[Federal Register Volume 73, Number 191 (Wednesday, October 1, 2008)]
[Rules and Regulations]
[Pages 56940-56956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23138]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 121, 125, 127, and 134

RIN 3245-AF40


The Women-Owned Small Business Federal Contract Assistance 
Procedures

AGENCY: Small Business Administration.

ACTION: Final rule.

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SUMMARY: This final rule amends the U.S. Small Business Administration 
(SBA) regulations governing small business contracting programs to set 
forth procedures that will govern the new Women-Owned Small Business 
(WOSB) Federal Contract Assistance Procedures as authorized in the 
Small Business Act.

DATES: Effective Date: This rule is effective October 31, 2008.
    Applicability Date: This final rule will be effective 30 days after 
publication. This final rule does not identify the industries in which 
WOSBs are underrepresented or substantially underrepresented in Federal 
procurement because SBA is awaiting comments on its proposed rule 
before concluding its eligibility determinations. SBA's determination 
of the industries in which WOSBs are underrepresented or substantially 
underrepresented in Federal procurement will be effective not less than 
30 days after its publication date.

FOR FURTHER INFORMATION CONTACT: Linda Korbol, Assistant Administrator 
for Women's Procurement, Office of Government Contracting, (202) 205-
7341 or [email protected].

SUPPLEMENTARY INFORMATION: On December 27, 2007, SBA proposed to amend 
its regulations in the Federal Register, 72 FR 73285, with a request 
for comments to implement the WOSB Federal Contract Assistance 
Procedures

[[Page 56941]]

(Procedures). These Procedures are authorized under Section 811 of the 
Small Business Reauthorization Act of 2000, Public Law 106-554, which 
is codified at Section 8(m) of the Small Business Act (Act), 15 U.S.C. 
637(m).
    The proposed rule concerned procedures to increase Federal 
procurement opportunities for WOSBs. More specifically, the proposed 
rule contained provisions that would authorize contracting officers to 
restrict competition to eligible WOSBs for Federal contracts not 
exceeding $3 million ($5 million for manufacturing) in those industries 
in which WOSBs are underrepresented or substantially underrepresented 
and in which the procuring agency has determined that the set-aside 
would satisfy constitutional requirements. The proposed rule also set 
forth the standards for determining the eligibility of a concern as a 
WOSB or EDWOSB and required any firm receiving a contract under these 
procedures to certify its status as a ``small business concern owned 
and controlled by women'' as defined in Sec.  3(n) of the Small 
Business Act, 15 U.S.C. 632(n). In addition, the proposed rule 
identified the industries in which WOSBs were determined to be 
underrepresented and substantially underrepresented in Federal 
contracting. The proposed rule also established standards for 
eligibility examinations and protest procedures, as well as the 
penalties that can be imposed for a concern's misrepresentation of its 
status as an EDWOSB or WOSB. Lastly, the rule proposed the relevant 
conforming amendments to SBA's current procurement and appeal procedure 
regulations.

Discussion of Comments on the Proposed Rule

    The comment period for the Proposed Rule closed on March 31, 2008. 
SBA received approximately 1,720 comments. These comments are available 
to the public for viewing at http://www.regulations.gov. The large 
majority of comments were received from individuals. Of the 1,720 
comments, SBA received approximately 1,610 comments from individuals, 
thirty-one comments from individuals using form letters from various 
associations or organizations, forty-five comments from associations or 
organizations, thirty-one comments from members of Congress, and three 
comments from other Federal agencies through the public comment process 
and posted online at www.regulations.gov.
    Of the 1,720 comments received, approximately twenty-seven of the 
comments were not applicable to the rule; four of the comments 
requested an extension of the public comment period; and 1,689 of the 
comments requested withdrawal of the proposed rule and/or stated 
opposition to some portion of the proposed rule. Of the comments that 
opposed the proposed rule, 1,591 comments requested that the proposed 
rule be withdrawn; 828 comments stated that some aspect of the proposed 
rule frustrated Congressional intent; 173 comments opposed the method 
by which the proposed rule requires a procuring agency to determine 
that the set-aside is consistent with constitutional standards; 104 
comments were concerned with the methodology used by SBA to determine 
industries in which WOSBs were underrepresented or substantially 
underrepresented; thirty-six comments alleged that SBA and/or the 
Kauffman-RAND Institute for Entrepreneurship Public Policy (RAND) study 
applied the incorrect level of scrutiny to determine 
underrepresentation or otherwise addressed Constitutional concerns; 
seven comments addressed SBA's use of the value of contract dollars to 
determine underrepresentation; and four comments opposed the proposed 
self-certification process.

