Federal Register, Volume 84 Issue 93 (Tuesday, May 14, 2019)

[Federal Register Volume 84, Number 93 (Tuesday, May 14, 2019)]
[Proposed Rules]
[Pages 21256-21267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09684]

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Proposed Rules
Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 84, No. 93 / Tuesday, May 14, 2019 / Proposed
Rules

[[Page 21256]]

SMALL BUSINESS ADMINISTRATION

13 CFR Parts 124 and 127

RIN 3245-AG75

Women-Owned Small Business and Economically Disadvantaged Women-
Owned Small Business--Certification

AGENCY: U.S. Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: The Small Business Administration (SBA) is proposing to amend
its regulations to implement a statutory requirement to certify Women-
Owned Small Business Concerns (WOSB) and Economically Disadvantaged
Women-Owned Small Business Concerns (EDWOSB) participating in the
Women-Owned Small Business Contract Program.

DATES: Comments must be received on or before July 15, 2019.

ADDRESSES: You may submit comments, identified by RIN: 3245-AG75, by
any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
For mail, paper, disk, or CD/ROM submissions: Brenda
Fernandez, U.S. Small Business Administration, Office of Policy,
Planning and Liaison, 409 Third Street SW, 8th Floor, Washington, DC
20416.
Hand Delivery/Courier: Brenda Fernandez, U.S. Small
Business Administration, Office of Policy, Planning and Liaison, 409
Third Street SW, 8th Floor, Washington, DC 20416.

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 sba.gov">brenda.fernandez@sba.gov. 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 and Liaison, 409 Third
Street SW, Washington, DC 20416; (202) 207-7337;
sba.gov">brenda.fernandez@sba.gov.

SUPPLEMENTARY INFORMATION: The WOSB Federal Contract Program
(hereinafter referred to as the ``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 WOSBs or
EDWOSBs for Federal contracts in certain industries. Section 825 of the
National Defense Authorization Act for Fiscal Year 2015, Public Law
113-291, 128 Stat. 3292 (December 19, 2014) (2015 NDAA), amended the
Small Business Act to grant contracting officers the authority to award
sole source awards to WOSBs and EDWOSBs and shorten the time period for
SBA to conduct a required study to determine the industries in which
WOSBs are underrepresented. In addition, section 825 of the 2015 NDAA
amended the Small Business Act to create a requirement that a concern
be certified as a WOSB or EDWOSB by a Federal agency, a State
government, SBA, or a national certifying entity approved by SBA, in
order to be awarded a set aside or sole source contract under the
authority of section 8(m) of the Small Business Act. 15 U.S.C.
637(m)(2)(E). The certification requirement applies only to
participants wishing to compete for set-aside or sole source contracts
under the Program. Once this rule is finalized, WOSBs that are not
certified will not be eligible to compete on set asides for the
Program. Other women-owned small business concerns that do not
participate in the Program may continue to self-certify their status,
receive contract awards outside the Program as WOSBs, and count toward
an agency's goal for awards to WOSBs. For those purposes, contracting
officers would be able to accept self-certifications without requiring
them to verify any documentation. SBA is proposing to provide
certification, to accept certification from certain identified
government entities, and to allow certification by SBA-approved third
party certifiers. As part of the changes necessary to implement a
certification program, SBA is also proposing to amend its regulations
with regard to continuing eligibility and program examinations. SBA is
also proposing to adjust the economic disadvantage thresholds
applicable to determining whether an individual qualifies as
economically disadvantaged for participation in the 8(a) Business
Development (BD) Program to make them consistent with the thresholds
applicable to whether a woman qualifies as economically disadvantaged
for EDWOSB status.
On September 14, 2015, SBA published in the Federal Register a
final 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 55019. SBA did
not address the certification portion of the 2015 NDAA in this final
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. SBA notified the public that because it
did not want to delay the implementation of the WOSB sole source
authority by combining it with the new certification requirement, SBA
decided to implement the certification requirement through a separate
rulemaking.
As part of the process to craft the regulations governing the WOSB/
EDWOSB certification program, SBA issued an Advance Notice of Proposed
Rulemaking (ANPR) on December 18, 2015. 80 FR 78984. The ANPR solicited
public comments to assist SBA in drafting a proposed rule to implement
a WOSB/EDWOSB certification program. SBA received 122 comments in
response to the ANPR. SBA has reviewed all the comments while crafting
this proposed rule and received additional input from interested
stakeholders.
This proposed rule also proposes changes to Sec. 124.104(c), to
make the economic disadvantage requirements for the 8(a) BD program
consistent to the economic disadvantage requirements for women-owned
firms seeking EDWOSB

[[Page 21257]]

status. The proposed change would eliminate the distinction in the 8(a)
BD program for initial entry into and continued eligibility for the
program. The economic disadvantage criteria for EDWOSBs equate to the
continuing eligibility criteria for the 8(a) BD program. This has
resulted in the anomaly of a concern applying for EDWOSB and 8(a) BD
status simultaneously and being found to be economically disadvantaged
for EDWOSB purposes, but denied eligibility for the 8(a) BD program
based on not being economically disadvantaged. This proposed rule
intends to make economic disadvantage for the 8(a) BD program
consistent to that for a woman seeking to qualify as economically
disadvantaged for the EDWOSB program. SBA does not believe that it
makes sense to allow a woman to qualify as economically disadvantaged
for EDWOSB purposes, but to then be declined from 8(a) BD participation
for not being economically disadvantaged.
In addition, SBA notes that in September 2017, SBA awarded a
contract to conduct a study to assist the Office of Business
Development in defining or establishing criteria for determining what
constitutes ``economic disadvantage'' for purposes of firms applying to
the 8(a) BD program. The results supported a $375,000 adjusted net
worth for initial eligibility, as compared to the current $250,000
threshold. The study did not, however, consider differences in economic
disadvantage between applying to the 8(a) BD program and continuing in
the program once admitted. Because SBA believes that it is important to
have the same economic disadvantage criteria for the 8(a) BD program as
for the EDWOSB program, to avoid confusion and inconsistency between
the programs, SBA considered applying a $375,000 net worth standard to
both the 8(a) BD and EDWOSB programs. SBA concluded that the $375,000
net worth standard may not be appropriate as the standard for
determining economic disadvantage because it related to entry into the
8(a) BD program as opposed to participation in the free enterprise
system as an economically disadvantaged business owner. As such, this
rule proposes to adopt the $750,000 net worth continuing eligibility
standard for all economic disadvantage determinations in the 8(a) BD
program. SBA specifically requests comments on whether the $375,000 net
worth standard or the $750,000 net worth standard should be used for
both the 8(a) BD and EDWOSB programs. In particular, SBA requests
comments on how the different standards would affect small business
owners participating in the federal marketplace.
SBA is proposing to amend 13 CFR 127 subpart C to establish the
process by which SBA will certify firms as WOSBs or EDWOSBs. Proposed
Sec. 127.300(a) would provide that SBA will provide a free electronic
application process to all firms seeking to be certified as WOSBs or
EDWOSBs. In the pursuit of speed, efficiency, and ease of
administrative burden, applicants would apply online through an
electronic application process. Electronic applications are much faster
to process than paper applications as the information can be sorted and
searched for digitally. Electronic applications force all mandatory
fields to be completed, thereby eliminating incomplete applications.
Moreover, through electronic applications, notifications can be sent to
applicants to confirm receipt of their applications, along with any
follow-up electronic correspondence, rather than through time-consuming
paper mail. Transitioning to purely electronic applications will also
reduce transactions costs for the agency, saving taxpayer dollars in
the process. Data analysis will also be enhanced as applications move
to be only electronic. The ability to process WOSB and EDWOSB
certifications in an expedited fashion will further SBA's mission to
increase the number of WOSBs that win Federal Government contracts.
SBA is proposing that applicants would have the opportunity to
request reconsideration of an initial decline decision, which would be
consistent with the 8(a) BD application process. The contract protest
mechanism, allowing interested parties to challenge the WOSB/EDWOSB
status of an apparent successful offeror, will remain the same with an
appeal right and will serve as a means to ensure that concerns awarded
a Federal contract based on their WOSB or EDWOSB certifications are
eligible for award.
SBA's regulations currently authorize the following WOSB/EDWOSB
certifications: (1) Certification by third party national certifying
entities approved by SBA, (2) certification by SBA as a Participant in
the 8(a) BD program where the concern is owned and controlled by one or
more women, and (3) concerns certified as owned and controlled by women
and certified as Disadvantaged Business Enterprises (DBEs) by states
pursuant to the U.S. Department of Transportation's (DOT's) DBE
program. 13 CFR 127.300(d). Although the current program principally
relies on self-certification, it also permits SBA to have non-
governmental third party certifiers approved by SBA. SBA approved four
non-governmental entities for that purpose as an alternative option for
WOSB or EDWOSBs. These entities are not restricted from assessing fees
for certification. In the ANPR, SBA sought comments on how those
certification processes are working, how they can be improved, and how
best to incorporate them into the new certification requirements.
Almost all of the 122 comments that SBA received mentioned third party
certifiers or their process. Overwhelmingly the commenters urged SBA to
craft a system that would be as uniform as possible, with applicants
not being treated differently depending on whom they chose for
certification purposes. Almost every commenter that mentioned the topic
also wanted the certification process by SBA to be free for all
applicants. Commenters noted that 8(a) BD program applicants and
HUBZone program applicants do not pay a fee for certification. Overall,
commenters suggested that SBA create a clear, transparent, consistent,
and free certification process. Commenters supportive of authorized
third party certifiers offered that speed to certification is one
attraction that might be worth the cost. SBA also received comments
concerning whether a third party certifier could be a for-profit
entity. The legislation does not limit participation as a third party
certifier to entities that are non-profit, and SBA is not proposing any
limitation. The proposed rule would also require any approved third
party certifier to notify an applicant of its fees and the ability to
apply online with SBA at no cost.
After evaluating the comments, SBA has determined that the new
legislation permits a balance of options for the public. SBA has
previously determined that the act of certifying a firm as eligible to
receive a federal contract is generally an inherently governmental
function. However, the 2015 NDAA specifically gives to SBA the
authority to use a non-governmental certifying entity approved by SBA
which is unique to the WOSB Program and does not affect inherently
governmental authorities for approval as required in the 8(a) BD or
HUBZone programs. SBA proposes to exercise this authority and will
promulgate the requirements that prospective national certifying
entities must adhere to in order to be approved.
SBA also proposes to use existing government entities at the
Federal and State levels that have valid certification programs which
SBA could accept in

