[Federal Register Volume 80, Number 177 (Monday, September 14, 2015)]
[Rules and Regulations]
[Pages 55019-55022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-22927]


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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: Final rule.

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SUMMARY: This rule makes changes to the regulations governing the 
Women-Owned Small Business (WOSB) program. The U.S. Small Business 
Administration (SBA) is making changes to those regulations to 
implement section 825 of the National Defense Authorization Act for 
Fiscal Year 2015. Specifically, this rule implements the authority set 
forth in section 825 of the 2015 NDAA allowing sole source awards to 
Women-Owned Small Businesses (WOSBs) or Economically Disadvantaged 
Women-Owned Small Businesses (EDWOSBs) in appropriate circumstances.

DATES: This rule is effective October 14, 2015.

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

SUPPLEMENTARY INFORMATION: 

I. Background

    The 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) establishes 
criteria for the WOSB Program, including the eligibility and contract 
requirements for the program. Congress recently amended the WOSB 
Program in 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 in Federal 
contracting. In addition, section 825 of the 2015 NDAA 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.
    On May 1, 2015, SBA published in the Federal Register a proposed 
rule to implement the sole source authority for WOSBs and EDWOSBs and 
the revised timeline for SBA to conduct a study to determine the 
industries in which WOSBs are underrepresented. 80 FR 24846. The rule 
proposed amendments to Sec. 127.101 to include sole source contracts as 
a type of contracting assistance available under part 127. The rule 
also proposed to revise Sec. 127.102 by adding the term ``sole source 
contracts'' to the definitions of ``EDWOSB requirement'' and ``WOSB 
requirement'' and establishing that the terms ``Substantial 
underrepresentation'' and ``Underrepresentation'' would be determined 
by the study to be conducted. The term ``sole source contracts'' was 
also a proposed addition to Sec. 127.500, which concerns the industries 
in which a contracting officer is authorized to restrict competition 
under the WOSB program. This change to Sec. 127.500 proposed to 
authorize contracting officers to award sole source contracts in those 
industries as well. SBA also proposed amendments to Sec. 127.503 to 
establish the conditions for awarding a sole source contract. 
Essentially if, after conducting market research in an industry where a 
WOSB or EDWOSB set-aside is authorized, a 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, a contract may be awarded on a sole source 
basis, provided the value of the contract, including options, does not 
exceed $6.5 million for manufacturing contracts and $4 million for all 
other contracts. SBA also proposed to amend Sec. 127.507 to authorize 
contracting officers to award sole source contracts in the WOSB program 
if the contract requirement is valued at or below the simplified 
acquisition threshold. Finally, the rule proposed to amend the protest 
regulations in Sec. 127.600 to make them consistent with the protest 
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).
    Paragraph (a) of Sec. 127.501 sets out that the agency will 
designate ``the industries in which WOSBs are underrepresented and 
substantially underrepresented'' by NAICS code. However, because 
paragraph (b) uses the term ``disparity'' instead, SBA intended to 
propose a technical amendment to this paragraph to replace that term 
with ``underrepresentation''; such an amendment would make the 
paragraph consistent with amendments to the definitions and other 
sections of the WOSB regulations. This purely technical conforming 
change to Sec. 127.501 is included in this final rule.
    As explained in the proposed rule, SBA recognized that the new 
certification requirement for WOSBs would require a more prolonged 
rulemaking. Because SBA did not want to delay the implementation of the 
WOSB sole source authority by combining it with the new certification 
requirement, SBA did not propose any changes to implement the 
certification requirement but rather indicated that it

[[Page 55020]]

would do so through a separate future rulemaking. SBA received 495 
comments on the proposed rule. With the exception of comments which did 
not set forth any rationale or make suggestions, SBA discusses and 
responds fully to all the comments below.

