The SBA should implement a women-owned small business certification program, according to the SBA’s own Inspector General.

In a recent report on management challenges facing the SBA, the SBA Office of Inspector General urged the SBA to adopt a WOSB certification program–and stated that failing to do so may allow ineligible firms to receive WOSB set-aside contracts.

The SBA OIG’s report notes that the 2013 and 2015 National Defense Authorization Acts made major changes to the WOSB program.  The 2013 NDAA “removed previously existing contract caps on set-aside awards for which WOSB and economically disadvantaged WOSB firms were able to compete.”  The 2015 NDAA “granted contracting officers the authority to award sole-source contracts to firms in [the WOSB program] and required firms to be certified by a Federal agency, a State government, the [SBA] Administrator, or a national certifying entity approved by the Administrator.”

However, the “SBA has opted to implement the sole-source authority provision first–separate from a certification program.”  The SBA OIG continued:

We believe allowing sole source contracting authority in [the WOSB program], without implementing the contemporaneously required certification program, is inconsistent with SBA’s statutory authorization and exposes the program to abuse.  Absent a certification program, the Government is more likely to award [WOSB] contracts to ineligible firms.

Although Inspector General reports sometimes include management’s response to the OIG’s concerns, no response was included with this report.

The SBA’s response to the elimination of WOSB self-certification has been to continue to allow WOSB self-certification until some unspecified point in the future.  I am sympathetic to the SBA’s position; the SBA may have been caught off guard by Congress’s action, and needs to muster the appropriate resources if it is to implement an internal certification program.

Nevertheless, I remain concerned about the legal merits of the SBA’s position.  The 2015 NDAA unambiguously eliminated WOSB self-certification, and it is a basic rule of law that an act of Congress trumps an inconsistent agency position.  Although Congress could have (and perhaps should have) allowed the SBA a grace period to react to the change, Congress did not do so.  When Congress does not specify an effective date at some point in the future, a statute ordinarily is deemed effective as of the date of its enactment.

All this is to say that, at least until I hear the SBA’s legal rationale for its position (SBA, if you read this, please feel free to contact me), I am not convinced that WOSB self-certification is still legally viable.  Perhaps the SBA OIG’s report will help spur the SBA to prioritize an internal certification program, before this issue is tested in the GAO or the courts.  In the meantime, of course, there are always the (sometimes maligned) third-party certifiers.

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