[[Page 21258]]

lieu of an SBA only process. In addition to those that will apply
directly to SBA for WOSB or EDWOSB certification, or through an
approved national entity, the proposed rule would authorize SBA to
accept certifications that have been issued by SBA, a Federal agency or
State authority under the DOT/DBE program. SBA already certifies firms
as eligible for its 8(a) BD and HUBZone programs without concerns being
charged a fee for applying. The Department of Veterans Affairs (VA)
certifies veteran-owned small businesses (VOSBs) and service-disabled
veteran-owned small businesses (SDVOSBs) at no cost through its Center
for Verification and Evaluation (CVE). Many veterans are also women.
This rule proposes that SBA accept certifications by SBA (for the 8(a)
BD and HUBZone programs) and VA that a firm is owned and controlled by
women for purposes of WOSB/EDWOSB certification. The DOT DBE program
has authority for certifying women under its State-run programs.
Similarly, SBA proposes to accept these certifications that a firm is
owned and controlled by women as well. SBA is therefore proposing to
amend Sec. 127.300 by deleting paragraphs (b) through (f) and
explaining that the certification process will be handled by SBA and
that SBA will accept, under certain conditions, the aforementioned
Federal or State third party certifications.
SBA will accept from the VA, VOSB or SDVOSB certification for women
veterans, provided that the business concern is 51% owned and
controlled by one or more women who are veterans or service-disabled
veterans. VA applies SBA's standards of ownership and control under its
Center for Verification and Evaluation (CVE) program. Because VA does
not determine economic disadvantage, SBA will only accept VA
certifications as evidence of ownership and control by women. Women
veterans or service-disabled veterans seeking EDWOSB status would have
to apply directly to SBA for this certification. In such a case, SBA
would accept VA's determination that the firm is owned and controlled
by women, but the firm would still have to demonstrate that the women
are economically disadvantaged.
Similarly, SBA will accept the DOT/DBE certification for WOSB
eligibility. Because the thresholds of economic disadvantage are
different between SBA and DOT's DBE program, SBA cannot accept the
economic disadvantage determination of a DBE for the EDWOSB
certification. Interested parties seeking EDWOSB status will have to
apply directly to SBA for this certification.
SBA believes that there may difficulty in processing all the
potential applications of those seeking WOSB or EDWOSB certifications
in a timely manner. There are currently approximately 10,000 firms in
the WOSB repository. SBA's 8(a) Business Development program processes
approximately 3,000 applications a year, and SBA's HUBZone program
processes approximately 1,500 applications per year. Because the WOSB/
EDWOSB program is being designed so that only firms that have been
certified are eligible for contracts through the program, SBA expects a
large influx of applications as soon as these rules are finalized. If
all those firms currently in the repository seek WOSB/EDWOSB
certification from SBA immediately, there most likely will be a delay
for many firms seeking certification. SBA is requesting comments on
possible solutions to this potential bottleneck. One solution that SBA
is considering is to adapt a process similar to that previously used by
SBA in certifying firms as small disadvantaged businesses (SDBs) when
there was an SDB program. Under such an approach, a firm could submit
an offer as a WOSB or EDWOSB if it had submitted an application to SBA
and had not received a negative determination regarding that
application at the time it submits its offer. A concern would be
required to notify the procuring agency of this conditional status in
its offer. If a concern then becomes the apparent successful offeror on
a WOSB/EDWOSB contract, the contracting officer would notify SBA and
SBA would prioritize the firm's application and make a determination
within 15 days from the date SBA received the contracting officer's
notification. Such a timeframe should not be detrimental since it is
the same afforded for size and status protests today. SBA specifically
requests comments on this alternative and other possible approaches
that would help ease the transition from self-certification to a
required certification program.
Proposed Sec. 127.301 and Sec. 127.306 would provide guidance on
how a concern may apply to the WOSB/EDWOSB Program. Proposed Sec.
127.301 would provide guidance on initial applications, and proposed
Sec. 127.306 would address the procedures for denied applications and
decertifications. Proposed Sec. 127.305 would provide that WOSB
Program applicants will be permitted to request reconsideration, within
30 calendar days of notification of an initial decline decision. In
proposed Sec. 127.306, SBA would require a one-year waiting period for
a concern to re-apply after a decline or decertification. Currently the
8(a) BD program requires a concern to wait one year to reapply after a
denied application. 13 CFR 124.207. SBA will render a final decision
within 60 calendar days of a reconsideration request. In response to
the SBA ANPR, many commenters requested that SBA adopt an appeal
process for denied applications similar to the 8(a) BD development
program. Other commenters wanted to emphasize giving concerns an
ability to ask SBA to reconsider the application and make changes.
SBA's HUBZone certification process does not currently utilize an
appeal or reconsideration process. SBA is not proposing to adopt an
appeal process similar to the 8(a) BD program for the WOSB Program, but
would allow concerns the ability to request reconsideration. SBA
believes that the reconsideration process should be sufficient for a
firm to understand its deficiencies and come into compliance with the
HUBZone eligibility requirements.
Proposed Sec. 127.302 would provide information on how a concern
may apply for certification. SBA is proposing to process all
applications online. SBA is currently already processing all 8(a) BD
program and HUBZone program applications electronically, and this would
be an extension of that application process to the WOSB Program.
Current participants in the WOSB Program have been using https://
certify.sba.gov to self-certify for the past year.
Proposed Sec. 127.303(a) would describe the information and
documents that must be submitted during the electronic application
process. In the ANPR, SBA requested comments on what information and
documents should be collected during an application. Most commenters
believed that SBA should continue to collect the documents listed in
the current version of Sec. 127.300(e). SBA agrees with these comments
and while that list is not exhaustive, SBA believes that it is
illustrative of the amount and types of documents that SBA will be
collecting during the electronic application process. SBA is proposing
to maintain the list of required documents on its website, and that the
list of required documents ``may include, but is not limited to,
corporate records, and business and personal financial records,
including copies of signed Federal personal and business tax returns,
individual and business bank statements.'' This is similar to the
approach of SBA's other programs, in which SBA provides more detail of
the documents required on SBA's website as well as part of the
application process.

