[Federal Register Volume 75, Number 42 (Thursday, March 4, 2010)]
[Proposed Rules]
[Pages 10029-10058]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-3887]



[[Page 10029]]

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Part II





Small Business Administration





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13 CFR Parts 121, 127, and 134



Women-Owned Small Business Federal Contract Program; Proposed Rule

Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / 
Proposed Rules

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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 121, 127, and 134

RIN 3245-AG06


Women-Owned Small Business Federal Contract Program

AGENCY: Small Business Administration.

ACTION: Notice of proposed rulemaking; withdrawal of proposed rule.

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SUMMARY: The U.S. Small Business Administration (SBA) proposes to amend 
its regulations governing small business contracting procedures. This 
Proposed Rule would amend part 127, that was promulgated in a Final 
Rule on October 1, 2008, and entitled ``The Women-Owned Small Business 
Federal Contract Assistance Procedures,'' RIN 3245-AF40. This Proposed 
Rule would implement procedures authorized by the Small Business Act 
(Act) (Pub. L. 85-536, as amended) to help ensure a level playing field 
on which Women-Owned Small Businesses (WOSBs) can compete for Federal 
contracting opportunities. SBA proposes changes to part 127 that 
include eliminating the requirement for an agency-by-agency 
determination of discrimination, adopting both ``numbers'' and 
``dollars'' measures of underrepresentation, and using the Fiscal Year 
2006 Central Contractor Registration (CCR) database as the data source 
for determining eligible industries under the WOSB Program. This 
Proposed Rule thus identifies the eligible industries under the Program 
as those industries in which WOSBs are underrepresented or 
substantially underrepresented using either the numbers or the dollars 
approach. This Proposed Rule seeks to retain, for the most part, parts 
121 and 134 of the Final Rule published on October 1, 2008, titled 
``The Women-Owned Small Business Federal Contract Assistance 
Procedures,'' RIN 3245-AF40; these portions of the rule govern various 
implementation procedures of the Program, as more fully discussed 
below.
    In addition, SBA is withdrawing its proposed rule entitled ``The 
Women-Owned Small Business Federal Contract Assistance Procedures,'' 
which was published on October 1, 2008, in the Federal Register 
together with a request for comments on two data sets used to determine 
the eligible industries under the WOSB Program.

DATES: 
    Date of Withdrawal: The proposed rule published on October 1, 2008, 
in the Federal Register at 73 FR 57014 is withdrawn as of March 4, 
2010.
    Comment Date: Submit comments on or before May 3, 2010.

ADDRESSES: You may submit comments, identified by 3245-AG06, by any of 
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail, Hand Delivery/Courier: Dean Koppel, Assistant 
Director, Office of Policy and Research, Office of Government 
Contracting, U.S. Small Business Administration, 409 Third Street, SW., 
Washington, DC 20416.
    All comments will be posted on http://www.regulations.gov. If you 
wish to submit confidential business information (CBI) as defined in 
the User Notice at http://www.regulations.gov, please submit the 
comments to Dean Koppel and highlight the information that you consider 
to be CBI and explain why you believe this information should be held 
confidential. SBA will make a final determination as to whether the 
comments will be published or not.

FOR FURTHER INFORMATION CONTACT: Dean Koppel, Assistant Director, 
Office of Policy and Research, Office of Government Contracting, U.S. 
Small Business Administration, 409 Third Street, SW., Washington, DC 
20416.

SUPPLEMENTARY INFORMATION: 

I. Background

    On December 21, 2000, Congress enacted the Small Business 
Reauthorization Act of 2000, Public Law 106-554. Section 811 of that 
Act addressed the difficulties women-owned businesses have endured in 
competing for Federal procurement contracts by adding a new section 
8(m), 15 U.S.C. 637(m), authorizing Federal contracting officers to 
restrict competition to eligible Women-Owned Small Businesses (WOSBs) 
for Federal contracts in certain industries. The law responds to 
decades of sex discrimination that have inhibited the ability of women 
to form firms and then to compete equally for contracts. By providing 
small, women-owned businesses an opportunity to gain a critical 
foothold in the Federal procurement market, the statute helps WOSBs 
overcome the economic barriers they have faced and helps ensure that 
the Federal government does not perpetuate the effects of economic sex 
discrimination.
    In enacting this statute, Congress acted against a backdrop of 
discrimination against women that has been examined in Congressional 
hearings over many years and which persists to this day, as well as a 
history of largely unsuccessful Federal attempts to remedy that 
discrimination and provide a level playing field for WOSBs to compete 
for Federal contracts. Women-owned firms have been persistently 
underrepresented in Federal procurement contracting. For example, in 
1979, when Executive Order 12138

charged Federal agencies with responsibility for providing 
procurement assistance to women-owned businesses, WOSBs received 
only 0.2% of all Federal procurements.

LaLa Wu and Kate Collier, The National Plan of Action: Then and Now, 
Bella Abzug Leadership Institute, Nov. 2007 (hereinafter referred to as 
National Plan of Action), publicly available at http://www.abzuginstitute.org/NationalPlanofAction_ThenandNow-Final.pdf.\1\ 
In the nine succeeding years (through 1989), the percentage of WOSB 
Federal procurements grew to 1 percent. See id. In later years,
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    \1\ In 1988, the Women's Business Ownership Act, Public Law 100-
588 (Oct. 25, 1988), ``was enacted to assist women in starting, 
managing and growing small businesses.'' Ibid. The National Plan of 
Action reported that ``while this program has assisted thousands of 
women in obtaining business financing and information, it has had 
less success'' at increasing the percentage of the total value of 
all prime contract and subcontract awards going to WOSBs or 
increasing the WOSB share in the economy because WOSBs have not 
experienced a proportional increase in their share of Federal 
contracting dollars. Subsequently, in 1994, section 7106 of the 
Federal Acquisition Streamlining Act (FASA), Public Law 103-355, 
``amended the Small Business Act by establishing a target that was 
aimed at increasing opportunities for women to compete for Federal 
contracts.'' Id. ``FASA, among other things, established a 
government-wide goal for participation by WOSBs in procurement 
contracts of not less than 5 percent of the total value of all prime 
contract and subcontract awards for each fiscal year.'' Ibid. That 
goal has not been reached to date.

