[Federal Register Volume 80, Number 84 (Friday, May 1, 2015)]
[Proposed Rules]
[Pages 24846-24850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-10331]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 127

RIN 3245-AG72


Women-Owned Small Business Federal Contract Program

AGENCY: U.S. Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: The U.S. Small Business Administration (SBA) proposes to amend 
its regulations to implement section 825 of the National Defense 
Authorization Act for Fiscal Year 2015 (2015 NDAA). Section 825 of the 
2015 NDAA included language granting contracting officers the authority 
to award sole source contracts to Women-

[[Page 24847]]

Owned Small Businesses (WOSBs) and Economically Disadvantaged Women-
Owned Small Businesses (EDWOSBs). Section 825 of the 2015 NDAA also 
changed the deadline for SBA to conduct a study to determine the 
industries in which WOSBs are underrepresented to January 2, 2016. As a 
result, SBA is proposing to amend its definitions of 
underrepresentation and substantial underrepresentation.

DATES: Comments must be received on or before June 30, 2015.

ADDRESSES: You may submit comments, identified by RIN: 3245-AG72, or by 
docket number SBA-2015-0004, by any of the following methods: (1) 
Federal Rulemaking Portal: http://www.regulations.gov and follow the 
instructions for submitting comments; or (2) Mail/Hand Delivery/
Courier: Brenda Fernandez, U.S. Small Business Administration, Office 
of Policy, Planning & Liaison, 409 Third Street SW., 8th Floor, 
Washington, DC 20416. SBA will not accept comments to this proposed 
rule submitted by email. SBA will post all comments on 
www.regulations.gov. If you wish to submit confidential business 
information (CBI) as defined in the User Notice at www.regulations.gov, 
please submit the information to Brenda Fernandez, U.S. Small Business 
Administration, Office of Policy, Planning and Liaison, 409 Third 
Street SW., 8th Floor, Washington, DC 20416, or send an email to 
[email protected]. Highlight the information that you consider 
to be CBI and explain why you believe SBA should hold this information 
as confidential. SBA will review the information and make the final 
determination on whether it will publish the information.

FOR FURTHER INFORMATION CONTACT: Brenda Fernandez, U.S. Small Business 
Administration, Office of Policy, Planning & Liaison, 409 Third Street 
SW., 8th Floor, Washington, DC 20416; (202) 205-7337; 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    The Women-Owned Small Business (WOSB) Program, set forth in section 
8(m) of the Small Business Act, 15 U.S.C. 637(m), authorizes Federal 
contracting officers to restrict competition to eligible Women-Owned 
Small Businesses (WOSBs) or Economically Disadvantaged Women-Owned 
Small Businesses (EDWOSBs) for Federal contracts in certain industries. 
Section 8(m) of the Small Business Act (Act) sets forth certain 
criteria for the WOSB Program, including the eligibility and contract 
requirements for the program. Congress recently amended the WOSB 
Program with section 825 of the National Defense Authorization Act for 
Fiscal Year 2015, Public Law 113-291, 128 Stat. 3292 (December 19, 
2014) (2015 NDAA), which included language granting contracting 
officers the authority to award sole source awards to WOSBs and EDWOSBs 
and shortening the time period for SBA to conduct a required study to 
determine the industries in which WOSBs are underrepresented.