Extension of the Public Comment Period

    The SBA received several comments that requested an extension of 
the public comment period. In response to these comments and the 
general high level of interest that the proposed rule generated during 
the public comment period, SBA agreed with the recommendation in these 
comments and therefore reopened the comment period for an additional 30 
days in order to allow the public more time to submit comments on the 
proposed rule. See 73 FR 10697. As a result, the comment period closed 
on March 31, 2008 and SBA received approximately 1,720 comments.

General Comments on Implementation of the Procedures

    Of the comments that opposed the proposed rule, over 700 requested 
that SBA withdraw the proposed rule but did not provide a substantive 
reason why SBA should take such action. Accordingly, and for the 
reasons below, SBA will continue with this final rule setting forth the 
contracting procedures for WOSBs. In addition, SBA points out that 
Congress authorized the contracting assistance procedures for WOSBs 
contained in the final rule as a result of the Federal government's 
inability to reach the government-wide WOSB contracting goal of 5% of 
the value of all contract awards. Congress enacted Section 8(m) to 
authorize creation of a targeted procurement mechanism for WOSBs and it 
charged SBA with the responsibility for establishing and implementing 
the governing standards and regulations for these Procedures. The 
Procedures in the final rule will not only benefit WOSBs, but should 
help Federal agencies achieve their WOSB participation goals under 
Section 15(g) of the Small Business Act, 15 U.S.C. 644(g). For all of 
these reasons, SBA will not withdraw the proposed rule, but instead has 
decided to move forward with this final rule based on the authority in 
Section 8(m).

Eligible Industries in Which WOSBs Are Underrepresented or 
Substantially Underrepresented

    The SBA received approximately 104 comments expressing concern that 
the proposed rule limited WOSB eligibility for restricted-competition 
contracts to only four industry sectors. These comments stated that SBA 
should have used a broader methodology in the RAND study to identify 
the industries in which WOSBs are underrepresented or substantially 
underrepresented. The comments also state that SBA, without substantive 
justification, declined to adopt the approach in the RAND study that 
would have classified 87% of industries as underrepresented, and 
instead promulgated a rule based on the most restrictive approach 
proposed by the report. In addition, SBA received comments stating that 
it was the intent of Congress to increase federal contracts going to 
WOSBs and that the proposed rule will not accomplish increased 
participation by WOSBs. Lastly, SBA received a comment stating that the 
RAND report and therefore the proposed rule based its conclusions on 
the erroneous assumptions that the past contract opportunities analyzed 
by the RAND study are and will remain constant across all of the 
potentially affected industries.
    In response to these comments, SBA notes that Section 8(m) requires 
SBA to conduct a study to identify the industries in which WOSBs are 
underrepresented and substantially underrepresented in Federal 
procurement. SBA initially completed the legislatively mandated study 
in September 2001. However, in March 2005, the National Academy of 
Sciences (NAS) issued an independent evaluation determining that SBA's 
original study was ``fatally flawed.'' In response to the NAS findings, 
SBA issued a solicitation

[[Page 56942]]