[a]lthough the growth rate in the number of women-owned small 
businesses (WOSBs) was almost twice that of all firms between 1997 
and 2002, WOSBs [did] not experience[] a proportional increase in 
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their share of Federal contracting dollars.

See id.

    Evidence presented to Congress shows that women-owned firms 
continue to be significantly underrepresented in Federal 
contracting.\2\ In 2002, for example, there

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were 6.5 million women-owned firms in the United States, which 
accounted for 28.2 percent of all non-farm businesses in the United 
States. See SBA Office of Advocacy, Women in Business: A Demographic 
Review of Women's Business Ownership, 2007 (available at http://www.sba.gov/advo/research/rs280tot.pdf). Despite this presence, 
however, the share of women-owned small business prime contract awards 
(in dollar terms) was 2.9 percent in FY 2002 and 3.39 percent in FY 
2008. See Federal Procurement Data System/Next Generation (available at 
http://www.fpds.gov/fpdsng_cms/).\3\
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    \2\ This underrepresentation is mirrored by disparities that 
women-owned firms face in the marketplace more generally. See, e.g., 
Opportunities and Challenges for Women Entrepreneurs on the 20th 
Anniversary of the Women's Business Ownership Act: Roundtable Before 
the S. Comm. on Small Business and Entrepreneurship, 110th Cong. 3 
(2008) (available at http://www.access.gpo.gov/congress/Senate/Senate17ch110.html); Expanding Opportunities for Women 
Entrepreneurs: The Future of Women's Small Business Programs: 
Hearing Before the S. Comm. on Small Business and Entrepreneurship, 
110th Cong. 2 (2007) (statement of the Hon. John F. Kerry, Chairman 
and Sen. from Massachusetts) (stating that ``women owned small 
businesses still continue to have markedly lower revenue and fewer 
employees than firms, even comparable ones, owned by men'') 
(available at http://sbc.senate.gov/hearings/20070920.cfm); Women in 
Business: Leveling the Playing Field: Roundtable Before the S. Comm. 
on Small Business and Entrepreneurship, 110th Cong. 8 (2008) 
(available at http://sbc.senate.gov/hearings/20080319.cfm).
    \3\ See also Small Business Administration, FY 2008 Official 
Goaling Report; Small Business Administration (available at http://www.sba.gov/aboutsba/sbaprograms/goals/index.html (last visited 
February 12, 2010).
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    Substantial academic literature and evidence presented to Congress 
demonstrates that women face discrimination both in the ability to form 
and grow their businesses and in the treatment they receive in 
contracting markets.\4\
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    \4\ See, e.g., Women in Business: Leveling the Playing Field: 
Roundtable Before the S. Comm. on Small Business and 
Entrepreneurship, 110th Cong. 8 (2008) (discussing challenges facing 
women business owners) (available at http://sbc.senate.gov/hearings/20080319.cfm); The Department of Transportation's Disadvantaged 
Business Enterprises Program: Hearing Before the H. Comm. on Transp. 
and Infrastructure, 111th Cong. 299 (2009) (statement of Joann 
Payne, President, Women First National Legislative Committee) 
(describing sex discrimination in business lending) (available at 
http://transportation.house.gov/hearings/hearingdetail.aspx?NewsID=859); Opportunities and Challenges for 
Women Entrepreneurs: Roundtable Before the S. Comm. on Small 
Business and Entrepreneurship, 110th Cong. 25 (2008) (detailing, 
among other things, sex discrimination in lending, and women's 
exclusion from informal business networks that are a crucial source 
of business opportunities) (available at http://sbc.senate.gov/hearings/20080909.cfm); National Economic Research Associates, Inc., 
Race, Sex and Business Enterprise: Evidence from Memphis, Tennessee 
100 (2008) (explaining that discrimination in the labor force 
reduces the future availability of women-owned businesses by 
limiting women's ability to obtain the kinds of employment 
experiences that are most likely to lead to entrepreneurial 
opportunities) (The Minority Business Development Agency: Enhancing 
the Prospects for Success: Hearing Before the H. Subcomm. on 
Commerce, Trade, and Consumer Protection of the H. Comm. on Energy 
and Commerce, 111th Cong. (2009) available at http://energycommerce.house.gov/index.php?option=com_content&view=article&id=1772:the-minority-business-development-agency-enhancing-the-prospects-for-success&catid=129:subcommittee-on-commerce-trade-and-consumer-protection&Itemid=70).
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    The following sections explain the operation of the Program.

II. Section 8(m): The WOSB Program Legislation

    Congress established the WOSB Program as a tool to enable 
contracting officers to identify and establish a sheltered market for 
competition among WOSBs for the provision of goods and services to the 
Federal Government. H.R. Rep. No. 106-879, at 2 (2000) (publicly 
available at http://thomas.loc.gov/cgi-bin/cpquery/T?&report=hr879&dbname=106&). Consistent with these goals, section 8(m) 
of the Act authorizes contracting officers to restrict competition for 
``any contract for the procurement of goods or services by the Federal 
Government'' to WOSBs under certain enumerated circumstances. 15 U.S.C. 
637(m)(2). To be deemed a WOSB for purposes of section 8(m), a firm 
must be a ``small business concern owned and controlled by women.'' As 
defined in section 3(n) of the Act, this means that at least 51 percent 
of the concern must be owned by one or more women, and that the 
management and daily business operations of the concern must be 
controlled by one or more women. 15 U.S.C. 632(n).
    Section 8(m) establishes six criteria that must be satisfied in 
order for a contracting officer to reserve an acquisition for WOSBs:
     First, each eligible concern must be not less than 51 
percent owned by one or more women who are ``economically 
disadvantaged.'' However, SBA may waive this requirement of economic 
disadvantage if it determines that the concern is in an industry in 
which WOSBs are ``substantially underrepresented.''
     Second, the contracting officer must have a reasonable 
expectation that two or more WOSBs will submit offers for the contract.
     Third, the anticipated award price of the contract must 
not exceed $5 million in the case of manufacturing contracts and $3 
million in the case of other contracts.
     Fourth, in the estimation of the contracting officer, the 
contract must be able to be awarded at a fair and reasonable price.
     Fifth, each competing concern must be duly certified by a 
Federal agency, a State government, or an SBA-approved entity as a 
WOSB, or must certify to the contracting officer and provide adequate 
documentation that it is a WOSB. The statute imposes penalties for a 
concern's misrepresentation of its status as a WOSB.
     Sixth, paragraph (2)(C) of the Act provides that the 
contract for which competition is restricted must be for the 
procurement of goods or services with respect to an industry identified 
by SBA ``pursuant to paragraph (3).'' However, the reference to 
paragraph (3) of the Act appears to be a drafting error that resulted 
from a floor amendment, and the intent of the provision appears to be 
to identify eligible contracts as those concerning an industry 
identified pursuant to paragraph (4).\5\ Thus, accounting for the 
apparent drafting error, the sixth condition for the restriction of 
Federal procurement contracts to WOSBs is that the contract be for the 
procurement of goods or