II. Summary of Comments

    Most of the comments supported the rule. Specifically, most of the 
comments favored SBA's decision to quickly implement the sole source 
authority granted by the 2015 NDAA. Many of the commenters noted that 
they believe this authority and the quick implementation by SBA will 
help WOSB and EDWOSB businesses, and will put the program on more equal 
footing with SBA's other socio-economic contracting programs. In 
addition, the comments supported incorporating the statutory authority 
for sole source awards into the regulations and suggested no meaningful 
changes to the proposed regulatory text. As such, this final rule 
adopts the changes set forth in the proposed rule regarding sole source 
awards to WOSBs and EDWOSBs.
    The second most covered topic in the comments received pertained to 
the language of the 2015 NDAA requiring the certification of WOSB and 
EDWOSB firms. As noted above, SBA did not propose to address the 
certification portion of the 2015 NDAA in the proposed rule because its 
implementation is more complicated, could not be accomplished by merely 
incorporating the statutory language into the regulations, and would 
have delayed the implementation of the sole source authority 
unnecessarily. In addition, SBA noted in the supplementary information 
to the proposed rule that there is no evidence that Congress intended 
to halt the existing WOSB Program until such time as SBA establishes 
the infrastructure and issues regulations implementing the statutory 
certification requirement. SBA continues to believe 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 development of the certification requirement through a 
separate rulemaking.
    SBA believes that any certification process must be fair, efficient 
and comprehensive, but should not be burdensome or prevent new WOSBs 
and EDWOSBs from entering into the Federal marketplace. SBA wants to 
balance the need to protect the Government and other participants from 
fraud, with the goal of increasing WOSB and EDWOSB participation in the 
program. SBA believes that this process should be implemented in a 
systematic and thoughtful manner, and that increased public 
participation in the process will help SBA develop the best possible 
certification program.
    The comments pertaining to certification of WOSBs and EDWOSBs were 
varied and covered a wide range of topics. SBA is in the process of 
developing its strategy for implementation of the certification 
language in the 2015 NDAA. SBA will consider the comments relating to 
certification received in response to this proposed rule when drafting 
the rule implementing the certification requirement. The certification 
rulemaking will give the public an opportunity to provide SBA with 
comments relating to SBA's proposed approach to the certification 
process and assist SBA in crafting the best possible certification 
program.
    SBA also received several comments on the definitional changes 
related to the mandatory study to determine the industries in which 
WOSBs are underrepresented. The comments were generally supportive of 
SBA's proposed changes. As such, this final rule adopts the proposed 
changes to the definitions of the terms ``Underrepresentation,'' 
``Substantial underrepresentation,'' ``EDWOSB requirement,'' and ``WOSB 
requirement'' in Sec.  127.102.
    Several comments recommended that all NAICS codes should be 
available for WOSB and EDWOSB set-asides. Determining the industries in 
which WOSB and/or EDWOSB contracts are available is outside the scope 
of this rule. In addition, section 825 of the 2015 NDAA specifically 
requires the Administrator to conduct a study to identify the 
industries in which small business concerns owned and controlled by 
women are underrepresented with respect to Federal procurement 
contracting in order to determine the industries in which WOSB and/or 
EDWOSB contracts can be awarded.

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 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 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 rule, SBA considered input submitted by three coalitions of 
women's groups representing women-owned small businesses that 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, 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), 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 a Final Regulatory Flexibility 
Analysis addressing the impact of this rule.
1. What are the need for and objective of this final rule?
    This final 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-

[[Page 55021]]

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 final 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 final 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 final rule?
    The legal basis for this final 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 final 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 Search (DSBS) database 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 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 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 duplicate 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 
entities?
    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 regulations must implement the statutory 
provisions, and there are no alternatives for these regulations.

List of Subjects in 13 CFR Part 127

    Government contracts, Reporting and recordkeeping requirements, 
Small businesses.

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

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

0
1. The authority for 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

[[Page 55022]]

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.


Sec.  127.501  [Amended]


0
5. Amend Sec.  127.501 by removing the word ``disparity'' in the two 
places where it appears in paragraph (b) and adding the word 
``underrepresentation'' in its place.


0
6. Amend Sec.  127.503 as follows:
0
a. Revise the section heading;
0
b. Revise paragraph (a) subject heading and paragraph (b) subject 
heading;
0
c. Redesignate 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 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
7. 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 officer may set aside the requirement or 
award the requirement on a sole source basis as set forth in Sec.  
127.503.


0
8. 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.

Maria Contreras-Sweet,
Administrator.
[FR Doc. 2015-22927 Filed 9-11-15; 8:45 am]
 BILLING CODE 8025-01-P