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 RAND to complete a revised study of the underrepresentation 
of WOSBs in Federal procurement in accordance with the NAS findings. 
The RAND report was published in April 2007. The report, along with the 
supporting back-up datasets used to identify underrepresentation, are 
available to the public at http://www.rand.org/pubs/technical_reports/TR442/.
    The RAND study outlines twenty-eight different approaches for 
measuring the underrepresentation of WOSBs by using a disparity ratio. 
Each approach uses a different data source or a different version of 
the same data source, and each of the data sources was recommended by 
the NAS findings. Depending on the approach used, the RAND study 
yielded different levels of WOSB representation in Federal procurement. 
For the reasons set forth in the proposed rule, SBA eliminated various 
non-justifiable approaches and selected the approach that it believed 
most appropriately conformed to the applicable statutory requirements, 
most accurately reflected the measure employed, and was legally 
justifiable. The selected approach compared the percentage of Federal 
contract dollars going to WOSBs to the percentage of total revenue from 
all sources going to WOSBs in 4-digit NAICS codes (``disparity 
ratio''). Using this approach, SBA issued a proposed rule that 
identified four industries in which WOSBs were underrepresented or 
substantially underrepresented. The comments that SBA received were 
opposed to the determination that WOSBs were eligible for contracts in 
only four industries.
    Although SBA did not receive any comments on the reliability of the 
data sources used for the selected approach, as indicated above, SBA 
did receive a large number of comments opposing the selected approach. 
As a result, SBA engaged in a further review and examination of the 
RAND study, including the data sources and in particular the CCR data 
set, which was relied upon to arrive at the four industries in which 
WOSBs were found to be underrepresented and substantially 
underrepresented. As a result of this further examination, SBA has now 
identified a limitation inherent in the CCR data set. Specifically, 
when RAND computed the disparity ratio to determine 
underrepresentation, each firm's total revenue was counted in every 
NAICS code associated with the firm. This has resulted in firms' total 
revenue being counted for multiple NAICS codes, overstating the 
aggregate revenue figures. Although the CCR data set was publicly 
available along with the RAND report at http://www.rand.org/pubs/technical_reports/TR442/, this CCR data set limitation was not 
specifically disclosed in the RAND study or to the public in the 
proposed rule.
    Therefore, concurrently with the issuance of this final rule, SBA 
is issuing a Proposed Rule; Request for Comment that seeks input from 
the public on what effect, if any, the CCR data has on the disparity 
ratio, and ultimately, the determination that WOSBs are 
underrepresented or substantially underrepresented in the various 
industries. This CCR data limitation is fully explained in the Proposed 
Rule; Request for Comment. The Proposed Rule; Request for Comment also 
seeks comment on an alternative data set not analyzed by RAND or 
included in the proposed rule.
    In light of the foregoing, this final rule does not identify the 
industries in which WOSBs are underrepresented or substantially 
underrepresented in Federal procurement. Therefore, SBA has determined 
that it is premature to address the public comments opposing SBA's 
identification of the eligible industries. Once SBA has received and 
evaluated the public's comments on the data limitation in response to 
the Proposed Rule; Request for Comments, SBA will publish a Notice in 
the Federal Register that contains the rationale for its final 
determination and a list of eligible industries. SBA will also post on 
its Internet Web site a list of 4-digit NAICS Industry Subsector 
industries it designates under Sec.  127.501(a).

Use of Dollars as the Measure of WOSB Underrepresentation

    As indicated above, SBA determined that the most justifiable 
approach to determining WOSB representation compared the percentage of 
contract dollars going to WOSBs to the percentage of revenue dollars 
going to WOSBs. SBA received several comments on the decision to use 
contract dollars as the measure of underrepresentation. These comments 
stated that the use of the number of contracts as the measure of 
underrepresentation will more likely help to achieve the 5% goal and is 
therefore consistent with Congressional intent.
    SBA disagrees with these comments and believes that the use of 
contract dollars as the measure is more consistent with the relevant 
statutory requirements and Congressional intent. When considering 
whether to use the dollar value of contract awards or the number of 
contract awards as the measure of underrepresentation, SBA evaluated 
the benefits and limitations of either choice. As indicated in the 
proposed rule, after careful analysis, SBA decided to adopt an approach 
consistent with statutory measures, which use dollars. Most 
importantly, Congress, through the Small Business Act, has given 
relevant 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.'' 15 U.S.C. 644(g)(1) 
(emphasis added). Congress authorized the contracting assistance 
procedures in Section 8(m) to assist Federal agencies in achieving this 
goal.
    In addition, 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.
    Based on the above, a measure that determines underrepresentation 
based on the number of contract awards going to WOSBs would not align 
with the purpose behind Congress's passage of the Section 8(m) 
legislation or with the other Congressional measures. On the other 
hand, a measure based on contract dollars is consistent with the 5% 
goal, which is also based on contract dollars, and therefore conforms 
more closely to the Congressional intent and purpose of Section 8(m). 
Based on this determination, the proposed rule defined ``substantial 
underrepresentation'' and ``underrepresentation'' as a ratio 
representing the WOSB share of Federal prime contract dollars divided 
by the WOSB share of total business receipts.

[[Page 56943]]

For the reasons stated above, the final rule adopts the definitions of 
underrepresentation and substantial underrepresentation without 
modification.