[[Page 21259]]

Proposed Sec. 127.303(b) would make clear that SBA may need to
request additional documents during the application process in order to
confirm eligibility. Proposed Sec. 127.303(c) would state that it is
the concern's responsibility to notify SBA of any changes that could
affect the firm's eligibility while SBA is reviewing the application.
SBA is proposing to add new paragraphs Sec. 127.303(d) and (e) to
detail the additional information that concerns reapplying after a
denial or decertification are required to submit. The proposed rule
provides that concerns reapplying for certification will have to submit
information showing what changes have been made to remedy the issues of
ineligibility in the initial application.
Proposed Sec. 127.304 would detail how SBA will process
applications. WOSB program applicants will have their packages
reviewed, similar to the 8(a) BD program, within 15 calendar days for
completeness of an application. Concerns will be notified if required
information is missing, and that SBA will not process incomplete
applications. SBA proposes that it will make its determination within
90 days after a concern submits a complete application. This is
consistent with the time frames and policies established for SBA's
other certification programs. The 90-day time frame will not begin to
run on submitted but incomplete applications. SBA proposes that after a
complete application is submitted, SBA could still need additional
information from an applicant. Proposed paragraph (c) would provide
that it is the applicant's responsibility to demonstrate its
eligibility and that SBA could draw adverse inferences when a concern
fails to provide documents and information that SBA has requested.
Proposed paragraph (d) would provide that a concern must be eligible
when it applies, and must maintain its eligibility throughout the time
SBA is evaluating its application. Proposed paragraph (e) would provide
that any changes in circumstances may be relevant to a concern's
eligibility, that a concern has an affirmative duty to notify SBA of
any changes, and that SBA may decline to certify a concern that fails
to notify SBA of changed circumstances. Proposed paragraphs (f) and (g)
would provide that any decision regarding an application will be in
writing. Proposed paragraph (f) would also state that it will be SBA's
responsibility to update https://certify.sba.gov (or any successor
system) and the System for Award Management, to indicate the firm has
been certified by SBA.
Proposed Sec. 127.305 would authorize a reconsideration process,
which would permit a firm found to be ineligible to address
deficiencies and change its bylaws, articles of incorporation, or other
ownership documents to come into compliance with SBA's ownership and
control requirements. As mentioned above, this is consistent with SBA's
current application and continuing eligibility process for the 8(a) BD
program. The goal of this proposed change is to allow eligible concerns
to become certified as quickly as possible, even if there were
deficiencies or eligibility issues on their initial applications.
Proposed Sec. 127.306 would provide that concerns may reapply to
the program one year after a final decline or decertification decision.

Third Party Certification

SBA is proposing to further amend subpart C of part 127 to
establish procedures for Third Party Certification in the context of a
required certification program. In proposed Sec. 127.350, SBA is
proposing that all Third Party Certifiers (TPCs) must be approved by
SBA. Under the proposed rule, an approved TPC need not be a non-profit
entity. SBA is also clarifying that a TPC is a non-governmental entity,
in contrast to the governmental certifications (8(a), DOT/DBE, VA/CVE)
that SBA will accept for WOSB/EDWOSB certification purposes.
SBA is proposing that in order to be certified by a TPC, an
applicant must be registered in the System for Award Management (SAM)
and must upload all required documents in certify.gov. An applicant
using a TPC would be required to provide the TPC with access to the
documents in certify.sba.gov. A firm certified by a TPC would need to
upload the written certification from a TPC to https://certify.sba.gov
(or any successor system). Proposed Sec. 127.352 would provide that
SBA will maintain the instructions for becoming a TPC on SBA's website.
Proposed Sec. 127.353(a) would permit TPCs to charge a fee. As
noted above, commenters generally favored free certification, but those
comments pertained to certification by the Government and other
commenters recognized a value to having TPCs in certain instances. SBA
notes that any applicant that wishes to have its application for
certification processed without a fee would always be able to submit
its application to SBA. SBA recognizes that TPCs currently charge a fee
to certify WOSBs, and believes that this option should not be
eliminated for any applicant seeking the services of a TPC. Further,
Sec. 127.353(a)(1) and (2) would provide that all TPCs must notify
potential applicants of the free option offered by SBA at the beginning
of the application process. In addition, proposed Sec. 127.353(b)
would require that the method of the notification must be approved by
SBA.
Proposed Sec. 127.354 would provide the certification standards
that TPCs must meet. The proposed rule identifies minimum standards
that need to be met. As noted above, SBA received suggestions that
consistency between certification options offered by various certifiers
would be helpful for participants, and help alleviate possible
confusion from having multiple certification options. These baseline
standards will provide some consistency between various certifiers,
ensuring that all certifiers are meeting the same minimum requirements.
Proposed Sec. 127.355 would establish procedures that SBA will
utilize to ensure that TPCs are meeting the requirements of subpart D.
Specifically, SBA is proposing that it will conduct periodic compliance
reviews, and that SBA may revoke its approval of a TPC that is not
meeting the requirements.
Proposed Sec. 127.356 would create the process for certification
by a TPC. SBA is proposing that concerns submit their applications
directly to the TPC, register in SAM, and upload all of the documents
to certify.sba.gov. The applicant will provide the TPC with access to
its documents in certify.sba.gov. Once certified, the applicant will
upload the approval document to certify.sba.gov.
Proposed Sec. 127.357 would address ineligibility determinations
made by TPCs. Proposed Sec. 127.357(a) would permit a concern found to
be ineligible by a TPC to request reconsideration and a
redetermination, at no additional cost to the concern. Proposed Sec.
127.357(a) would also require the TPC to complete the reconsideration
process within 60 calendar days. Finally, the proposed rule would
prohibit a declined firm from reapplying for WOSB or EDWOSB
certification by SBA or a TPC for a one-year period.
SBA is proposing to amend subpart D of part 127 to establish
procedures for maintaining a concern's certification as WOSB or EDWOSB
and conducting program examinations of WOSB program participants after
certification. Proposed Sec. 127.400 would require that concerns
recertify their eligibility every three years. SBA proposes that
failure to recertify in the time period provided will result in the
concern being decertified, and thus removed as a certified WOSB or
EDWOSB from the

[[Page 21260]]