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services with respect to an industry identified by SBA pursuant to the 
study mandated by paragraph (4) as one in which WOSBs are 
underrepresented with respect to Federal procurement contracting.
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    \5\ Paragraph (3) as enacted permits SBA to waive the 
``economically disadvantaged'' requirement for industries in which 
SBA has determined that WOSBs are substantially underrepresented. 
However, at the time that the WOSB bill was reported out of the 
House Committee on Small Business, then-paragraph (3) (eventually 
enacted as paragraph (4)) required the Administrator to conduct a 
study to identify industries in which WOSBs are underrepresented 
with respect to Federal procurement contracting. Thus, the House 
Committee viewed paragraph (2)(C) as requiring that contracts 
eligible for the 8(m) program be contracts ``for the procurement of 
goods and services in an industry identified by the Administrator of 
the Small Business Administration as one in which small business 
concerns owned and controlled by women are historically 
underrepresented.'' H.R. Rep. No. 106-879, at 4 (2000). There is 
nothing in the legislative history that indicates that Congress 
intended a different result.
    In accord with the legislative history, and to give effect to 
each provision of the statute, SBA has concluded that paragraph 
(2)(C)'s reference to paragraph (3) is better understood as a 
reference to paragraph (4). Paragraph (2)(C) authorizes restricted 
competition with respect to industries ``identified'' by SBA 
pursuant to the referenced paragraph. Paragraph (4) uses the term 
``identify,'' calling for SBA to conduct a study to ``identify'' 
industries in which WOSBs are underrepresented with respect to 
Federal procurement contracting. Paragraph (3), in contrast, does 
not use the term ``identify.''
    Understanding the reference to paragraph (3) as a reference to 
paragraph (4) also preserves the independent effect of each 
paragraph in section 8(m), including paragraphs (2)(A) and (3). If, 
by contrast, paragraph (2)(C) were applied literally, it would 
generate several anomalies. For example, it would undercut paragraph 
(2)(A)'s requirement of economic disadvantage (the first condition 
discussed above), because restricted competition would apply only to 
industries for which SBA had waived the economic disadvantage 
requirement. Further, a literal reading of paragraph 2(C) would turn 
paragraph (3), which is clearly phrased as a waiver provision, into 
an affirmative condition for restricted competition, authorizing 
restricted competition only in industries in which WOSBs are 
``substantially underrepresented.'' In addition, the literal 
application of paragraph (2)(C) would undercut paragraph (4), which 
requires SBA to conduct a study to identify industries in which 
WOSBs are ``underrepresented'' with respect to Federal procurement 
contracting. If restricted competition were permitted only in 
industries in which SBA had determined WOSBs to be ``substantially 
underrepresented,'' there would be no need for SBA to conduct a 
study to determine underrepresentation (as opposed to substantial 
underrepresentation).
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    Based on its understanding of the meaning and intent of section 
8(m) read as a whole, SBA interprets the statute to authorize 
restricted competition for industries in which it has determined WOSBs 
to be underrepresented or substantially underrepresented in Federal 
procurements, provided the other conditions of section 8(m) are met. 
This Proposed Rule is drafted accordingly.