II. Section-by-Section Analysis

A. Sole Source Authority

    In order to implement these statutory changes, SBA is proposing to 
amend 13 CFR part 127. Specifically, this proposed rule amends Sec.  
127.101, concerning the type of contracting assistance available under 
part 127, to include the new sole source authority. This proposed rule 
also amends the definitions of the terms ``EDWOSB requirement'' and 
``WOSB requirement'' in Sec.  127.102 to include sole source contracts. 
The proposed rule also amends Sec.  127.500, which concerns the 
industries in which a contracting officer is authorized to restrict 
competition under the WOSB program, to address the new sole source 
authority.
    SBA proposes to amend Sec.  127.503 by adding two new paragraphs to 
incorporate the statutory language of section 825 of the 2015 NDAA 
granting authority for sole source contracts to EDWOSBs and WOSBs. 
Under this statutory authority, if a contracting officer conducts 
market research in an industry where a WOSB or EDWOSB set-aside is 
authorized, and the contracting officer cannot identify two or more 
WOSBs or EDWOSBs that can perform at a fair and reasonable price, but 
identifies one WOSB or EDWOSB that can perform at a fair and reasonable 
price, the contracting officer can award the contract on a sole source 
basis, if the value of the contract, including options, does not exceed 
$6.5 million for manufacturing contracts and $4 million for all other 
contracts.
    The proposed rule also amends Sec.  127.507, concerning contracting 
opportunities at or below the simplified acquisition threshold, to 
address sole source awards under the WOSB Program. Finally, the 
proposed rule amends the protest regulations in Sec.  127.600 to 
include procedures for protests involving sole source contracts. The 
protest procedures for sole source contracts to WOSBs and EDWOSBs would 
be the same as those procedures for sole source contracts involving 
service-disabled veteran owned small business concerns (SDVO SBC) 
(Sec.  125.24(a)) and HUBZone small business concerns (Sec.  
126.800(a)).

B. Time Period for Study

    In order to comply with the revised timeline for SBA to conduct a 
required study to determine the industries in which WOSBs are 
underrepresented, SBA is proposing to revise the definitions of 
``underrepresentation'' and ``substantial underrepresentation'' in 
Sec.  127.102. Section 825 established a new timeline for SBA to 
conduct a study to determine the industries in which WOSBs are 
underrepresented. The original deadline for this study was established 
by section 1697(b) of the National Defense Authorization Act of 2013, 
Pub. L. 112-239, January 2, 2013, 126 Stat. 2091 (2013 NDAA), which 
required SBA to conduct a study of the industries in which WOSBs are 
underrepresented within five years of the date of enactment of the 2013 
NDAA (and every 5 years thereafter). Section 825 of the 2015 NDAA 
amended section 1697(b) of the 2013 NDAA and changed the deadline to 
within 3 years of the date of enactment of the 2013 NDAA, which means 
the study must be conducted by January 2, 2016.
    In order to meet this deadline, the proposed rule amends the 
definitions of the terms ``substantial underrepresentation'' and 
``underrepresentation'' in Sec.  127.102. This change would allow SBA 
to conduct a study within the time constraint imposed by Congress by 
providing SBA with the flexibility necessary to conduct the most 
reliable and relevant study of WOSB participation in Federal 
contracting. In addition, the new definitions of these terms would 
align more closely than the current definitions with the statutory 
intent of the 2013 NDAA and the 2015 NDAA.

C. Other

    SBA recognizes that Section 825 also created a requirement that a 
firm be certified as a WOSB or EDWOSB by a Federal Agency, a State 
government, SBA, or a national certifying entity approved by SBA. This 
statutory requirement appears to apply to both sole source and set 
asides under the WOSB Program, and may require substantial resources. 
Establishing a certification requirement and process will require a 
more prolonged rulemaking before SBA can establish such a program. In 
our view, there is no evidence that Congress intended to halt the 
existing WOSB Program until such time as SBA establishes the

[[Page 24848]]

infrastructure and issues regulations implementing the statutory 
certification requirement. Instead, we maintain that the new WOSB sole 
source authority can and should be implemented as quickly as possible, 
using existing program rules and procedures, while SBA proceeds with 
implementing the certification requirement through a separate 
rulemaking.

III. Compliance With Executive Orders 12866, 12988, 13132, 13563, the 
Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory 
Flexibility Act (5 U.S.C. 601-612)

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
rule does not constitute a significant regulatory action under 
Executive Order 12866. This is not a major rule under the Congressional 
Review Act (CRA), 5 U.S.C. 800.

Executive Order 12988

    This action meets applicable standards set forth in Sections 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

    For the purpose of Executive Order 13132, SBA has determined that 
the proposed rule will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore SBA has determined that this 
proposed rule has no federalism implications warranting the preparation 
of a federalism assessment.