Dynamic Small Business Search (DSBS) system.
Proposed Sec. 127.401 would establish the ongoing obligations of
certified WOSB Program participants. Specifically, this provision would
provide that all certified concerns have an affirmative duty to notify
SBA of any material changes in writing. Proposed Sec. 127.402 would
address the failure of a concern to recertify every three years or to
notify SBA of a material change. The proposed language makes clear that
such concerns would be decertified.
Proposed Sec. 127.403 pertains to program examinations. Program
examinations under the new regulations will serve a similar function as
they had previously. However, they will be inherently different with
the proposed new SBA certification. Proposed paragraph (a) would
establish that an examination is an investigation by SBA to verify the
accuracy of any WOSB/EDWOSB certification and to ensure that currently
certified concerns continue to meet the eligibility criteria of the
WOSB Program. Proposed paragraph (b) would provide that program
examinations will be conducted by SBA staff, SBA field staff or others
designated by the SBA's Director of Government Contracting (D/GC).
Proposed paragraph Sec. 127.403(c) establishes that the scope of
review for examinations is any information that is related to a
concern's eligibility. SBA may conduct site visits when appropriate as
part of the program examination. Further, proposed paragraph (d) would
require that it is the program participant's responsibility to ensure
that all required information has been submitted to SBA and that all
that information is up to date and accurate. Additionally, this
proposed section would provide that all of the required information is
considered material by SBA in determining a concern's eligibility and
that the information is assumed to be truthful and current.
Proposed Sec. 127.404 would authorize SBA to conduct program
examinations at its discretion any time after a concern has submitted
an application to be certified. This regulation also clarifies that SBA
may initiate an examination of a concern without notification. As noted
above, in order to apply to the WOSB program and maintain eligibility a
concern must provide SBA with required documents and information. This
provision would provide that SBA may review any previously submitted
information at any time as part of a program examination. Given that
SBA may not need additional information when it begins the examination,
it is not necessary to notify concerns that SBA is reviewing material
that has already been submitted to SBA. Proposed Sec. 127.405 would
make clear that in addition to reviewing material already submitted,
SBA may also request additional information when conducting a program
examination.
Proposed Sec. 127.406 would authorize SBA to decertify concerns
that fail to provide or maintain the required certifications or
documents. As noted above, SBA will maintain a list of all the required
documents that a concern must provide and keep up-to-date. Concerns
that fail to meet this requirement would be proposed for
decertification. SBA would also propose decertification for firms that
SBA determines no longer meet the eligibility requirements. Concerns
would be proposed for decertification pursuant to Sec. 127.406(a).
Concerns proposed for decertification would be given 15 calendar days
to respond. Proposed Sec. 127.406(a)(3) would be added to establish
that SBA will generally not consider new evidence in a response. SBA
also proposes to add Sec. 127.406(b) which would state that when a
concern is decertified pursuant to this section, the D/GC will issue
that decision in writing and will consider all the reasons why the firm
was proposed for decertification. Further, this section would provide
that SBA may draw adverse inferences when making this eligibility
determination. Proposed Sec. 127.406(c) would provide that decertified
firms would be able to reapply to the program one year after
decertification.
SBA is proposing to remove Sec. 127.505, as the pertinent
information in this provision is already detailed in Sec. 121.406(b).
This proposed rule would not change the general procedures
concerning WOSB/EDWOSB protests in relation to contract actions. A
concern that has been determined ineligible as part of a status protest
could continue to appeal that decision pursuant to newly redesignated
Sec. 127.605. However, SBA is proposing to amend newly redesignated
Sec. 127.604(f)(4) to clarify that firms found to be ineligible would
need to reapply rather than request a reexamination. The proposed
language also provides a citation to the appropriate regulation for
reapplication procedures.

Compliance With Executive Orders 12866, 13563, 12988, 13132, and 13771,
the Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory
Flexibility Act (5 U.S.C. 601-612).

Executive Order 12866

The Office of Management and Budget (OMB) has determined that this
proposed rule is a significant regulatory action for the purposes of
Executive Order 12866. Accordingly, the next section contains SBA's
Regulatory Impact Analysis. This is not a major rule, however, under
the Congressional Review Act.

Regulatory Impact Analysis

1. Is there a need for the regulatory action?

The U.S. Small Business Administration (SBA) is required by statute
to administer the WOSB Federal Contract Program (WOSB Program). The
Small Business Act (Act) sets forth the certification criteria for the
WOSB Program. Specifically, the Act states that a WOSB or EDWOSB must,
``be certified by a Federal agency, a State government, the
Administrator, or a national certifying entity approved by the SBA
Administrator, as a small business concern owned and controlled by
women.'' 15 U.S.C. 637(m)(2)(E).
The Federal Acquisition Regulation (FAR) and SBA regulations
require that in order to be certified as a WOSB or EDWOSB a small
business concern must provide documents supporting its WOSB or EDWOSB
status to SBA. See 13 CFR 127.300 and FAR 19.1503(b)(3). The specific
documents firms are required to provide are outlined in Sec. Sec.
127.300(d) and (e). The Act also states that the SBA is authorized to
conduct eligibility examinations of any certified WOSB or EDWOSB, and
to handle protests and appeals related to such certifications. Id.
Sec. 637(m)(5)(A) and (5)(B).
Under the current system firms may be certified by third party
certifiers, or they may essentially self-certify and upload the
required documents to sba.certify.gov. In order to award a WOSB set-
aside or sole source contract, the contracting officer must document
that the contracting officer reviewed the firm's certifications and
documentation. 13 CFR 127.503(g); FAR 19.1503(b)(3). The lack of
required certification, coupled with the requirement that the
contracting officer must verify that documents have been uploaded, may
contribute to reluctance to use the program, resulting in the failure
to meet the statutory goal of 5% of all prime contract dollars being
awarded to

[[Page 21261]]

WOSBs. In FY 2017, the government wide WOSB goal of 5% was not met with
actual performance at 4.71% ($20.8B). The government has only met the
goal once (FY 2015). While the amount of dollars awarded to WOSBs under
the set aside program are trending up, they still account for less than
0.016% of dollars awarded to WOSBs. A certification could help entice
agencies to set aside more contracts for WOSBs, so that the government
can meet the statutory 5% goal.

2. What are the potential benefits and costs of this regulatory action?

The benefit of the proposed regulation is a significant improvement
in the confidence of contracting officers to make Federal contract
awards to eligible firms. Under the existing system, the burden of
eligibility compliance is placed upon the awarding contracting officer.
Contracting officers must review the documentation of the apparent
successful offeror on a WOSB or EDWOSB contract. Under this proposed
rule, the burden is placed upon SBA and/or third party certifiers. All
that a contracting officer need do is to verify that the firm is fact a
certified WOSB or EDWOSB in SAM. A contracting officer would not have
to look at any documentation provided by a firm or prepare any internal
memorandum memorializing any review. This will encourage more
contracting officers to set aside opportunities for WOSB Program
participants as the validation process will be controlled by SBA in
both SAM and DSBS. Increased procurement awards to WOSB concerns can
further close a gap of under-representation of women in industries
where in the aggregate WOSB represent 12 percent of all sales in
contrast with male-owned businesses that represent 79% of all sales
(per SBA Office of Advocacy Issue Brief Number 13, dated May 31, 2017
https://www.sba.gov/sites/default/files/advocacy/Womens-Business-Ownership-in-the-US.pdf).
Another benefit of the proposed regulation is to reduce the cost
associated with the time required for completing WOSB certification by
replacing the WOSB Program Repository with Certify.SBA.gov
(``Certify'') in the regulation. It is also anticipated that the
proposed WOSB certification methodology and likely increased use of
WOSB/EDWOSB set asides may increase program participation levels by
approximately 32%. Under the prior WOSB Program Repository, SBA
determined that the average time required to complete the process
required by the WOSB Program Repository was two hours, whereas the use
of Certify results requires only one hour. Across an estimated 12,347
firms, the total cost savings is significant, as discussed below.
Another potential benefit is the reduction of time and costs to WOSB
firms through the reduction of program participation costs. By
successfully leveraging technology, SBA has reduced the total cost of
burden hours substantially from $2,533,200 to $967,965.
Based on the calculations below, the total estimated number of
respondents (WOSBs and EDWOSBs) for this collection of information
varies depending upon the types of certification that a business
concern is seeking. For initial certification, the total estimated
number of respondents is 9,349. The total number was calculated using
the two-year average number of business concerns that have provided
information through Certify from March 2016 through February 2018. For
annual updates, the total number is 12,347. For examinations and
protests, the total number is 130.

------------------------------------------------------------------------
Number of
Type of certification respondents Source
------------------------------------------------------------------------
Initial certification.......... 9,349 Average annual number
of respondents to
Certify between March
2016 and February
2018.
New certifications each year... 500 Program participation
is expected to remain
constant after initial
year of certification,
with 500 new
certifications
annually.
Annual updates to certification 11,847 Program participation
is expected to remain
constant after initial
year of certification,
with a reduction of
500 participants
annually through
attrition.
----------------
Total annual responses..... 12,347 Annual new
certifications plus
annual updates.
------------------------------------------------------------------------

Each respondent submits one response at the time of initial
certification and one at the time of annual update. Estimated burden
hours vary depending upon the type of certification that a WOSB or
EDWOSB pursues. SBA conducted a survey among a sample of entities that
assist WOSBs and EDWOSBs to provide information through Certify. The
majority of those surveyed stated that for initial certifications the
estimated time for completion is one hour per submission. For annual
updates, because of the need to submit little if any additional
information, the estimated burden is 0.5 hour per submission. For
examinations and protests, the estimated burden is 0.25, which is much
lower because firms have already provided the required documents
identified in 13 CFR 127.300(d) and (e) through Certify. It is
estimated that the initial certification will involve 9,349 existing
participants and 2,998 new respondents in the first year. After the
first year, initial certifications are expected for 500 new respondents
annually with an additional 11,847 annual certifications for existing
participants for a total of 12,347 participants in each succeeding
year. The participant level is expected to remain stable at 12,347
participants annually with 500 new respondents and 500 attritions from
the program annually. Further, 130 respondents are expected to
participate in protests and appeals. The respondent's cost of burden
hours for a five year period and average is provided in the following
table.