III. The RAND Report

    Shortly after section 8(m) was enacted, and pursuant to the 
requirement of paragraph (4) of the law, SBA, using its own internal 
resources, conducted a study to identify the industries in which WOSBs 
are underrepresented with respect to Federal procurement contracting. 
SBA initially completed its study in September 2001, and contracted 
with the National Academy of Sciences (NAS) to review the study before 
publication. In March of 2005, the National Research Council, which 
functions under the auspices of the NAS and other National Academies, 
issued an independent evaluation concluding that SBA's study was flawed 
and offering various recommendations for a revised study. In response 
to this evaluation, SBA issued a solicitation in October 2005 seeking a 
contractor to perform a revised study in accordance with the NAS 
recommendations. In February 2006, SBA awarded a contract to the 
Kauffman-RAND Institute for Entrepreneurship Public Policy (RAND) to 
complete a revised study of the underrepresentation of WOSBs in Federal 
prime contracts by industry code. The resulting study--the RAND 
Report--was published in April 2007 and is available to the public at 
http://www.RAND.org/pubs/technical_reports/TR442.
    As the RAND Report explains more fully, RAND measured WOSB 
representation in each industry code through a ``disparity ratio,'' 
which is a measure comparing the utilization of WOSBs in Federal 
contracting in a particular code to their availability for such 
contracts. The disparity ratio itself is defined as utilization divided 
by availability. Utilization and availability, in turn, are themselves 
ratios. The disparity ratio is therefore a ratio of ratios. This 
disparity ratio provides an estimate of the extent to which WOSBs that 
are available for Federal contracts in specific industries are actually 
being utilized to perform such contracts.
    Consistent with the NAS's recommendation, RAND measured utilization 
and availability in two ways: in terms of dollars and numbers. When 
using dollars as the measure, RAND calculated utilization as the ratio 
of Federal contract dollars awarded to WOSBs in a given industry code 
to total Federal contract dollars awarded in that industry code. It 
calculated availability as the ratio of the gross receipts (revenues) 
of WOSBs in a particular industry code to the gross receipts (revenues) 
of all firms in that code.\6\ When using numbers as the measure, RAND 
calculated utilization as the ratio of the number of Federal contracts 
awarded to WOSBs in a particular industry code to the number of Federal 
contracts awarded overall in that code, and availability as the ratio 
of the number of WOSBs in a particular industry code to the total 
number of firms in that code.
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    \6\ This is a fairly conservative method of determining 
availability and may underestimate the availability of WOSBs because 
discrimination may limit the revenues of WOSBs that nonetheless are 
ready, willing, and able to perform work on Federal contracts.
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    According to the RAND Report, if the disparity ratio in an industry 
code is equal to 1.0 when measuring in terms of dollars, that indicates 
that WOSBs have been awarded contract dollars in the same proportion as 
their economic representation in the industry; that is, they are 
awarded contracting dollars in proportion to their share of total 
business in that industry, and are therefore neither over- nor under-
represented. Similarly, if the disparity ratio in an industry code is 
equal to 1.0 when measuring in terms of numbers, this indicates that 
WOSBs are awarded contracts (of whatever dollar value) in the same 
proportion as their numerical representation in the industry. A ratio 
of less than 1.0 (lower utilization than availability) suggests some 
degree of underrepresentation with respect to that particular means of 
measuring disparity (dollars or numbers); a ratio of greater than 1.0 
(greater utilization than availability) suggests some measure of 
overrepresentation with respect to a given metric. Following the NAS 
report's recommendations, RAND classified an industry as 
``underrepresented'' if its disparity ratio was between 0.5 and 0.8 
using either the numbers or dollars approach, and ``substantially 
underrepresented'' if its ratio was less than 0.5. It is important to 
note that RAND states

disparity ratios are not in and of themselves measures of 
discrimination, although they have been used in numerous court cases 
to infer discrimination. Nonetheless they are a starting point, a 
way to identify whether there are any differences in outcomes 
between different types of firms.

(RAND Report at 30; see also discussion at 4 and 5).

    RAND calculated these ratios using a variety of different data 
sets. For the utilization component of the disparity ratio, RAND used 
the data from the FY 2005 Federal Procurement Data System/Next 
Generation (FPDS/NG) procurement database. This was the only data 
source identified by RAND with respect to the utilization component of 
the disparity ratio. However, RAND did adjust the FPDS to account for 
possible miscoding of business size. Specifically, RAND linked the FPDS 
data to 2004 Dun and Bradstreet (D&B) data using the Data Universal 
Numbering System (DUNS) to identify the parent companies of local 
establishments, and then used the DUNS to assess whether a firm was 
small. However, because the data file was also prone to error, RAND 
presented results both with and without the DUNS cross-reference.
    For the availability component of the disparity ratio, RAND used 
two different databases: The 2002 Survey of Business Owners (SBO) from 
the five-year Economic Census, and the FY 2006 Central Contractor 
Registration (CCR) registration database. Using the SBO database, RAND 
presented results only at the two-digit industry code level, a 
comparatively generalized level of industry disaggregation. Using the 
CCR, in contrast, RAND presented results at the two-, three-, and four-
digit industry code levels. RAND also presented full sample results and 
trimmed sample results (eliminating the top and bottom 0.5 percent of 
the data) for each disparity ratio. RAND did this in order to examine 
the sensitivity of the disparity ratio to extreme values, such as very 
large contracts or negative dollar amounts resulting from contract 
actions based on multi-year contracts or modifications to such 
contracts to earlier contracts.
    Using these different data sources and various adjustments, the 
RAND Report identified twenty-eight different possible approaches to 
determining the degree of underrepresentation of WOSBs in Federal 
procurement contracting. The parameters and results of each approach 
are summarized in the RAND Report at Table 4.6.

IV. Regulatory History

    On June 15, 2006, SBA published in the Federal Register, at 71 FR 
34550, a Proposed Rule (RIN 3245-AE65), with