Executive Order 13563

    A description of the need for this regulatory action, the benefits 
and costs associated with this action, and any alternatives are 
included in the Initial Regulatory Flexibility Analysis.
    In drafting this proposed rule, SBA considered input submitted by 
three coalitions of women's groups representing women-owned small 
businesses who support this rule and encourage its quick 
implementation.

Paperwork Reduction Act, 44 U.S.C., Ch. 35

    For the purpose of the Paperwork Reduction Act, 44 U.S.C., Chapter 
35, SBA has determined that this proposed rule does not impose 
additional reporting or recordkeeping requirements.

Regulatory Flexibility Act, 5 U.S.C., 601-612

    According to the Regulatory Flexibility Act (RFA), 5 U.S.C. 601, 
when an agency issues a rulemaking, it must prepare a regulatory 
flexibility analysis to address the impact of the rule on small 
entities. In accordance with this requirement, SBA has prepared an 
Initial Regulatory Flexibility Analysis addressing the impact of this 
rule.

Initial Regulatory Flexibility Analysis

1. What are the need for and objective of this proposed rule?
    This proposed rule is necessary to implement Section 825 of the 
National Defense Authorization Act for Fiscal Year 2015, Public Law 
113-291, December 19, 2014, 128 Stat. 3292 (2015 NDAA). Section 825 of 
the 2015 NDAA included language granting contracting officers the 
authority to award sole source contracts to Women-Owned Small 
Businesses (WOSBs) and Economically Disadvantaged Women-Owned Small 
Businesses (EDWOSBs). The purpose of this rule is to establish the 
procedures whereby Federal agencies may award sole source contracts to 
WOSBs and EDWOSBs and to provide a mechanism to protest such awards. 
The rule provides an additional tool for Federal agencies to ensure 
that WOSBs have an equal opportunity to participate in Federal 
contracting and ensures consistency among SBA's socio-economic small 
business contracting programs. The objectives of this proposed rule are 
to put the WOSB Program on a level playing field with other SBA 
government contracting programs with sole source authority, and to 
provide an additional, needed tool for agencies to meet the statutorily 
mandated 5% prime contracting goal for WOSBs.
    Section 825 of the 2015 NDAA also revised the timeline for SBA to 
conduct a study to determine the industries in which WOSBs are 
underrepresented. This proposed rule is necessary to allow SBA to 
conduct the most reliable and relevant study of WOSB participation in 
Federal contracting and comply with the new statutorily mandated 
timeline.
2. What is the legal basis for this proposed rule?
    The legal basis for this proposed rule is section 825 of the 
National Defense Authorization Act for Fiscal Year 2015, Public Law 
113-291, December 19, 2014, 128 Stat. 3292, which amended Section 8(m) 
of the Small Business Act, 15 U.S.C. 637(m).
3. What is SBA's description and estimate of the number of small 
entities to which the rule will apply?
    The RFA directs agencies to provide a description, and where 
feasible, an estimate of the number of small business concerns that may 
be affected by the rule. This proposed rule establishes a new 
procurement mechanism to benefit WOSBs. Therefore, WOSBs and EDWOSBs 
available to compete for Federal contracts under the WOSB Program are 
the specific group of small business concerns most directly affected by 
this rule.
    SBA searched the Dynamic Small Business Supplemental Search (DSBS) 
and determined that there were approximately 34,000 firms listed as 
either WOSBs or EDWOSBs under the WOSB Program. In addition, according 
to the fiscal year 2013 small business goaling report, there were a 
little over 250,000 actions concerning women-owned small businesses and 
the total dollar value of those actions was approximately $15 billion. 
An analysis of the Federal Procurement Data System from April 1, 2011 
(the implementation date of the WOSB Program) through January 1, 2013, 
revealed that there were approximately 26,712 women-owned small 
business concerns, including 131 EDWOSBs and 388 WOSBs eligible under 
the WOSB Program, that received obligated funds from Federal contract 
awards, task or delivery orders, and modifications to existing 
contracts.
    Therefore, this rule could affect a smaller number of EDWOSBs and 
WOSBs than those eligible under the WOSB Program. We note that the sole 
source authority can only be used where a contracting officer conducts 
market research in an industry where a WOSB or EDWOSB set-aside is 
authorized, and the contracting officer cannot identify two or more 
WOSBs or EDWOSBs that can perform at a fair and reasonable price, but 
identifies one WOSB or EDWOSB that can perform. In addition, the sole 
source authority for WOSBs and EDWOSBs is limited to contracts valued 
at $6.5 million or less for manufacturing contracts and $4 million or 
less for all other contracts.
    Nonetheless, we believe that this rule may have a significant 
positive economic impact on EDWOSB concerns competing for Federal 
contracting opportunities in industries determined by SBA to be 
underrepresented by WOSB concerns and likewise may positively affect 
WOSB concerns