[[Page 21262]]

Cost of Burden Hours--5 Year Cost Estimate and Average
----------------------------------------------------------------------------------------------------------------
Initial--new Examinations
Initial--existing participants 1 Annual updates and protests
Year 1 hr @ $77.58 per hr @ $77.58 .5 hr @ $77.58 .25 hr @ Annual totals
participant per per $77.58 per
participant participant participant
----------------------------------------------------------------------------------------------------------------
Number of Program Participants
----------------------------------------------------------------------------------------------------------------
1............................ 9,349 2,998 .............. 130 12,477
2............................ ................. 500 11,847 130 12,477
3............................ ................. 500 11,847 130 12,477
4............................ ................. 500 11,847 130 12,477
5............................ ................. 500 11,847 130 12,477
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
1............................ $725,295 $232,585 .............. $2,521 $960,402
2............................ ................. 38,790 $459,545 2,521 500,856
3............................ ................. 38,790 459,545 2,521 500,856
4............................ ................. 38,790 459,545 2,521 500,856
5............................ ................. 38,790 459,545 2,521 500,856
----------------------------------------------------------------------------------
5 Year Total:............ ................. .............. .............. .............. 2,963,828
----------------------------------------------------------------------------------
Annual Cost Avg...... ................. .............. .............. .............. 592,766
----------------------------------------------------------------------------------------------------------------

(a) Respondent's Cost of Burden Hours:
Initial certification--transition of existing participants (one
time cost):
Estimated officer's salary = $77.58/hour (based on General Schedule
15 Step 10, Washington-Baltimore-Northern Virginia area), which would
be equivalent to a senior manager in an average small business firm.)
Total estimated burden: 9,349 x 1 hour x $77.58/hour = $725,295.
Initial certification--new participants (first year cost):
Estimated officer's salary = $77.58/hour (based on General Schedule
15 Step 10, Washington-Baltimore-Northern Virginia area), which would
be equivalent to a senior manager in an average small business firm.)
Total estimated burden: 2998 x 1 hour x $77.58/hour = $232,585.
Initial certification--new participants (cost for each succeeding
year after initial year):
Estimated officer's salary = $77.58/hour (based on General Schedule
15 Step 10, Washington-Baltimore-Northern Virginia area), which would
be equivalent to a senior manager in an average small business firm.)
Total estimated burden: 500 x 1 hour x $77.58/hour = $38,790.
Annual update:
Estimated officer's salary = $77.58/hour (based on General Schedule
15 Step 10, Washington-Baltimore-Northern Virginia area), which would
be equivalent to a senior manager in an average small business firm.)
Total estimated burden: 11,847 x .5 hour x $77.58/hour = $459,545.
Examinations and Protests (each year):
Estimated officer's salary = $77.58/hour (based on General Schedule
15 Step 10, Washington-Baltimore-Northern Virginia area), which would
be equivalent to a senior manager in an average small business firm.)
Total estimated burden: 130 x .25 hour x $77.58/hour = $2,521.
SBA previously stated that the estimated total respondent's cost of
burden hours was $2,533,200 annually. By successfully leveraging
technology, SBA has reduced the total cost of burden hours
substantially from $2,533,200 to $960,402 for the initial year and
$500,856 annually in succeeding years, with respective savings of
$1,572,798 in the initial year and annual savings in successive years
of $2,032,344 and a five year savings of $9,702,174 for WOSB to
redirect as revenue generating resources to close the noted revenue
disparity with male-owned businesses.
SBA believes that there are no additional capital or start-up costs
or operation and maintenance costs and purchases of services costs to
respondents as a result of this rule because there should be no cost in
setting up or maintaining systems to collect the required information.
As stated previously, the information requested should be collected and
retained in the ordinary course of business.

3. What are the alternatives to this proposed rule?

The proposed regulations are required to implement specific
statutory provisions which require promulgation of implementing
regulations. One alternative considered would be to rely solely on
third party certifiers to certify WOSBs and EDWOSBs. However, there is
a cost to small businesses for third party certifiers. Firms submit the
same documentation to third party certifiers that would submit to SBA,
but third party certifiers charge on average $380 annually.
Consequently, the cost of relying completely on third party certifiers
would be $3,552,620.00 a year (9,349 initial applicants x $380). If
third party certifiers were used for the anticipated increase to 12,477
annual participants, the cost would be $4,741,260. In addition, SBA
maintains that certification for Federal procurement purposes is an
inherently governmental function. Consequently, even if SBA utilized
third party certifiers for an initial or preliminary review, SBA or a
governmental entity would still have to be involved in reviewing those
certifications. In addition, there is an intended benefit of
certification. The intent is to increase confidence in the eligibility
of firms so that contracting officers and activities utilize the sole
source authority. Although trending upwards, WOSB/EDWOSB set aside and
sole awards only accounted for 3.4% of total dollars awarded to WOSBs
in FY 2017. The Federal Government has met the statutory WOSB goal of
5% of total

[[Page 21263]]

dollars awarded to WOSBs only once (FY 2015).

Executive Order 13563

As part of its ongoing efforts to engage stakeholders in the
development of its regulations, on December 18, 2015, SBA issued an
Advance Notice of Proposed Rulemaking in the Federal Register, 80 FR
78984. In response to that notice, SBA received 122 comments. SBA has
incorporated those comments and suggestions in the proposed regulation
to the extent feasible. In addition, SBA shared the proposed rule with
the Small Business Procurement Advisory Council and the Federal
Acquisition Regulation small business committee. In addition, the
agency met with stakeholders.

Executive Order 12988

For purposes of Executive Order 12988, SBA has drafted this
proposed rule, to the extent practicable, in accordance with the
standards set forth in section 3(a) and 3(b)(2) of Executive Order
12988, to minimize litigation, eliminate ambiguity, and reduce burden.
This rule has no preemptive or retroactive effect.

Executive Order 13132

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

Executive Order 13771

This proposed rule is expected to be an Executive Order 13771
regulatory action. Details on the estimated costs of this proposed rule
can be found in the rule's economic analysis.

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

In carrying out its statutory mandate to provide oversight of
certification related to SBA's WOSB Federal Contract Program, SBA is
currently approved to collect information from the WOSB applicants or
participants through SBA Form 2413, and for EDWOSB applicants or
participants, through SBA Form 2414. (OMB Control Number 3245-0374).
This collection of information also requires submission or retention of
documents that support the applicant's certification.
SBA has implemented a certification and information collection
platform--Certify--that replicates the currently approved information
collection. In other words, the information collected through Certify
includes eligibility documents previously collected in the WOSB
Repository, and information collected on SBA Form 2413 (WOSB) and SBA
Form 2414 (EDWOSB). SBA recently revised this information collection to
establish that the agency has discontinued these paper forms and will
collect the information and supporting documents electronically through
Certify. The recent submission made minor changes to add one question
to request information on classes of stock for a corporation and
eliminated one question that was redundant.
As currently approved this collection of information is submitted
by small business applicants or program participants who self-certify
or who obtain certification from an SBA approved third-party certifier.
SBA has determined that this proposed rule does not add any additional
burden to what is already in place for the current documentation
required for self-certification.
As discussed above, this rule proposes to fully implement the
statutory requirement for small business concerns to be certified by a
Federal agency, a State government, SBA, or a national certifying
entity approved by SBA, in order to be awarded a set aside or sole
source contract under the WOSB program. As a result of these changes,
the rule proposes to eliminate the option to self-certify, set the
standards for certification by SBA, and clarify the third-party
certification requirements. SBA does not anticipate that these changes
would impact the content of the information currently collected;
however, it would be necessary to propose changes to the instructions,
especially as they relate to self-certification, to make it clear that
the option is no longer available. SBA does not believe that any
required change to the instructions require the agency to resubmit the
information collection to OMB for review and approval.
SBA notes that personal financial information reported on SBA Form
413 (Control Number 3245-0188) will also be submitted electronically
through Certify by those applicants seeking SBA certification as an
EDWOSB. However, applicants using third-party certifiers will continue
to use the paper version of Form 413. This rule does not propose to
make any changes to that collection. However, if comments on this
proposed rule result in revisions to these WOSB/EDWOSB related
collections of information, SBA will seek OMB approval, if necessary,
before the rule is finalized.