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request for comments, that proposed to amend its regulations in 
accordance with section 8(m). The Proposed Rule contained the 
infrastructure rules necessary for the WOSB Program implementation, but 
did not identify the eligible industries for the WOSB Program because 
the RAND Report had not been published at the time of the issuance of 
that Proposed Rule. The RAND Report was subsequently published on April 
27, 2007. Based on SBA's evaluation of the public and inter-agency 
comments received on the June 15, 2006 Proposed Rule, as well as 
discussions with the U.S. Department of Justice (DOJ) and the Office of 
Federal Procurement Policy (OFPP), and further examination of section 
8(m), it was determined that the June 15, 2006 Proposed Rule required 
significant changes that warranted further public comment and 
consideration. In addition, SBA had the results of the RAND study.
    Therefore, on December 27, 2007, SBA published a new Proposed Rule, 
titled Women-Owned Small Business Federal Contract Assistance 
Procedures, RIN 3245-AF40, at 72 FR 73285, that consolidated the 
infrastructure rules necessary for the WOSB Program implementation with 
the RAND study findings, which were used to determine the industries in 
which WOSBs would be eligible for Federal contracting under the WOSB 
Program.
    In determining the eligible industries, the December 2007 Proposed 
Rule employed the full-sample 4-digit NAICS code dollars approach 
(using the dollar value of contract awards and the receipts of 
businesses) to identify the eligible industries under the WOSB Program. 
This approach identified four industries in which WOSBs were either 
underrepresented or substantially underrepresented. The comment period 
for the December 2007 Proposed Rule closed on March 31, 2008. SBA 
received approximately 1,720 comments on the proposed rule. Of the 
1,720 comments received, 1,689 requested withdrawal of the Proposed 
Rule and/or stated opposition to some portion of the Proposed Rule. 
Subsequently, on October 1, 2008, SBA published a Final Rule in the 
Federal Register at 73 FR 56940, RIN 3245-AF40. This Final Rule 
implemented the infrastructure regulations for the WOSB Program, but 
did not identify the eligible industries for the WOSB Program.
    The reason for the approach was that after identifying eligible 
industries under the program in December 2007, SBA discovered certain 
limitations in the data RAND used. Therefore, SBA published a Proposed 
Rule; Request for Comment on October 1, 2008, at 73 FR 57014, which 
provided for a 30-day public comment period and requested comments on 
two data sets that SBA could use to determine the eligible industries 
for the WOSB Program. SBA elected to publish the October 1, 2008, 
Proposed Rule, rather than a Final Rule, on the identification of the 
eligible industries to engage in a further review and examination of 
the RAND study and potential measures of disparity. As a result of this 
further examination, SBA stated in the Proposed Rule; Request for 
Comments that it had identified a limitation inherent in the CCR data 
set when the dollars approach was used. Specifically, SBA explained 
that vendors input information into CCR relating to the firm's revenues 
and NAICS codes, which are a method for classifying business 
establishments. Vendors must supply at least one NAICS code for 
registration into CCR to be complete, but can supply more than one. 
Vendors do not input the business's revenues for each NAICS code listed 
or for each NAICS code in which it does business; rather, vendors input 
total revenues for the firm. Thus, CCR does not provide information 
concerning the revenue of a firm in each of the NAICS codes, or 
industries, it sets forth in its CCR registration. Therefore, when RAND 
computed the disparity ratio using the CCR dollars approach to 
determine underrepresentation, each firm's total revenue was counted in 
every NAICS code associated with the firm.
    Upon discovering the CCR data set limitation, SBA contacted the 
United States Census Bureau (Census Bureau) to determine the 
availability of an alternative data set. The Census Bureau provided SBA 
with a data set for the availability component of the disparity ratio 
that consists of data from the 2002 Survey of Business Owners (SBO) 
collected through the 5-year Economic Census for firms with employees 
(hereinafter referred to as ``Census SBO data''). Although this data 
set was not used in the RAND report results, it was mentioned in the 
RAND report as restricted data which would be available to SBA at a 
more disaggregated NAICS code level than the public SBO data. The 
Census Bureau report and associated data are available at http://www.sba.gov/idc/groups/public/documents/sba_homepage/census_bureau.pdf.
    In its October 1, 2008 Proposed Rule; Request for Comment, SBA 
sought input from the public on this CCR data limitation as well as the 
Census SBO data set alternative. SBA received 38 comments on that 
Proposed Rule. The majority of these comments generally opposed the use 
of the Census SBO data because the disaggregated data set was not 
available publicly without undergoing a screening process due to 
statutory restrictions to protect the confidentiality of the data. No 
comments addressed the substantive findings of the Census data or 
challenged its accuracy.
    SBA has reviewed the October 1, 2008 Final Rule and the Proposed 
Rule, as well as the public comments, and determined that changes to 
both rules are necessary. After careful review of the comments, SBA has 
decided to withdraw the October 1, 2008 Proposed Rule for the reasons 
identified in the currently proposed rule. Consequently, SBA has set 
forth below a new Proposed Rule for the WOSB Program which includes 
both the infrastructure regulations and the identification of the 
eligible industries. SBA has set forth the entire Proposed Rule below, 
rather than only the portions of part 127 that SBA has decided to 
amend, in order to afford the public an opportunity to comment on all 
aspects of the program. SBA has determined that setting forth the 
entire infrastructure and industries in a Proposed Rule will best serve 
the public's ability to address any concerns or opinions regarding this 
WOSB Program. For ease of reference, following is a discussion of the 
substantive changes that the rule proposes to make to the Final Rule 
and Proposed Rule published on October 1, 2008 at 73 FR 56940 and 73 FR 
57014, respectively.

V. Identification of the Eligible Industries

1. Choice of Data sets

    As stated earlier, the RAND Report, using various combinations of 
data sources and methods, identified twenty-eight possible approaches 
to measuring the underrepresentation and substantial 
underrepresentation of WOSBs in Federal procurement contracting. Twenty 
of these approaches compare FY 2006 CCR registration data to FY 2005 
FPDS/NG procurement data, while eight of the approaches compare the 
2002 SBO data from the five-year Economic Census to FYs 2002/2003 FPDS/
NG procurement data.
    SBA proposes not to use the eight approaches that rely on a 
comparison of the 2002 SBO data to FYs 2002/2003 FPDS/NG procurement 
data for the following reasons:
     The SBO data set generally considers all firms in the 
economy, and not simply the number of firms that are ready, willing, 
and able to perform

[[Page 10034]]

Federal contracts. In contrast, because firms are generally required to 
register on the CCR database prior to bidding on a Federal contract, a 
firm's presence in the CCR reflects its willingness to bid on a Federal 
contract. However, it is possible that a firm's inability to bid on 
Federal contracts, and therefore its reluctance to register on the CCR 
could itself result from gender discrimination.
     The SBO does not distinguish between WOSBs and women-owned 
businesses in general, large and small. The CCR, in contrast, contains 
self-reported information on whether a business is small. And the 
procedures authorized by section 8(m) are specifically targeted towards 
only small businesses owned by women.
     The SBO is generally not available for two years after the 
survey is completed. CCR data, in contrast, are updated continuously 
and made available immediately. It is not clear, however, the degree to 
which data regarding business ownership and size economic size change 
from year to year, and therefore not clear how much weight this 
distinction should carry.
    In addition, the SBO data in the RAND Report do not disaggregate 
industry groupings beyond the two-digit NAICS level. In the NAS 2005 
report examining SBA's 2002 internal study, NAS criticized SBA's use of 
the two-digit Major Group Standard Industrial Classification (SIC) 
industry codes as inadequate. The two-digit Major Group SIC designation 
corresponds to the current three-digit Subsector NAICS designation. 
Thus, while NAS criticized SBA's use of two-digit SIC information, the 
SBO two-digit NAICS data is even less precise than the two-digit SIC 
data. Both the CCR and the FPDS/NG, in contrast, provide the capability 
to use four-digit NAICS classifications.
    SBA solicits comment on its decision, in light of the foregoing 
considerations, not to use any of RAND's approaches that utilize the 
SBO data and to focus instead on only those approaches that use the CCR 
data. A further discussion on the appropriateness of the use of the CCR 
data is set forth below.
    Because the NAS criticized SBA's use of the two-digit SIC code and 
recommended that SBA use industry detail as disaggregated as the data 
will support, SBA also proposes to eliminate the sixteen approaches 
that used CCR and FPDS/NG FY 2005 procurement data at the two and 
three-digit NAICS code level.
    Of the remaining four approaches, two are based on full sample 
results, while the other two are based on trimmed sample results 
(eliminating the top and bottom 0.5 percent of the data). The RAND 
Report found little benefit to trimming the sample, and placed more 
weight on the full sample results. Based on RAND's finding, SBA 
proposes to eliminate the two approaches based on the trimmed-sample 
results.
    This leaves two possible approaches, both of which use 2004 CCR and 
2005 FPDS/NG procurement data at the four-digit NAICS code level.