Agency-by-Agency Determination

    Commenters also voiced concerns over the requirement in proposed 
Sec.  127.501(b) that the procuring agency conduct its own, additional 
analysis of its procurement history, and make a determination whether 
the agency itself had discriminated against WOSBs in the relevant 
industry. The comments state that this requirement frustrates 
Congressional intent by applying a strict-scrutiny standard when 
gender-based preferences need only satisfy the standard of intermediate 
scrutiny. The comments also state that the disparity study analysis 
conducted by RAND is sufficient to satisfy the intermediate scrutiny 
standard and that the agency determination of discrimination 
requirement has no basis in law. The comments further state that the 
requirement would unduly limit the industries in which WOSBs were 
underrepresented or substantially underrepresented. Lastly, the 
comments state that this requirement would substantially burden the 
procuring agencies and that the procuring agencies will avoid set-
asides to avoid self-incrimination and litigation.
    As reflected in both the proposed rule and in this final rule, SBA 
agrees that the intermediate scrutiny standard applies to gender-based 
set-asides. 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'' and sometimes as ``heightened scrutiny.'' 
See id. at 555. The RAND study and the final rule acknowledge the 
application of the intermediate scrutiny standard to gender-based 
preferences.
    In applying this standard, Federal courts have generally required 
that the government establish probative evidence of discrimination in 
the relevant economic sphere 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); 
Contractors Ass'n of Eastern Penna. v. City of Philadelphia, 6 F.3d 
990, 1010-11 (3d Cir. 1993); Hershell Gill Consulting Engineers, Inc. 
v. Miami-Dade County, 333 F.Supp.2d 1305, 1317 (S.D. Fla. 2004). Based 
on the Federal Court precedents, the U.S. Department of Justice has 
advised SBA that before a contracting officer may restrict competition 
to WOSBs under section 8(m), it must be determined through appropriate 
analysis (which analysis may include examination of the concerned 
agency's procurement history) that the set-aside will be consistent 
with the foregoing constitutional standards. In particular, it must be 
determined whether the set-aside is substantially related to remedying 
sex discrimination in the affected industry. For the foregoing reasons, 
SBA cannot agree with the comments that section 127.501(b) of the 
proposed rule has no basis in the law and is inconsistent with 
intermediate scrutiny. As the cases above illustrate, intermediate 
scrutiny has been held to require evidence of discrimination in the 
relevant economic sphere in order to justify gender-based set asides in 
that sphere. The standard in section 127.501(b) is fully consistent 
with this judicially recognized discrimination requirement, and in fact 
represents one of the soundest, most reliable means of ensuring 
compliance with it. In addition, because the RAND study correctly 
acknowledges that the unrefined disparity ratios it found are not in 
and of themselves measures of discrimination, SBA disagrees with the 
comments that contend the RAND study alone is sufficient to satisfy the 
intermediate scrutiny.
    As to the comments that the requirement of agency-specific findings 
of discrimination would be too burdensome for agencies, the SBA 
believes that individual contracting agencies are in a better position 
than the SBA to evaluate the connection between disparity and 
discrimination in certain contracting sectors because SBA does not have 
access to details of procurement history within other agencies. 
Accordingly, although requiring contracting agencies to identify 
evidence of discrimination in relevant contracting spheres would no 
doubt impose some burden, this allocation is less costly and burdensome 
than having SBA try to make discrimination findings based upon private 
sector or agency procurement data to which the agency does not have 
access. Furthermore, these additional agency findings will further 
augment the data upon which the RAND study is based and, in this way, 
more than compensate for any burden the procuring authorities might 
encounter.
    The SBA further disagrees with the concern that an agency finding 
of discrimination could be perceived as an admission of unlawful 
conduct. An agency-specific finding of past discrimination would not 
necessarily constitute an admission of liability for past unlawful 
conduct because courts have noted that agency discrimination may in 
some instances result from an agency's passive participation in a 
discriminatory market.
    For the foregoing reasons, the final rule adopts Sec.  127.501 
without any change.

Substantially Underrepresented Industries

    SBA received at least one comment that was concerned with SBA's 
statement in the proposed rule that the provisions of Section 8(m) 
appear literally to authorize set-asides for Federal contracts only in 
industries in which WOSBs are determined to be substantially 
underrepresented. See 15 U.S.C. 637(m)(2)(C), (3). The comment states 
that this provision is unclear and conflicting, resulting in a 
disingenuous partial implementation of the statute that is not aligned 
with Congressional intent. The comment recommends SBA to recognize 
that, in industries where women are substantially underrepresented, the 
requirement of being economically and socially disadvantaged should not 
apply at all because of the disparity between utilization and 
availability.
    As SBA accurately stated in the proposed rule, 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)--by its express cross-reference to subparagraph (3) 
rather than to subparagraph (4)--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 merely 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, based on the above reasoning, and as already stated in 
the proposed rule, SBA believes that the legislation is properly 
interpreted to authorize set-asides industries in which

[[Page 56944]]

WOSBs are determined to be underrepresented or substantially 
underrepresented.