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

According to the Regulatory Flexibility Act (RFA), 5 U.S.C. 601,
when an agency issues a rulemaking, it must prepare a regulatory
flexibility analysis to address the impact of the rule on small
entities. However, section 605 of the RFA allows an agency to certify a
rule, in lieu of preparing an analysis, if the rulemaking is not
expected to have a significant economic impact on a substantial number
of small entities. The RFA defines ``small entity'' to include ``small
businesses,'' ``small organizations,'' and ``small governmental
jurisdictions.'' This proposed rule concerns various aspects of SBA's
contracting programs. As such, the rule relates to small business
concerns, but would not affect ``small organizations'' or ``small
governmental jurisdictions.'' SBA's contracting programs generally
apply only to ``business concerns'' as defined by SBA regulations, in
other words, to small businesses organized for profit. ``Small
organizations'' or ``small governmental jurisdictions'' are non-profits
or governmental entities and do not generally qualify as ``business
concerns'' within the meaning of SBA's regulations.
As stated in the regulatory impact analysis this rule will impact
approximately 9,000-12,000 women-owned small businesses. If adopted in
final form, these businesses will have to apply to SBA for
certification. However, SBA has proposed to minimize the impact on
WOSBs by accepting certifications already received from SBA, through
DOT's DBE program, or the VA's CVE program, and by providing firms that
have been certified by third party certifiers with a one-year grace
period for certification. The costs to WOSBs for certification should
be de minimis, because the required documentation already exists: Such
as articles of incorporation, bylaws, stock ledgers or certificates,
tax records, etc. In addition, this information is already required to
be provided either to third party certifiers, governmental certifying
entities (e.g., DOT DBE, SBA 8(a) Business Development, VA CVE) or to
SBA through Certify. Thus, the Administrator certifies that the
rulemaking is not expected to have a significant economic impact on a
substantial number of small entities.

[[Page 21264]]

List of Subjects

13 CFR Part 124

Administrative practice and procedure, Government procurement,
Minority businesses, Reporting and recordkeeping requirements,
Technical assistance.

13 CFR Part 127

Government contracts, Reporting and recordkeeping requirements,
Small businesses.

For the reasons stated in the preamble, SBA proposes to amend 13
CFR parts 124 and 127 as follows:

PART 124--8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS
STATUS DETERMINATIONS

0
1. The authority citation for part 124 continues to read as follows:

Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d), 644 and
Pub. L. 99-661, Pub. L. 100-656, sec.1207, Pub. L. 101-37, Pub. L.
101-574, section 8021, Pub. L. 108-87, and 42 U.S.C. 9815.

0
2. Amend Sec. 124.104 as follows:
0
a. Remove the first two sentences of paragraph (c)(2) introductory text
and add one sentence in their place;
0
b. Remove the first two sentences of paragraph (c)(3)(i) and add one
sentence in their place; and
0
c. Revise the first sentence of paragraph (c)(4).
The additions and revision read as follows:

Sec. 124.104 Who is economically disadvantaged?

* * * * *
(c) * * *
(2) * * * The net worth of an individual claiming disadvantage must
be less than $750,000. * * *
(3) * * * (i) SBA will presume that an individual is not
economically disadvantaged if his or her adjusted gross income averaged
over the three preceding years exceeds $350,000. * * *
(4) * * * An individual will generally not be considered
economically disadvantaged if the fair market value of all his or her
assets (including his or her primary residence and the value of the
applicant/Participant firm) exceeds $6 million. * * *

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

0
3. The authority citation for part 127 continues to read as follows:

Authority: 15 U.S.C. 632, 634(b)(6), 637(m), 644 and 657r.

0
4. Revise subpart C to read as follows:
Subpart C--Certification of EDWOSB or WOSB Status

Certification by SBA

Sec.
127.300 How is a concern certified as an WOSB or EDWOSB?
127.301 When may a concern apply to SBA for certification?
127.302 Where can a concern apply for certification from SBA?
127.303 What must a concern submit to SBA?
127.304 How will SBA process the application for certification?
127.305 Can an applicant ask SBA to reconsider SBA's initial
decision to decline its application?
127.306 May declined or decertified concerns seek recertification at
a later date?

Certification by Third Party

Sec.
127.350 What is a third party certifier?
127.351 What third party certifications may a concern use as
evidence of its status as a qualified WOSB or EDWOSB?
127.352 What is the process for becoming a third party certifier?
127.353 May third party certifiers charge a fee?
127.354 What are the minimum required certification standards for a
third party certifier?
127.355 How will SBA ensure that approved third party certifiers are
meeting the requirements?
127.356 How does a concern obtain certification from an approved
certifier?
127.357 What happens if a firm is found not eligible by a third
party certifier?

Subpart C--Certification of WOSB or EDWOSB Status

Certification by SBA

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

(a) WOSB certification. (1) A concern may apply to SBA for WOSB
certification. There is no cost to apply to SBA for certification. SBA
will consider the information provided by the concern in order to
determine whether the concern qualifies. SBA, in its discretion, may
rely solely upon the information submitted to establish eligibility,
may request additional information, or may verify the information
before making a determination. SBA may draw an adverse inference and
deny the certification where the concern fails to cooperate with SBA or
submit information requested by SBA.
(2) A concern may submit evidence to SBA that it is a women-owned
concern that is a certified 8(a) Participant, certified by the
Department of Veterans Affairs (VA) CVE as a Service-Disabled Veteran
Owned Business or Veteran-Owned Business, or certified as a
Disadvantaged Business Enterprise (DBE) by a state agency authorized by
the Department of Transportation (DOT); or
(3) A concern may submit evidence that it has been certified as a
WOSB by an approved Third Party Certifier in accordance with this
subpart.
(b) EDWOSB certification. (1) A concern may apply to SBA for EDWOSB
certification. There is no cost to apply to SBA for certification. SBA
will consider the information provided by the concern in order to
determine whether the concern qualifies. SBA, in its discretion, may
rely solely upon the information submitted to establish eligibility,
may request additional information, or may verify the information
before making a determination. SBA may draw an adverse inference and
deny the certification where the concern fails to cooperate with SBA or
submit information requested by SBA.
(2) A women-owned business that is a certified 8(a) Participant
qualifies as an EDWOSB;
(3) Firms certified by the VA or under DOT's DBE program as women-
owned business concerns will be deemed to be owned and controlled by
women, but must apply to SBA to demonstrate their economic disadvantage
in order to be certified as EDWOSBs; or
(4) A concern may submit evidence that it has been certified as an
EDWOSB by a third party certifier under this subpart.
(c) SBA notification and designation. If SBA determines that the
concern is a qualified WOSB or EDWOSB, it will issue a letter of
certification and designate the firm as a certified WOSB or EDWOSB on
the Dynamic Small Business Search (DSBS) system, or successor system.

Sec. 127.301 When may a concern apply to SBA for certification?

A concern may apply for WOSB or EDWOSB certification and submit the
required information whenever it can represent that it meets the
eligibility requirements, subject to the restrictions of Sec. 127.306.
All representations and supporting information contained in the
application must be complete and accurate as of the date of submission.
The application must be signed by an officer of the concern who is
authorized to represent the concern.

Sec. 127.302 Where can a concern apply for certification from SBA?

