If you ask any small business federal government contractor or their attorney for the top complaints about the regulations that apply to the Small Business Administration, inconsistency between the various programs is likely to show up on that list. At first glance, it seems the requirements are pretty standard across the board. However, when you dive deeper, you’ll likely notice that even though the requirements are similar, there are enough small differences in the language you can’t just assume that, say, a requirement for service-disabled veteran-owned small business (SDVOSB) is going to be the same for a woman-owned small business (WOSB) or an 8(a) Program participant.
The differences make it crucial to look at the specific regulations for the specific SBA program to ensure compliance. You can’t just assume that they are the same. Thankfully, it looks like the SBA has finally heard our cries for consistency with a recent Notice of Proposed Rulemaking, in which it attempts to align the WOSB Program with the new SDVOSB/VetCert Program and the 8(a) Program. And, as an added bonus, the beginnings of what appears to be a plan to make the WOSB certification process a bit easier if your business is already certified under either the 8(a) program or the SDVOSB program.
Outside Employment
Previously, the WOSB program stated that the woman or economically disadvantaged woman who held the highest officer position was prohibited from engaging in outside employment that would “prevent her from devoting sufficient time and attention to the business concern to control its management and daily operations.” If a woman devoted fewer hours to the business than its normal hours of operation, it was presumed that she did not control the business, as required by 13 C.F.R. 127.202(c). That presumption could be rebutted by showing she had the “ultimate managerial and supervisory control over both the long-term decision making and day-to-day management and administration of the business.”
Now, SBA is expanding that language to make the outside employment requirement in line with those of the SDVOSB Program. The proposed language states:
(1) A woman or economically-disadvantaged woman generally must devote full-time to the business concern during its normal hours of operations. The woman or economically-disadvantaged woman who holds the highest officer position of the business concern may not engage in outside employment that prevents her from devoting sufficient time and attention to the business concern to control its management and daily operations.
(2) Where a woman or economically disadvantaged woman claiming to control a business concern devotes fewer hours to the business than its normal hours of operation, SBA will assume that she does not control the business concern, unless the concern demonstrates that she has ultimate managerial and supervisory control over both the long-term decision making and day-to-day management and administration of the business.
This change will make 13 C.F.R. 127.202(c)(1) and (2) match the SDVOSB language at 13 C.F.R. § 128.203(i). So what does this mean? Essentially, they are changing the rebuttable presumption applied when a woman works outside employment to an assumption. In reality, it doesn’t much change the process because woman owners will still be required to prove their outside employment does not affect their full-time control of the applicant business.
The proposed amendment also proposes to add new language at 13 C.F.R. § 127.202(c)(3) that will require the qualifying woman to notify the SBA prior to engaging in outside employment and that they must demonstrate that the outside employment will not prevent her from controlling the WOSB company. This would be a new requirement that is not yet accounted for in either the WOSB or SDVOSB programs but is included in a similar fashion in the 8(a) regulations.
These new similarities between the WOSB, SDVOSB, and 8(a) outside employment limitations are emblematic of SBA’s attempts to “provide consistency across the language used in SBA’s other government contracting programs,” an explicit goal stated in the recent Notice of Proposed Rulemaking.
Support for WOSB Eligibility
Additionally, SBA is supplementing language in the certification process which looks like it will allow women owners seeking WOSB/EDWOSB certification to use their SDVOSB/VOSB and/or 8(a) status as support for their WOSB/EDWOSB application. 13 C.F.R. § 127.303. Much like the attempts to align the language in the outside employment limitations, this represents an effort to address inconsistencies and confusion in navigating the various programs and streamline the ability of participants in one program to gain access to the benefits of another if they qualify. That same notice details the proposed changes to 13 C.F.R. § 127.303, which regulates the required documentation a concern must submit to achieve WOSB certification. 8(a) requirements are far stricter than those of WOSB, so to allow an existing 8(a) participant that is owned and controlled by one or more women to supplement their WOSB application with proof of their 8(a) status is a no-brainer that should simplify a complicated process for small business owners. Adding the ability to supplement a WOSB application with SDVOSB certification documentation lends consistency to the programs and further demonstrates SBA’s attempts to address longstanding confusions and frustrations.
Conclusion
While contractors and attorneys alike will no doubt continue to face inconsistencies between SBA’s socioeconomic programs, the recent Notice published in the Federal Register is proof that comments and critiques do not have to fall on deaf ears. The proposed changes help to align the programs in areas where it makes sense to streamline them, and brings these regulations up to date in a manner that should hopefully simplify a process important to contractors and lawyers across the country.
Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919.
Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.