Effect of Status Protest

    SBA received two comments regarding the proposed protest procedures 
in Sec.  127.600, et seq. These comments were concerned that the 
proposed rule did not address what would happen to a pending or already 
issued WOSB contract award when a status protest was filed with the 
contracting officer.
    SBA agrees that proposed Sec.  127.604 fails to provide any 
direction to contracting officers as to whether they are required to 
suspend the contract award or performance on the award until the status 
protest has been resolved. Therefore, SBA has amended Sec.  127.604(f) 
to allow a contracting officer to award a contract or begin performance 
after receipt of a protest, but only if the contracting officer has 
determined that the award must be made to protect the public interest. 
The proposed rule's preamble did give some guidance for this decision, 
stating generally that a status protest ``halts the procurement until 
SBA investigates the allegations and reaches a decision.'' For the 
foregoing reasons, the following provision to Sec.  127.604(d) will be 
added: The contracting officer may award the contract or begin 
performance after receipt of a protest if the contracting officer 
determines in writing that an award must be made to protect the public 
interest.

Self-Certification Process

    SBA received several comments on the self-certification process. 
These comments criticize SBA for creating a new certification process 
for these Procedures by requiring WOSBs to self-certify. The comments 
urge SBA to instead accept WOSB certifications from other organizations 
as the sole method for certification. In addition, a comment 
recommended that the certification rules be rewritten to prevent large 
corporate influence over the certification process. This comment fails 
to include any suggestion on how the recommendation can be 
accomplished.
    SBA believes that the self-certification process set forth in this 
final rule is consistent with the statutory framework of Section 8(m) 
and with prevailing Supreme Court precedent. Section 127.300 requires 
WOSBs to be registered in the Central Contractor Registration (CCR) and 
have a current self-certification posted on Online Representations and 
Certifications Application (ORCA) that it qualifies as an EDWOSB or 
WOSB. Specifically, 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 ORCA affirming that it qualifies as an 
EDWOSB or WOSB. That section further details the specific 
representations that 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 the Federal Government's generally accepted 
representations and certifications process that concerns currently 
utilize to self-certify other forms of small business status in Federal 
procurements, using that system for the WOSB self-certification process 
for Federal procurement would be the logical choice and would minimize 
interference with the procurement process and the burden on contracting 
officers and WOSBs. In addition, because certifying entities may not 
all use the same eligibility criteria applicable to EDWOSBs and WOSBs 
as provided under this rule, SBA does not intend automatically to 
accept additional third-party certifications for purposes of these 
Procedures. 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 SBA will maintain a 
list of all approved certifiers on its Web site.
    SBA also believes the self-certification process in this rule will 
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. It also 
puts a minimum burden on the EDWOSB and WOSB desiring to do business 
with the Federal government. At the same time, the self-certification 
in the CCR and ORCA will help minimize the likelihood of fraud and 
misrepresentation of WOSB and EDWOSB status through the use of robust 
protest procedures coupled with the provisions for appropriate 
examinations to monitor the eligibility of firms that self-certify 
their status and existing fraud statutes and procedures. These 
procedures are also consistent with other contracting preferences 
procedures.

Other SBA Contracting Preferences

    SBA received one comment stating that the proposed rule wrongly 
creates procedures that must compete with other set-aside incentives, 
such as the 8(a) Business Development Program, for the attention of 
agency contracting officers.
    In response to this comment, SBA assumes that the commenter was 
referring to Sec.  127.503(c) of the proposed rule, which made 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.'' 15 U.S.C. 634(b)(6). This final rule does not create an 
order of preference among SBA's contracting programs and is intended to 
be consistent with SBA's policy of parity among its contracting 
programs.
    In addition, SBA notes that the Federal government spends billions 
of dollars each year in Federal procurement. Lastly, Sec.  127.502 is 
necessary to ensure the integrity of the business development aspects 
of the 8(a) BD Program. Generally, the requirement will be retained for 
8(a) participation, but may be released by SBA as indicated in the 
regulation. Thus, SBA has not amended the final rule to adopt this 
comment.