A concern seeking certification as a WOSB or EDWOSB may apply to
SBA

[[Page 21265]]

for certification via https://certify.sba.gov or any successor system.
Certification pages must be validated electronically or signed by a
person authorized to represent the concern.

Sec. 127.303 What must a concern submit to SBA?

(a) To be certified by SBA as a WOSB or EDWOSB, a concern must
provide documents and information demonstrating that it meets the
requirements set forth in part 127 subpart B. SBA maintains a list of
the minimum required documents that can be found at https://
certify.sba.gov. A firm may submit additional documents and information
to support its eligibility. The required documents must be provided to
SBA during the application process electronically. This may include,
but is not limited to, corporate records, business and personal
financial records, including copies of signed Federal personal and
business tax returns, and individual and business bank statements.
(b) In addition to the minimum required documents, SBA may request
additional information from applicants in order to verify eligibility.
(c) After submitting the application, an applicant must notify SBA
of any changes that could affect its eligibility.
(d) If a concern was decertified or previously denied
certification, it must include with its application for certification a
full explanation of why it was decertified or denied certification, and
what, if any, changes have been made. If SBA is not satisfied with the
explanation provided, SBA may decline to certify the concern.
(e) If the concern was decertified for failure to notify SBA of a
material change affecting its eligibility pursuant to Sec. 127.401, it
must include with its application for certification a full explanation
of why it failed to notify SBA of the material change. If SBA is not
satisfied with the explanation provided, SBA may decline to certify the
concern.

Sec. 127.304 How will SBA process the application for certification?

(a) The SBA's Director of Government Contracting (D/GC) or designee
is authorized to approve or decline applications for certification. SBA
must receive all required information and supporting documents before
it will begin processing a concern's application. SBA will not process
incomplete applications. SBA will advise each applicant within 15
calendar days after the receipt of an application whether the
application is complete and suitable for evaluation and, if not, what
additional information or clarification is required to complete the
application. SBA will make its determination within ninety (90)
calendar days after receipt of a complete package, whenever
practicable.
(b) SBA may request additional information or clarification of
information contained in an application or document submission at any
time.
(c) The burden of proof to demonstrate eligibility is on the
applicant concern. If a concern does not provide requested information
within the allotted time provided by SBA, or if it submits incomplete
information, SBA may presume that disclosure of the missing information
would adversely affect the business concern's eligibility or
demonstrate a lack of eligibility in the area or areas to which the
information relates.
(d) The applicant must be eligible as of the date it submitted its
application and up until the time the D/GC issues a decision. The
decision will be based on the facts contained in the application, any
information received in response to SBA's request for clarification,
and any changed circumstances since the date of application.
(e) Any changed circumstances occurring after an applicant has
submitted an application will be considered and may constitute grounds
for decline. After submitting the application and signed
representation, an applicant must notify SBA of any changes that could
affect its eligibility. The D/GC may propose decertification for any
EDWOSB or WOSB that fails to inform SBA of any changed circumstances
that affected its eligibility for the program during the processing of
the application.
(f) If SBA approves the application, SBA will send a written notice
to the concern and update https://certify.sba.gov or any successor
system, and update DSBS and the System for Award Management (or any
successor systems) to indicate the firm has been certified by SBA.
(g) A decision to deny eligibility must be in writing and state the
specific reasons for denial.
(h) A copy of the decision letter will be sent to the electronic
mail address provided with the application. SBA will consider any
decision sent to this electronic mail address provided to have been
received by the applicant firm.
(i) The decision of SBA to decline certification is the final
Agency decision, unless the applicant seeks reconsideration pursuant to
Sec. 127.305.

Sec. 127.305 Can an applicant ask SBA to reconsider SBA's initial
decision to decline its application?

(a) A concern whose application is declined may request that SBA
reconsider its decision by filing a request for reconsideration at
https://certify.sba.gov, or any successor system, within 30 calendar
days of the date of SBA's decision.
(b) At the time of its request for reconsideration, the applicant
must provide any additional information and documentation pertinent to
overcoming the reason(s) for the initial decline, whether or not
available at the time of initial application, including information and
documentation regarding changed circumstances.
(c) SBA will issue a written decision within 60 calendar days of
SBA's receipt of the applicant's request for reconsideration. SBA may
approve the application, deny it on the same grounds as the original
decision, or deny it on other grounds. If denied, the D/GC will explain
why the applicant is not eligible for admission to the EDWOSB or WOSB
program and give specific reasons for the decline.
(d) If SBA declines the application solely on issues not raised in
the initial decline, the applicant can ask for reconsideration as if it
were an initial decline.
(e) The decision of SBA to decline certification is the final
Agency decision.

Sec. 127.306 May declined or decertified concerns seek
recertification at a later date?

A concern that SBA has declined or decertified may seek
certification after one year from the date of decline or
decertification if it believes that it has overcome all of the reasons
for decline or decertification and is currently eligible. A concern
found to be ineligible during a WOSB/EDWOSB status protest is precluded
from applying for certification for one year from the date of the final
agency decision (the D/GC's decision if no appeal is filed or the
decision of SBA's Office of Hearings and Appeals (OHA) where an appeal
is filed pursuant to Sec. 127.605.

Certification by Third Party

Sec. 127. 350 What is a third party certifier?

A third party certifier is a non-governmental entity that SBA may
approve to certify that an applicant firm is qualified for the WOSB or
EDWOSB contracting program. A third party certifier may be a for-profit
or non-profit entity. The list of SBA-approved third

[[Page 21266]]

party certifiers may be found on SBA's website at sba.gov.

Sec. 127.351 What third party certifications may a concern use as
evidence of its status as a qualified EDWOSB or WOSB?

In order for SBA to accept a third party certification that a
concern qualifies as a WOSB or EDWOSB, the concern must have a current,
valid certification from an entity designated as an SBA-approved
certifier. The third party certification must be submitted to SBA
through https://certify.sba.gov (or a successor system).

Sec. 127.352 What is the process for becoming a third party
certifier?

SBA will periodically hold open solicitations. All entities that
believe they meet the criteria to act as a third party certifier will
be free to respond to the solicitation. SBA will review the
submissions, and if SBA determines that an entity has demonstrated it
meets SBA criteria, SBA will enter into an agreement and designate the
entity as an approved third party certifier.

Sec. 127.353 May third party certifiers charge a fee?

(a) Third party certifiers may charge a reasonable fee, but must
notify applicants first, in writing, that SBA offers certification for
free.
(b) The method of notification and the language that will be used
for this notification must be approved by SBA. The third party
certifier may not change its method or the language without SBA
approval.

Sec. 127.354 What are the minimum required certification standards
for a third party certifier?

(a) All third party certifiers must enter into written agreements
with SBA. This agreement will detail the requirements that the third
party certifier must meet. SBA may terminate the agreement if SBA
subsequently determines that the entity's certification process does
not comply with SBA-approved certification standards or is not based on
the same program eligibility requirements as set forth in subpart B of
this part or conducts itself in a manner contrary to SBA's values.
(b) Third party certifiers' certification process must comply with
SBA-approved certification standards and track the WOSB or EDWOSB
eligibility requirements set forth in subpart B of this part.
(c) In order for SBA to enter into an agreement with a third party
certifier, the entity must establish the following:
(1) It will render fair and impartial WOSB/EDWOSB Federal Contract
Program eligibility determinations;
(2) It will provide the approved applicant a valid certificate for
entering into the SBA electronic platform, and will retain documents
used to determine eligibility for a period of six (6) years to support
SBA's responsibility to conduct a status protest, eligibility
examination, agency investigation or audit of the third party
determinations;
(3) Its certification process will require applicant concerns to
register in SAM (or any successor system) and submit sufficient
information as determined by SBA to enable it to determine whether the
concern qualifies as a WOSB. This information must include
documentation demonstrating whether the concern is:
(i) A small business concern under the SBA size standard
corresponding to the concern's primary industry, as defined in 13 CFR
121.107;
(ii) At least 51 percent owned and controlled by one or more women
who are United States citizens; and
(4) It will not decline to accept a concern's application for WOSB/
EDWOSB certification on the basis of race, color, national origin,
religion, age, disability, sexual orientation, marital or family
status, or political affiliation.

