WOSB Certification: SBA Seeks Public Comments

A year after Congress surprisingly eliminated WOSB self-certification, the SBA is asking for public comment on how to certify WOSBs.

In a notice published today, the SBA states that it intends to draft regulations to address the statutory change, but “seeks to understand what the public believes is the most appropriate way to structure a WOSB/EDWOSB certification program.”

In its notice, the SBA acknowledges that the Small Business Act allows “four different types” of WOSB certification programs: by a federal agency, a state government, SBA, or a national certifying entity approved by the SBA.  The SBA seeks comments “as to whether each of the four types should be pursued, or whether one or more of the types of certification are not feasible.”

The SBA also requests comments “on whether there should be a grace period after implementation to give firms that have self-certified the time necessary to complete the certification process.”  Finally, the SBA wants public feedback on whether the WOSB repository “should continue to be maintained after the certification program is implemented, and if so, why and in what capacity should it be used in the future.”

With respect to third party certification, the SBA’s notice acknowledges that the SBA has currently approved four third party entities to certify firms as WOSBs and EDWOSBs.  The SBA seeks public comment on a number of items related to third party certification, including how many third party certifiers would be necessary to serve the full community of WOSBs and EDWOSBs and whether the SBA’s regulations should include provisions for becoming a third party certifier.

Of note, the SBA also seeks comment on whether a third party certification should have an expiration date (and if so, how long a third party certification should be valid) and whether the SBA should change its processes regarding denials by third party certifiers (I have your answer to that one, SBA: “yes.”)  The SBA omits any discussion about whether third party certifiers should be allowed to charge application fees, which is a common complaint about the third party certification process.

With respect to state governments and other federal agencies, the SBA states that its current regulations “authorize SBA to recognize WOSB certifications made by states that have certified firms that are owned and controlled by women to be DBEs for DOT’s DBE program.”  The regulations “do not, however, recognize any other State certifications and do not authorize other Federal agencies to certify WOSBs and EDWOSBs.”

State-certified women-owned businesses have often asked me whether their state certifications confer WOSB status for federal purposes.  The SBA has now answered that question.  Moving forward, though, the SBA asks for public comment on whether the authority to certify WOSBs and EDWOSBs “should be extended to States generally” and if so, how that process would look.  The SBA also asks for feedback on whether any other Federal agencies can (or should) certify WOSBs.  These are interesting questions, but count me as very skeptical that SBA would voluntarily surrender WOSB certification authority to another federal agency.

Finally, the SBA seeks public input on whether the SBA should “set up its own WOSB/EDWOSB certification program.”  This is the option that many would prefer–but it is unclear whether the SBA has the resources to implement it effectively.  The SBA writes:

Recognizing that SBA has limited resources, should SBA create a new certification program specific to WOSBs and EDWOSBs?  If so, how should SBA structure such a certification program so that the limited resources do not cause the time period for certification to be overly lengthy?  How should SBA handle the likelihood of a large number of firms seeking certification once the certification process is operational?  Should SBA consider or attempt to establish an online WOSB/EDWOSB certification program, with dynamic feedback during the certification process?

These are the right questions, and demonstrate that the SBA is well-aware of the potential administrative problems and delays that could arise if the SBA attempts to establish an internal certification program without the resources to properly implement it.  Congress could, of course, solve this problem by appropriating the necessary funds for such a certification program, but the SBA is right not to count on such funding being made available.

I am glad to see that the SBA is moving forward with addressing the elimination of WOSB self-certification.  Hopefully, the public comments the SBA is requesting will help the SBA make the right choices–but the SBA’s request will only be helpful if it receives comments from interested parties.  The SBA is accepting public comments through February 16, 2016.  To comment, follow the instructions in the proposed rule.

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