one or more women who are United 
States citizens and, if the appeal is in connection with an

[[Page 73303]]

EDWOSB contract, that the concern is at least 51% owned and controlled 
by one or more women who are economically disadvantaged. This includes 
appeals from determinations by the D/GC that the protest was premature, 
untimely, nonspecific, or not based upon protestable allegations.
    (b) Except where inconsistent with this subpart, the provisions of 
Subpart A and B of this part apply to appeals listed in paragraph (a) 
of this section.
    (c) Appeals relating to formal size determinations and NAICS Code 
designations are governed by subpart C of this part.


Sec.  134.702  Who may appeal?

    Appeals from WOSB or EDWOSB protest determinations may be filed 
with OHA by the protested concern, the protestor, or the contracting 
officer responsible for the procurement affected by the protest 
determination.


Sec.  134.703  When must a person file an appeal from an WOSB or EDWOSB 
protest determination?

    Appeals from a WOSB or EDWOSB protest determination must be 
commenced by filing and serving an appeal petition within 10 business 
days after the appellant receives the WOSB or EDWOSB protest 
determination (see Sec.  134.204 for filing and service requirements). 
An untimely appeal will be dismissed.


Sec.  134.704  What are the effects of the appeal on the procurement at 
issue?

    Appellate decisions apply to the procurement in question. If the 
contracting officer awarded the contract to a concern that OHA finds to 
be ineligible, then the contracting officer may terminate the contract, 
not exercise any options, or not award further task or delivery orders.


Sec.  134.705  What are the requirements for an appeal petition?

    (a) Format. There is no required format for an appeal petition. 
However, it must include the following information:
    (1) The solicitation or contract number, and the name, address, and 
telephone number of the contracting officer;
    (2) A statement that the petitioner is appealing a WOSB or EDWOSB 
protest determination issued by the D/GC and the date that the 
petitioner received it;
    (3) A full and specific statement as to why the WOSB or EDWOSB 
protest determination is alleged to be based on a clear error of fact 
or law, together with an argument supporting such allegation; and
    (4) The name, address, telephone number, facsimile number, and 
signature of the appellant or its attorney.
    (b) Service of appeal. The appellant must serve the appeal petition 
upon each of the following:
    (1) The D/GC at U.S. Small Business Administration, 409 3rd Street, 
SW., Washington, DC 20416, facsimile (202) 205-6390;
    (2) The contracting officer responsible for the procurement 
affected by a WOSB or EDWOSB determination;
    (3) The protested concern (the business concern whose WOSB or 
EDWOSB status is at issue) or the protester; and
    (4) SBA's Office of General Counsel, Associate General Counsel for 
Procurement Law, U.S. Small Business Administration, 409 3rd Street, 
SW., Washington, DC 20416, facsimile number (202) 205-6873.
    (c) Certificate of Service. The appellant must attach to the appeal 
petition a signed certificate of service meeting the requirements of 
Sec.  134.204(d).


Sec.  134.706  What are the service and filing requirements?

    The provisions of Sec.  134.204 apply to the service and filing of 
all pleadings and other submissions permitted under this subpart unless 
otherwise indicated in this subpart.


Sec.  134.707  When does the D/GC transmit the protest file and to 
whom?

    Upon receipt of an appeal petition, the D/GC will send to OHA a 
copy of the protest file relating to that determination. The D/GC will 
certify and authenticate that the protest file, to the best of his or 
her knowledge, is a true and correct copy of the protest file.


Sec.  134.708  What is the standard of review?

    The standard of review for an appeal of a WOSB or EDWOSB protest 
determination is whether the D/GC's determination was based on clear 
error of fact or law.


Sec.  134.709  When will a Judge dismiss an appeal?

    (a) The presiding Judge will dismiss the appeal if the appeal is 
untimely filed under Sec.  134.703.
    (b) The matter has been decided or is the subject of adjudication 
before a court of competent jurisdiction over such matters. However, 
once an appeal has been filed, initiation of litigation of the matter 
in a court of competent jurisdiction will not preclude the Judge from 
rendering a final decision on the matter.


Sec.  134.710  Who can file a response to an appeal petition and when 
must such a response be filed?

    Although not required, any person served with an appeal petition 
may file and serve a response supporting or opposing the appeal if he 
or she wishes to do so. If a person decides to file a response, the 
response must be filed within 7 business days after service of the 
appeal petition. The response should present argument.


Sec.  134.711  Will the Judge permit discovery and oral hearings?

    Discovery will not be permitted, and oral hearings will not be 
held.


Sec.  134.712  What are the limitations on new evidence?

    The Judge may not admit evidence beyond the written protest file 
nor permit any form of discovery. All appeals under this subpart will 
be decided solely on a review of the evidence in the written protest 
file, arguments made in the appeal petition, and response(s) filed 
thereto.


Sec.  134.713  When is the record closed?

    The record will close when the time to file a response to an appeal 
petition expires pursuant to 13 CFR 134.710.


Sec.  134.714  When must the Judge issue his or her decision?

    The Judge shall issue a decision, insofar as practicable, within 15 
business days after close of the record.


Sec.  134.715  Can a Judge reconsider his decision?

    (a) The Judge may reconsider an appeal decision within 20 calendar 
days after issuance of the written decision. Any party who has appeared 
in the proceeding, or SBA, may request reconsideration by filing with 
the Judge and serving a petition for reconsideration on all the parties 
to the appeal within 20 calendar days after service of the written 
decision. The request for reconsideration must clearly show an error of 
fact or law material to the decision. The Judge may also reconsider a 
decision on his or her own initiative.
    (b) The Judge may remand a proceeding to the D/GC for a new WOSB or 
EDWOSB determination if the D/GC fails to address issues of decisional 
significance sufficiently, does not address all the relevant evidence, 
or does not identify specifically the evidence upon which it relied. 
Once remanded, OHA no longer has jurisdiction over the matter, unless a

[[Page 73304]]

new appeal is filed as a result of the new WOSB or EDWOSB 
determination.

Steven C. Preston,
Administrator.
 [FR Doc. E7-25056 Filed 12-26-07; 8:45 am]
BILLING CODE 8025-01-P