Sec. 127.355 How will SBA ensure that approved third party
certifiers are meeting the requirements?

(a) SBA will require third party certifiers to submit quarterly
reports to SBA. These reports will contain information including the
number of applications received, number of applications approved and
denied, and other information that SBA determines may be helpful for
ensuring that third party certifiers are meeting their obligations or
information or data that may be useful for improving the program.
(b) SBA will conduct periodic compliance reviews of third party
certifiers to ensure that they are properly applying SBA's WOSB/EDWOSB
requirements and certifying firms in accordance with those
requirements.
(1) SBA will conduct a compliance review on at least one third
party certifier per year and will ensure that every third party
certifier undergoes a full compliance review every three years.
(2) At the conclusion of each compliance review SBA will provide
the third party certifier with a written report detailing SBA's
findings with regard to the third party certifier's compliance with
SBA's requirements. The report will include recommendations for
possible improvements, and detailed explanations for any deficiencies
identified by SBA.
(c) If SBA determines that a third party certifier is not meeting
the requirements, SBA may revoke the approval of that third party
certifier.

Sec. 127.356 How does a concern obtain certification from an
approved certifier?

(a) A concern that seeks WOSB or EDWOSB certification from an SBA-
approved third party certifier must submit its application directly to
the approved certifier in accordance with the specific application
procedures of the particular certifier.
(b) The concern must register in the System for Award Management
(SAM), or any successor system.
(c) The approved certifier must ensure that all documents used to
determine that a firm is approved for certification are uploaded in
https://certify.sba.gov or any successor system.

Sec. 127.357 What happens if a firm is found not eligible by a third
party certifier?

(a) The concern may request, at no additional cost to the
applicant, a redetermination within 30 calendar days from the third
party certifier that initially declined its application and cannot
represent itself as a qualified WOSB or EDWOSB unless and until it
receives a determination of eligibility.
(b) The third party certifier must complete the redetermination
within 60 calendar days of request. If the applicant is declined, the
third party certifier shall notify SBA.
(c) The concern must wait one year to request a reexamination from
either SBA or a third party certifier.
(d) The concern may not seek certification from any other third
party certifier during this waiting period.
0
5. Revise subpart D to read as follows:
Subpart D--Maintaining WOSB and EDWOSB Status and Eligibility
Examinations
Sec.
127.400 How does a concern maintain its WOSB or EDWOSB
certification?
127.401 What are an EDWOSB's and WOSB's ongoing obligations to SBA?
127.402 What happens if a concern fails to recertify or notify SBA
of a material change?
127.403 What is a program examination, who will conduct it, and what
will SBA examine?
127.404 When may SBA conduct program examinations?
127.405 May SBA require additional information from a WOSB or EDWOSB
during a program examination?
127.406 What happens if SBA determines that the concern is no longer
eligible for the program?

[[Page 21267]]

Subpart D--Maintaining WOSB and EDWOSB Status and Eligibility
Examinations

Sec. 127.400 How does a concern maintain its WOSB or EDWOSB
certification?

(a) A certified WOSB or EDWOSB must recertify every three years to
SBA that it continues to meet all of the WOSB and EDWOSB eligibility
requirements. Concerns wishing to remain in the program without any
interruption must recertify their continued eligibility to SBA within
30 calendar days before the third anniversary date of their initial
certification and each subsequent three-year period. Failure to do so
will result in the concern being decertified. The process for
completing the recertification can be found on SBA's website at https://certify.sba.gov (or successor system).
(b) A concern certified by a third party certifier prior to the
effective date of SBA's certification may maintain that status for
three years from the date of its certification or most recent
recertification by the third party certifier.

Sec. 127.401 What are an EDWOSB's and WOSB's ongoing obligations to
SBA?

Once certified, a WOSB or EDWOSB must immediately notify SBA of any
material changes that could affect its eligibility. Material change
includes, but is not limited to, a change in the ownership, business
structure, or management. The notification must be in writing, and must
be uploaded into the firm's profile with SBA. The method for notifying
SBA can be found on https://certify.sba.gov. A concern's failure to
notify SBA of such a material change may result in decertification and
removal from SAM and DSBS (or any successor system) as a designated
certified WOSB/EDWOSB concern. In addition, SBA may seek the imposition
of penalties under Sec. 127.700.

Sec. 127.402 What happens if a concern fails to recertify?

If a WOSB or EDWOSB fails to recertify its status on https://
certify.sba.gov (or successor system) pursuant to Sec. 127.400 or SBA
determines that a concern has not notified SBA of a change that could
affect its WOSB or EDWOSB eligibility, SBA will decertify the concern
from the program. In the case of a concern failing to recertify its
status as a WOSB or EDWOSB, SBA will decertify the firm from the
program on the day after the third anniversary date of initial
certification or recertification. SBA will issue a written notice
explaining why the concern has been decertified. This decertification
will be SBA's final decision and may not be appealed.

Sec. 127.403 What is a program examination, who will conduct it, and
what will SBA examine?

(a) A program examination is an investigation by SBA officials,
which verifies the accuracy of any certification of a concern issued by
a third party certifier or other Federal or State agency or in
connection with a WOSB or EDWOSB contract. Thus, examiners may verify
that the concern currently meets the program's eligibility
requirements, and that it met such requirements at the time of its
application for certification, its most recent recertification, or its
certification in connection with a WOSB or EDWOSB contract.
(b) Examiners may review any information related to the concern's
eligibility requirements. SBA may also conduct site visits.
(c) It is the responsibility of program participants to ensure the
information provided to SBA is kept up to date and is accurate. SBA
considers all required information and documents material to a
concern's eligibility, and assumes that all information and
documentation submitted are up to date and accurate unless SBA has
information that indicates otherwise.

Sec. 127.404 When may SBA conduct program examinations?

SBA may conduct a program examination at any time after a concern
has been certified as a WOSB or EDWOSB.

Sec. 127.405 May SBA require additional information from a WOSB or
EDWOSB during a program examination?

At the discretion of the D/GC, SBA has the right to require that a
WOSB or EDWOSB submit additional information as part of the
certification process, or at any time thereafter. SBA may draw an
adverse inference from the failure of a concern to cooperate with a
program examination or provide requested information.

Sec. 127.406 What happens if SBA determines that the concern is no
longer eligible for the program?

If SBA believes that a concern does not meet the program
eligibility requirements, the concern has not provided or maintained
all the required certifications and documentation, or the concern has
failed to notify SBA of a material change, SBA will propose the concern
for decertification from the program.
(a) Proposed Decertification. The D/GC or designee will notify the
concern in writing that it has been proposed for decertification. This
notice will state the reasons why SBA has proposed decertification, and
that the WOSB or EDWOSB must respond to each of the reasons set forth.
(1) The WOSB or EDWOSB must respond in writing to a proposed
decertification within 20 calendar days from the date of the proposed
decertification.
(2) If the initial certification was done by a third party, SBA
will also notify the third party certifier of the proposed
decertification in writing.
(b) Decertification. The D/GC or designee will consider the reasons
for proposed decertification and the concern's response before making a
written decision whether to decertify. The D/GC may draw an adverse
inference where a concern fails to cooperate with SBA or provide the
information requested. The D/GC's decision is the final Agency
decision.
(c) Reapplication. A concern decertified pursuant to this section
may reapply to the program pursuant to Sec. 127.306.

Sec. 127.505 [Removed and reserved]

0
6. Remove and reserve Sec. 127.505.

Sec. 127.602 [Amended]

0
7. Amend Sec. 127.602 by removing the last sentence.

Sec. 127.603 [Amended]

0
8. Amend Sec. 127.603 by removing the second to last sentence in
paragraph (d).
0
9. Revise Sec. 127.604(f)(4) to read as follows:

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

* * * * *
(f) * * *
(4) A concern that has been found to be ineligible will be
decertified from the program and may not submit an offer as a WOSB or
EDWOSB on another procurement until it is recertified. A concern may be
recertified by reapplying to the program pursuant to Sec. 127.306.

Christopher M. Pilkerton,
Acting Administrator.
[FR Doc. 2019-09684 Filed 5-13-19; 8:45 am]
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