 2. Numbers and Dollars Approaches

    After careful analysis of the comments on SBA's 2007 and 2008 
Proposed Rules and reconsidering the data and analysis in the RAND 
Report, SBA has determined that both of the remaining approaches, using 
numbers and dollars, are viable and appropriate means of identifying 
industries in which WOSBs are underrepresented or substantially 
underrepresented for purposes of section 8(m). Both approaches 
represent legitimate and complementary interpretations of the statutory 
term ``underrepresentation.'' SBA likewise believes that applying the 
section 8(m) program in these industries would reduce the effects of 
the discrimination affecting women-owned small businesses, consistent 
with Congress's goals, and that both numbers and dollars approaches are 
substantially related to the purpose of the Program. As a result, as is 
explained in more detail below, the Proposed Rule would amend the 
definitions of underrepresentation and substantial underrepresentation 
and identify the eligible industries under this Program as those 
industries in which WOSBs are underrepresented or substantially 
underrepresented using either the numbers or the dollars approach. SBA 
recognizes that this approach may enable competition restricted to 
WOSBs in industries where using only one or the other of the disparity 
measurement methodologies in the RAND study might not show 
underrepresentation of WOSBs in that industry. SBA therefore seeks 
comment on this proposed approach.
    Section 8(m) instructs SBA to

conduct a study to identify industries in which small business 
concerns owned and controlled by women are underrepresented with 
respect to Federal procurement contracting.

15 U.S.C. 637(m)(4). The statute does not specify how 
underrepresentation should be identified, or state that only a single 
disparity measure can be used to identify underrepresentation. SBA must 
therefore determine the appropriate methods for identifying WOSB 
underrepresentation, recognizing that it is not bound to any one 
disparity measure to achieve that goal. As discussed above, the dollars 
approach compares the proportion of the dollar value of contracts in a 
particular NAICS code awarded to WOSBs with the proportion of gross 
receipts (revenues) in that NAICS code earned by WOSBs. The numbers 
approach compares the proportion of contracts (calculated in terms of 
number of contracts) awarded to WOSBs in a particular NAICS code with 
the number of WOSBs in that particular NAICS code.
    After reviewing comments and conducting further analysis, SBA 
concludes that both approaches provide sound and complementary 
analytical bases for determining the industries in which WOSBs are 
underrepresented and substantially underrepresented.
    Specifically, underrepresentation can occur when WOSBs are not 
being awarded Federal contracting dollars in proportion to their 
economic representation (measured by their gross receipts) in an 
industry. This might occur if, for example, WOSBs were awarded 
contracts in numbers proportional to their numerical representation in 
an industry, but received much less in Federal contracting dollars than 
their non-WOSB counterparts. But underrepresentation can also occur 
where there is disparity in the number of contracts being awarded to 
WOSBs, even if there is no measured disparity in contract dollars, due 
to a handful of WOSBs winning large-dollar contracts. Indeed, as the 
RAND Report results show, during FY 2005, the top WOSB firm was awarded 
$673 million dollars in contracts, or 6 percent of the value of all 
Federal prime contracts awarded to WOSBs ($10.5 billion dollars). In 
addition, the top 10 WOSBs garnered $1.6 billion, or 15 percent of 
Federal prime contracts going to WOSBs, and the top 25 WOSBs were 
awarded $2.1 billion, or 20 percent of Federal prime contracts going to 
WOSBs. Accordingly, the number of contracts, regardless of size, is a 
valid alternative measure of whether WOSBs have been offered equality 
of opportunity.
    It is true that the statutory goal for WOSB participation in 
government contracting is expressed in terms of dollars. However, upon 
further analysis, SBA does not believe that this fact counsels against 
use of a numbers approach for purposes of identifying the industries in 
which the WOSB Program should operate. The 5 percent participation 
goal--which appears in a different section of the statute from section 
8(m)--is a measure of the total volume of Government-awarded prime 
contracts and subcontracts that, ideally, will be awarded to WOSBs each 
year.

[[Page 10035]]

The goal includes both contracts awarded under the section 8(m) program 
and contracts awarded in industries deemed ineligible for that program. 
Section 8(m)'s ``underrepresent[ation]'' requirement, in contrast, 
concerns the identification of industries in which the statutorily 
prescribed contracting assistance to WOSBs should be permitted. There 
is no basis in the statutory language for determining that 
``underrepresentation'' for purposes of authorizing specific 
contracting assistance to WOSBs must be measured by the same metric as 
the total volume of Federal contracts awarded to WOSBs for purposes of 
an overall participation goal. As discussed above, the numbers approach 
identifies a valid and important meaning of ``underrepresentation'' 
that may exist even in situations where the dollars approach does not 
identify underrepresentation.
    SBA recognizes that these different means of measuring and 
evaluating underrepresentation are tools to identify those industries 
in which competition restricted to WOSBs will be authorized. Where 
different analytical methodologies yield different outcomes on the 
issue of WOSB underrepresentation in a particular industry, SBA must 
identify a reasonable means for evaluating, reconciling and applying 
these methodologies in order to serve the statutory goal of improving 
WOSBs equal access to Federal contracting in those industries where 
WOSBs are underrepresented. SBA therefore seeks comment on its proposed 
approaches to identifying underrepresentation.