[[Page 24849]]

eligible under the WOSB Program competing in industries determined by 
SBA to be substantially underrepresented by WOSB concerns, since the 
sole source authority will still provide greater access to Federal 
contracting opportunities.
4. What are the projected reporting, recordkeeping, Paperwork Reduction 
Act, and other compliance requirements?
    SBA has determined that this rule does not impose additional 
reporting or recordkeeping requirements.
5. What relevant Federal rules may duplicate, overlap, or conflict with 
this rule?
    SBA has not identified any relevant Federal rules currently in 
effect that duplicates this rule. The sole source mechanism of the WOSB 
program will be an addition to the procurement mechanisms available 
under the existing small business contracting programs that agencies 
currently administer, such as the HUBZone Program, the Service-Disabled 
Veteran-Owned (SDVO) Small Business Program, and the 8(a) Business 
Development Program. The sole source mechanism for WOSBs and EDWOSBs is 
only authorized where a contracting officer conducts market research in 
an industry where a WOSB or EDWOSB set aside is authorized, and the 
contracting officer cannot identify two or more WOSBs or EDWOSBs that 
can perform at a fair and reasonable price, but identifies one WOSB or 
EDWOSB that can perform (and so long as the value of the contract, 
including options, does not exceed $6.5 million for manufacturing 
contracts and $4 million for all other contracts). Therefore, the 
addition of the sole source mechanism for WOSBs and EDWOSBs should 
complement rather than conflict with the goals of existing small 
business procurement programs.
    SBA believes that the Federal Acquisition Regulations (FAR) will 
need to be amended to include this authority so that there is no 
conflict between the SBA's rules and the FAR.
6. What significant alternatives did SBA consider that accomplish the 
stated objectives and minimize and significant economic impact on small 
entitiese?
    The RFA requires agencies to identify alternatives to the rule in 
an effort to minimize any significant economic impact of the rule on 
small entities. The statutory authority for the sole source awards sets 
forth specific criteria, including dollar value thresholds for the 
awards. Therefore, the proposed regulations must implement the 
statutory provisions, and there are no alternatives for these 
regulations.

List of Subjects in 13 CFR Part 127

    Administrative practice and procedure, Government procurement, 
Reporting and recordkeeping requirements, Small businesses.

    Accordingly, for the reasons stated in the preamble, SBA proposes 
to amend 13 CFR part 127 as follows:

PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT PROGRAM

0
1. The authority for 13 CFR part 127 continues to read as follows:

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

0
2. Revise Sec.  127.101 to read as follows:


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

    This part authorizes contracting officers to restrict competition 
or award sole source contracts or orders to eligible Economically 
Disadvantaged Women-Owned Small Businesses (EDWOSBs) for certain 
Federal contracts or orders in industries in which the Small Business 
Administration (SBA) determines that WOSBs are underrepresented in 
Federal procurement. It also authorizes contracting officers to 
restrict competition or award sole source contracts or orders to 
eligible WOSBs for certain Federal contracts or orders in industries in 
which SBA determines that WOSBs are substantially underrepresented in 
Federal procurement and has waived the economically disadvantaged 
requirement.
0
3. Amend Sec.  127.102 by revising the definitions of the terms 
``EDWOSB requirement'', ``Substantial underrepresentation'', 
``Underrepresentation'', and ``WOSB requirement'' to read as follows:


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

* * * * *
    EDWOSB requirement means a Federal requirement for services or 
supplies for which a contracting officer has restricted competition or 
awarded a sole source contract or order to eligible EDWOSBs, including 
Multiple Award Contracts, partial set-asides, reserves, sole source 
awards, and orders set-aside for EDWOSBs issued against a Multiple 
Award Contract.
* * * * *
    Substantial underrepresentation is determined by a study using a 
reliable and relevant methodology.
* * * * *
    Underrepresentation is determined by a study using a reliable and 
relevant methodology.
* * * * *
    WOSB requirement means a Federal requirement for services or 
supplies for which a contracting officer has restricted competition or 
awarded a sole source contract or order to eligible WOSBs, including 
Multiple Award Contracts, partial set-asides, reserves, sole source 
awards, and orders set-aside for WOSBs issued against a Multiple Award 
Contract.
0
4. Revise Sec.  127.500 to read as follows:


Sec.  127.500  In what industries is a contracting officer authorized 
to restrict competition or make a sole source award under this part?

    A contracting officer may restrict competition or make a sole 
source award 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.
0
5. Amend Sec.  127.503 as follows:
0
a. Revise section heading;
0
b. Revise paragraph (a) subject heading and paragraph (b) subject 
heading;
0
c. Redesigne paragraphs (c), (d), (e) and (f) as paragraphs (e), (f), 
(g) and (h); and
0
d. Add new paragraphs (c) and (d).
    The revisions and additions read as follows:


Sec.  127.503  When is a contracting officer authorized to restrict 
competition or award a sole source contract or order under this part?

    (a) Competition restricted to EDWOSBs. * * *
    (b) Competition restricted to WOSBs. * * *
    (c) Sole source awards to EDWOSBs. For requirements in industries 
designated by SBA as underrepresented pursuant to Sec.  127.501, a 
contracting officer may issue a sole source award to an EDWOSB when the 
contacting officer determines that:
    (1) The EDWOSB is a responsible contractor with respect to 
performance of the requirement and the contracting officer does not 
have a reasonable expectation that 2 or more EDWOSBs will submit 
offers;
    (2) The anticipated award price of the contract (including options) 
will not exceed $6,500,000 in the case of a contract assigned a North 
American

[[Page 24850]]

Industry Classification System (NAICS) code for manufacturing, or 
$4,000,000 in the case of any other contract opportunity; and
    (3) In the estimation of the contracting officer, the award can be 
made at a fair and reasonable price.
    (d) Sole source awards to WOSBs. For requirements in industries 
designated by SBA as substantially underrepresented pursuant to Sec.  
127.501, a contracting officer may issue a sole source award to a WOSB 
when the contacting officer determines that:
    (1) The WOSB is a responsible contractor with respect to 
performance of the requirement and the contracting officer does not 
have a reasonable expectation that 2 or more WOSBs will submit offers;
    (2) The anticipated award price of the contract (including options) 
will not exceed $6,500,000 in the case of a contract assigned a NAICS 
code for manufacturing, or $4,000,000 in the case of any other contract 
opportunity; and
    (3) In the estimation of the contracting officer, the award can be 
made at a fair and reasonable price.
* * * * *
0
6. Revise Sec.  127.507 to read as follows:


Sec.  127.507  Are there EDWOSB and WOSB contracting opportunities at 
or below the simplified acquisition threshold?

    If the requirement is valued at or below the simplified acquisition 
threshold, the contracting may set aside the requirement or award the 
requirement on a sole source basis as set forth in Sec.  127.503.
0
7. Revise Sec.  127.600 to read as follows:


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

    (a) For sole source procurements. SBA or the contracting officer 
may protest the proposed awardee's EDWOSB or WOSB status.
    (b) For all other EDWOSB or WOSB requirements. An interested party 
may protest the apparent successful offeror's EDWOSB or WOSB status.

    Dated: April 27, 2015.
Maria Contreras-Sweet,
Administrator.
[FR Doc. 2015-10331 Filed 4-30-15; 8:45 am]
 BILLING CODE 8025-01-P