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

Regulatory Impact Analysis

    The Office of Management and Budget (OMB) has determined that this 
rule constitutes a ``significant regulatory action'' under Executive 
Order 12866,

[[Page 56945]]

thereby necessitating a regulatory impact analysis. OMB has also 
determined that this rule is not a major rule as defined by the 
Congressional Review Act.
    The SBA received one comment on the regulatory impact analysis. 
That comment questioned SBA's rationale that the Procedures will result 
in increased costs to the taxpayer. The comment cites a Department of 
Defense study which showed that price preference did not increase costs 
in contracts won by small disadvantaged businesses.
    Although SBA did state in its regulatory impact analysis that the 
rule directs benefits to EDWOSBs and WOSBs at some cost to the taxpayer 
through restrictions on competition, the SBA also noted that, 
generally, the cost of transferring a contract from one business to 
another has minimal cost to society as a whole. In addition, the 
analysis stated that the loss of efficiency through restrictions in 
contracting has broader impacts that depend highly on the use of these 
Procedures by contracting officers and the availability of competition 
among EDWOSBs and WOSBs. SBA further analyzed that 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.
    As to the remainder of SBA's Regulatory Impact Analysis, SBA did 
not receive any comments and is not aware of any additional information 
that would require revision of its initial conclusions. Therefore, SBA 
continues to believe that the initial analysis was accurate.

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 
Executive Order 13132. 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 final 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 
final 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 final 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 concern 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; however, this 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.

Regulatory Flexibility Act

    SBA has determined that this 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 prepared an Initial Regulatory Flexibility Analysis (IRFA) 
addressing the impact of the proposed rule in accordance with section 
603, title 5, of the United States Code. The IRFA examined 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 were any Federal rules 
that may duplicate, overlap, or conflict with the proposed rule; and 
whether there were any significant alternatives to the proposed rule. 
The Agency's final regulatory flexibility analysis (FRFA) is set forth 
below.
1.What are the reasons for, and objectives of, this final rule?
    SBA is establishing procedures pursuant to the SBA Reauthorization 
Act, Public Law 106-554, enacted December 21, 2000, codified at Section 
8(m) of the Small Business Act, which authorizes the creation and 
implementation of a new mechanism for Federal contracting with WOSBs. 
The purpose of the final rule is to create a framework and 
infrastructure for implementing these Procedures, thereby providing a 
tool for Federal agencies to increase Federal procurement opportunities 
to WOSBs. SBA is finalizing this regulation pursuant to section 8(m) of 
the Small Business Act, 15 U.S.C. 637(m).
    These Procedures will assist Federal agencies in achieving the 
Federal

[[Page 56946]]

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. Summary of the Significant Issues Raised by the Public Comments in 
Response to the Initial Regulatory Flexibility Analysis, a Summary of 
the Assessment of the Agency of Such Issues, and a Statement of any 
Changes Made as a Result of Such Comments
    SBA has set forth an analysis of the public comments on the 
Proposed Rule near the beginning of this final rule. However, the 
Agency did not receive any comments in response to the IRFA and is not 
aware of any additional information that would require revision of its 
initial conclusions. Therefore, SBA continues to believe that the 
initial analysis was accurate.
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 final rule will ultimately establish in 
the Federal 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. More specifically, when the required procuring agency 
determination is made, this rule may affect EDWOSBs that participate in 
Federal procurement in industries where SBA determines that WOSBs are 
underrepresented or substantially underrepresented and may affect WOSBs 
that participate in Federal procurement in industries where SBA 
determines that WOSBs are substantially underrepresented. In addition, 
the rule may affect other small businesses, as described below, to the 
extent that small businesses not owned and controlled by women or non-
eligible WOSBs may be excluded from competing for certain Federal 
contracting opportunities.
    The 2002 Survey of Business Owners published by the U.S. Bureau of 
the Census reported 6,489,493 women-owned businesses in the United 
States. More than 900,000 of these businesses have one or more paid 
employees. Most women-owned businesses, however, do not participate in 
the Federal contracting market. In addition, the SBO number represents 
all women-owned business (large and small) and only WOSBs are eligible 
under the regulations. As of January 21, 2007, approximately 93,000 
businesses represented themselves as WOSBs in the Federal Government's 
CCR as actual or potential Federal contractors. The study conducted by 
the RAND Corporation for SBA narrowed the pool of WOSBs in the CCR to 
approximately 56,000 to more closely approximate the universe of firms 
who are ready, willing, and able to do business with the Government.\1\ 
However, far fewer than 56,000 WOSBs are likely to be affected by this 
final rule because the number of entities to which the rule will apply 
will greatly depend on SBA's determination of the industries in which 
WOSBs are underrepresented or substantially underrepresented.
---------------------------------------------------------------------------

    \1\ RAND eliminated firms with less than $1,000 in annual 
revenue; counted a firm only once if they were registered more than 
once for multiple locations; eliminated other apparent duplications; 
and eliminated vendors that were only interested in competing for 
grants (as opposed to contracts).
---------------------------------------------------------------------------