 3. Appropriateness of Using the CCR Database

    Comments on the prior Proposed Rules raised concerns about the RAND 
study's use of revenue data from the CCR database, concerns SBA noted 
in its withdrawn 2008 Final Rule. One concern centered on the way 
vendors, i.e., businesses registering for Federal contracts, input data 
into the CCR. As described above, the CCR database reflects each firm's 
total revenue in every NAICS code associated with the firm, rather than 
the amount of revenue associated with the particular NAICS code at 
issue. SBA noted in its 2007 Proposed Rule that this feature of the CCR 
data might result in overstating firms' revenues in some or all NAICS 
codes.
    At least one commenter, in response to a prior version of the rule, 
asserted that the CCR data only takes into consideration current 
Federal contractors, whereas the SBO data could include all WOSB that 
are ready, willing and able to perform Federal work. A further 
potential viewpoint is that when using the SBO data set, the RAND Study 
found underrepresentation in a smaller number of industries, which 
could imply that women-owned firms were ``over-represented'' in 
numerous other industries in terms of the dollars of Federal 
procurement relative to their size in the economy. Consequently, it 
might be asserted that using the CCR data will allow set-asides in 
industries where other credible data (SBO data) show women-owned small 
businesses are not underrepresented in terms of Federal procurement.
    Based on further analysis, SBA has concluded that the CCR data set 
is the best available data to use to determine the availability 
component of the disparity rations. First, the fact that the CCR 
database reflects each firm's total revenue in every NAICS code 
associated with the firm, rather than the amount of revenue associated 
with the particular NAICS code at issue, does not render unreliable the 
disparity ratios calculated using the dollars component of the CCR 
database.\7\ As previously discussed, the dollars-based disparity 
ratios are themselves based on a comparison between two different 
ratios: the value of the government contracts awarded to WOSBs in a 
particular industry compared to the value of all government contracts 
awarded in that industry, on the one hand; and the gross receipts (in 
the economy at large) of WOSBs registered in the CCR database for that 
industry compared to the gross receipts for all businesses registered 
for that industry, on the other. The numerator of this ratio--the value 
of government contracts awarded to WOSBs and to industries in general 
within a given industry code--is not calculated using the CCR database.
---------------------------------------------------------------------------

    \7\ This feature of the CCR database has no effect on disparity 
ratios calculated according to the numbers method, since that method 
does not make reference to firms' gross receipts.
---------------------------------------------------------------------------

    In addition, with respect to the denominator, SBA believes that it 
is reasonable to assume that WOSBs and non-WOSBs register in the CCR 
database and identify industries for which they are available in a 
similar manner. Thus, if a WOSB in a particular kind of business 
registers in (and effectively overstates its revenues in) three NAICS 
codes, a non-WOSB in the same kind of business is likely to register in 
(and overstate its revenues in) the same three NAICS codes. And because 
the denominator of the dollars-based disparity ratio is calculated 
based on a comparison between gross receipts earned by WOSBs and non-
WOSBs, rather than the absolute values of those receipts, the potential 
over-reporting of revenue in each NAICS code does not raise serious 
concerns about the reliability of the dollars analysis of the RAND 
study.
    SBA has also concluded the CCR database appropriately captures 
those firms ready, willing and able to compete for Federal contracts. 
The firms in the CCR database have indicated by registering to submit 
an offer on Federal prime contracts that they are ``willing'' to 
perform work on such contracts and have self-identified as firms that 
are ready and able to perform such work. RAND's review of the data 
identified no additional means of determining which firms are ready and 
able to work on these contracts.\8\ However, RAND ensured that the 
firms each had at least one employee as a ``proxy for `able.' '' RAND 
Study at 30. Further, because the SBO data generally considers all 
firms in the economy, it is possible that it may actually overestimate 
the number of firms that are ready, willing and able to perform Federal 
contracts, thus potentially overestimating underrepresentation.
---------------------------------------------------------------------------

    \8\ For instance, although size may be relevant to the ability 
to perform certain work, RAND found that small firms successfully 
competed for Federal contracts, and that it was not possible to 
identify a natural break point in contract size beyond which small 
businesses generally could not compete.
---------------------------------------------------------------------------

    Although the CCR data account for a firm's willingness to submit an 
offer and receive a Federal contract without also expressly accounting 
for firm qualifications or abilities, SBA believes that the CCR data is 
nevertheless an appropriate measure of firm availability. Although some 
contracting assistance programs may rely on actual bidder lists as the 
utilized measure of ready, willing, and able firms, see, e.g., Eng'g 
Contractors Ass'n of S. Fla., Inc. v. Metro. Dade County, 122 F.3d 895, 
912 (11th Cir. 1997), some programs do not, and courts have upheld such 
programs against challenges. See Concrete Works of Colorado, Inc. v. 
City and County of Denver, 321 F.3d 950, 983 (10th Cir. 2003) 
(rejecting argument that underutilization must be measured by examining 
``only those firms actually bidding on City construction projects''). 
In Concrete Works, the court noted that even those firms that did 
submit bids might be unqualified, so that the city would always have to 
make some assumption about qualifications, and further observed that 
bidder lists might not capture all firms that are qualified. Id. The 
court concluded that disparity studies may make assumptions about 
qualifications ``as long as the same

[[Page 10036]]

assumptions can be made for all firms.'' Id.; cf. Adarand Constructors, 
Inc. v. Slater, 228 F.3d 1147, 1173 (2000) (noting that there was no 
evidence in the record that ``those minority subcontractors who have 
been utilized have performed inadequately or otherwise demonstrated a 
lack of necessary qualifications''). The court also noted that a firm's 
ability to perform contracts is not static: firms can generally perform 
services by hiring additional employees or using subcontractors. 
Concrete Works, 321 F.3d at 981. Of course, to the extent that the age 
and size of a firm may themselves be effectively limited by barriers 
tied to historical discrimination, using these factors to assess 
capacity and availability may in some instances extend the effects of 
past discrimination into this statistical assessment.
    For the reasons stated above, this Proposed Rule proposes to 
evaluate underrepresentation and substantial underrepresentation by 
using the CCR database and applying both the numbers and dollars 
approaches to identify eligible industries. Using this methodology, the 
RAND study found one hundred and nine (109) year-2002 NAICS codes in 
which WOSBs were either underrepresented or substantially 
underrepresented.
    Because SBA has received comments on this issue in the past, and 
there is a more detailed data set available (SBO data), it is 
interested in hearing from the public about this proposal to utilize 
the CCR data set, and specifically requests comments on whether the 
WOSB Program should operate, or whether its operation should require 
special justification, in sectors where women-owned businesses appear 
not be underrepresented based on other data.