    In addition, WOSBs who are not economically disadvantaged could be 
affected only to the extent that they compete for Federal contracts in 
industries in which WOSBs are determined to be substantially 
underrepresented. For industries in which WOSBs are determined to be 
substantially underrepresented, the potential number of WOSBs that 
could be direct beneficiaries of these Procedures restricting certain 
Federal contracts to WOSBs is also likely to be much fewer than the 
number of WOSBs registered in CCR, since not all WOSBs will satisfy the 
eligibility requirements for EDWOSB status. The CCR currently lists 
only 4,210 SDBs owned and controlled by one or more women. This is a 
useful statistic because the $750,000 net worth requirement is the same 
for SDBs and for WOSBs. While SBA acknowledges that there may be other 
WOSBs in existence besides those listed in the CCR as being certified 
by SBA as SDBs, it is difficult to envision more than 6,000 WOSBs that 
could meet SBA's eligibility criteria and that are also ready, willing, 
and able to bid on Government contracts.
    Moreover, the anticipated benefits of these Procedures may be less 
attractive to many WOSBs than a number of other preferences designed to 
assist small businesses, such as HUBZone, 8(a)BD, and others. Not all 
areas of Federal procurement are likely to be designated as 
underrepresented or substantially underrepresented, and opportunities 
in some of the qualified industries may be limited. Consequently, many 
otherwise-qualified EDWOSBs and WOSBs may not find it advantageous to 
pursue contract opportunities under these Procedures.
    This final rule will also affect non-WOSBs (small businesses not 51 
percent owned and controlled by women) seeking Federal contracts for 
which competition has been restricted to participants in these 
Procedures. This would be particularly harmful for those businesses 
that derive a significant portion of their business from Federal 
contracting. As of January 2007, the CCR lists approximately 376,000 
small businesses that are not WOSBs. To the extent that contracting 
officers use these Procedures, non-WOSBs may be excluded from competing 
for certain Federal contracting opportunities. However, this would 
occur only in industries in which WOSBs have been found to be 
underrepresented or substantially underrepresented and where the 
anticipated dollar value of the procurement does not exceed $3 million 
or $5 million, in the case of manufacturing contracts. The number of 
small businesses that would be excluded from eligibility for a set-
aside under these procurements or from future such determinations is 
not known at this time, but it could be a substantial number.
    Additional contracting opportunities identified by Federal agencies 
as candidates to be 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 with 
this rule. However, SBA does not expect a great many of the 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. It is 
acknowledged, however, that some redistribution of contracts among the 
various socioeconomic groups is likely to occur as a result of these 
Procedures.
4. What Are the Projected Reporting, Recordkeeping, Paperwork Reduction 
Act and Other Compliance Requirements?
    As explained above, WOSBs and EDWOSBs will not be required to 
undergo any formal certification process

[[Page 56947]]

to participate in these Procedures. Accordingly, there are no reporting 
or recordkeeping requirements on the affected industry. There will be 
some recordkeeping requirements for the Government; but since the 
Government already tracks procurement awards to WOSBs, the additional 
reporting requirements will require minimal changes to existing 
systems. SBA is working with the Integrated Acquisition Environment, 
which is managed by GSA, to ensure that CCR, ORCA, and the Federal 
Procurement Data System-Next Generation (FPDS-NG) contain the fields 
needed to capture the new socio-economic data. EDWOSB will be a new 
classification that the Government has not previously used.
5. Description of the Steps the Agency Has Taken To Minimize the 
Significant Economic Impact on Small Entities Consistent With the 
Stated Objectives of Applicable Statutes, Including a Statement of the 
Factual, Policy, and Legal Reasons for Selecting the Alternative 
Adopted in the Final Rule and Why Each One of the Other Significant 
Alternatives to the Rule Considered by the Agency Which Affect the 
Impact on Small Entities Was Rejected
    SBA has minimized the significant economic impact on small 
entities. As discussed in the previous section, WOSBs and EDWOSBs will 
not be required to undergo any formal certification process to 
participate in these Procedures. Section 8(m) of the Small Business 
Act, which is the authorizing statutory provision for these Procedures, 
allows SBA to decide on the type of certification needed to implement 
these Procedures. Specifically, a WOSB may be certified by a Federal 
agency, a State government, or a national certifying entity approved by 
the Administrator; or 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 for formal certification. SBA has ruled out this 
approach as unnecessary and too costly. The SBA believes that 
eligibility examinations and protest procedures incorporated into the 
final rule will minimize the likelihood of fraud and misrepresentation 
of WOSB and EDWOSB status. SBA has decided that allowing self-
certification and the option for firms to apply for certification from 
SBA-approved certifiers, when combined with random eligibility 
examinations and a formal protest procedure, is a more viable approach 
than formal certification by SBA and greatly reduces the burden on 
small entities.
    In addition, 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 
preferences. 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 final rule 
imposes no additional requirement on WOSBs.
    Pursuant to Executive Order 13272 dated August 16, 2002, agencies 
issuing final rules are required to discuss any comments received from 
SBA's Office of Advocacy in response to the proposed rule. In this 
case, SBA's Office of Advocacy submitted formal comments on February 
20, 2008, which recommended that the Final Regulatory Flexibility 
Analysis provide cost data on the effort required by WOSBs and EDWOSBs 
to play a role in compelling agencies to make a finding of 
discrimination prior to using a set-aside process for WOSB contract. 
With respect to this recommendation, SBA notes that each agency is 
responsible for conducting an analysis and making a determination of 
whether there has been past discrimination in a particular industry by 
that agency. Advocacy's position rests on the assumption that there is 
an expectation that WOSBs should play a role in the determination 
process. WOSBs are not required, nor are they expected, to participate 
in this process. The Small Business Act has set the Government-wide 
goals for contracts awarded to WOSBs at not less than 5% of the total 
value of all prime contract and subcontract awards for each fiscal 
year. SBA believes that the procuring agencies which have not achieved 
their agency goals for WOSB awards are likely to move forward to 
determine if there is discrimination in order to achieve the agency's 
individual goals for WOSB awards. Thus, SBA does not anticipate any 
cost to WOSBs and EDWOSBs to compel an agency to make a determination 
of discrimination.
    Furthermore, the procuring agencies are best-suited to make a 
determination of whether there is discrimination within a certain 
industry because they have the necessary agency procurement data and 
history more readily available than the SBA. Therefore, while the SBA 
can conduct government-wide disparity studies identifying the 
industries that have been underrepresented by women, the individual 
procuring agencies have the necessary information to justify individual 
WOSB awards. This does not translate into an additional cost for WOSBs 
or EDWOSBs as they are not required or expected to participate in the 
process of determining evidence of discrimination.

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.



0
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

0
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]

0
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''.

0
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) * * *

[[Page 56948]]

    (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) pursuant to part 127;
    (ii) The contracting officer;
    (iii) The SBA Government Contracting Area Director; and
    (iv) The Director for Government Contracting, or designee.
* * * * *

0
4. Amend Sec.  121.1008 (a) by adding a new sentence after the second 
sentence to read as follows:


Sec.  121.1008  What occurs 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

0
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.


0
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:
* * * * *

0
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?
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 that 
are eligible for EDWOSB or WOSB requirements.
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 established 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) determines that WOSBs are 
underrepresented or substantially underrepresented in Federal 
procurement and in which 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.

[[Page 56949]]

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.

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

[[Page 56950]]

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 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, subject to 
penalties for mispresentation, 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 an EDWOSB or WOSB.
    (b) Referral to SBA. When the contracting officer has information 
that calls into question the eligibility of a concern as an 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

[[Page 56951]]

(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 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

[[Page 56952]]

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.
    (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, pursuant to the method specified in Sec.  127.501(b), that a 
set-aside in that industry would be consistent with the equal 
protection requirements of the Due Process Clause of the Fifth 
Amendment of the Constitution.


Sec.  127.501  How will SBA and the agencies 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 that is 
considering restricting competition with respect to a contract in an 
industry pursuant to this rule is responsible for carrying out a 
relevant analysis that would 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

[[Page 56953]]

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 with respect to WOSBs; 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 with respect to WOSBs.


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).


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

[[Page 56954]]

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 period, the contracting officer may 
award the contract, unless the contracting officer has granted SBA an 
extension. The contracting officer may award the contract or begin 
performance after receipt of a protest if the contracting officer 
determines in writing that an award must be made to protect the public 
interest.
    (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

0
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

0
9. Amend Sec.  134.102 by redesignating paragraph (s) as paragraph (t) 
and adding new paragraph (s) to read as follows:

[[Page 56955]]

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

0
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.
* * * * *

0
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 issued pursuant to part 127 of this chapter. 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 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

[[Page 56956]]

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

Sandy Baruah,
Acting Administrator.
[FR Doc. E8-23138 Filed 9-26-08; 4:15 pm]
BILLING CODE 8025-01-P