4. The Eligible Industry Codes

    NAICS codes are revised every five years (in the years ending in 
'2' and '7'). RAND used the 2002 NAICS codes in its study. All but 
three of the 109 2002 NAICS codes identified by RAND correspond with 
the current 2007 NAICS codes. The three 2002 NAICS codes which do not 
correspond are: 5161--Internet Publishing and Broadcasting; 5173--
Telecommunications Resellers; and 5181--Internet Service Providers and 
Web Search Portals. However, these three 2002 NAICS codes were made 
part of other NAICS codes in 2007 that were also designated by RAND as 
substantially underrepresented--2002 NAICS code 5161 is now part of 
2007 NAICS code 5191; 2002 NAICS code 5173 is now a part of 2007 NAICS 
code 5179; and 2002 NAICS code 5181 is now split between 2007 NAICS 
codes 5171 and 5179. Because the RAND study found NAICS codes 5191, 
5179 and 5171 also to be substantially underrepresented, the change in 
NAICS code affects only the designation of industries to the extent 
that there are 106 2007 NAICS codes instead of 109 2002 NAICS codes but 
does not affect the types of WOSBs eligible under the WOSB Program.
    However, the WOSB Program will not operate in three of the 106 2007 
NAICS codes in sector 92 (2002 and 2007) because those NAICS codes do 
not apply to the private sector. These NAICS codes are: 9211--
Executive, Legislative, and other General Government Support; 9231--
Administration of Human Resource Programs; and 9281--National Security 
and International Affairs. Firms in these NAICS codes are:

    Federal, state, and local government agencies which administer 
and oversee government programs and activities that are not 
performed by private establishments,

see 13 CFR 121.201 n. 19, and contracts are not classified with this 
NAICS code. See 13 CFR 121.402(b).
    In addition, twenty of the 106 NAICS codes in sectors 42, 44, and 
45 (2002 and 2007) are not available for contracting assistance under 
the Program. These industries codes are: 4231--Motor Vehicle and Motor 
Vehicle Parts and Supplies Merchant Wholesalers; 4232--Furniture and 
Home Furnishing Merchant Wholesalers; 4233--Lumber and Other 
Construction Materials Merchant Wholesalers; 4234--Professional and 
Commercial Equipment and Supplies Merchant Wholesalers; 4236--
Electrical and Electronic Goods Merchant Wholesalers; 4239--
Miscellaneous Durable Goods Merchant Wholesalers; 4241--Paper and Paper 
Product Merchant Wholesalers; 4243--Apparel, Piece Goods, and Notions 
Merchant Wholesalers; 4246--Chemical and Allied Products Merchant 
Wholesalers; 4248--Beer, Wine, and Distilled Alcoholic Beverage 
Merchant Wholesalers; 4249--Miscellaneous Nondurable Goods Merchant 
Wholesalers; 4412--Other Motor Vehicle Dealers; 4421--Furniture Stores; 
4422--Home Furnishings Stores; 4431--Electronics and Appliance Stores; 
4461--Health and Personal Care Stores; 4511--Sporting Goods, Hobby, and 
Musical Instrument Stores; 4532--Office Supplies, Stationery, and Gift 
Stores; 4541--Electronic Shopping and Mail-Order Houses; and 4543--
Direct Selling Establishments.
    These twenty NAICS codes fall under the 2-digit NAICS code sectors 
42, 44 and 45, which cover wholesalers and retailers. Contracts are not 
classified with these NAICS codes. See 13 CFR 121.402(b). SBA 
regulations specifically state that sectors 42, 44 and 45 are ``not 
applicable to Government procurement of supplies.'' 13 CFR 121.201. 
These NAICS codes are not available for set-asides because contracting 
officers must classify any contract for the procurement of supplies 
under the applicable manufacturing NAICS code (and then the 
nonmanufacturer rule would apply to any offerors that are 
nonmanufacturers of the supply). 13 CFR 121.402.
    As a result of the above, this Proposed Rule treats eighty-three 
NAICS codes as eligible for Federal contracting under the WOSB Program. 
There are forty-five NAICS codes in which WOSBs are underrepresented 
and thirty-eight NAICS codes in which WOSBs are substantially 
underrepresented.
    The forty-five NAICS codes in which WOSBs are underrepresented are: 
2213--Water, Sewage and Other systems; 2361--Residential Building 
Construction; 2371--Utility System Construction; 2381--Foundation, 
Structure, and Building Exterior Contractors; 2382--Building Equipment 
Contractors; 2383--Building Finishing Contractors; 2389--Other 
Specialty Trade Contractors; 3149--Other Textile Product Mills; 3159--
Apparel Accessories and Other Apparel Manufacturing; 3219--Other Wood 
Product Manufacturing; 3222--Converted Paper Product Manufacturing; 
3321; Forging and Stamping; 3323--Architectural and Structural Metals 
Manufacturing; 3324--Boiler, Tank, and Shipping Container 
Manufacturing; 3333--Commercial and Service Industry Machinery 
Manufacturing; 3342--Communications Equipment Manufacturing; 3345--
Navigational, Measuring, Electromedical, and Control Instruments 
Manufacturing; 3346--Manufacturing and Reproducing Magnetic and Optical 
Media; 3353--Electrical Equipment Manufacturing; 3359--Other Electrical 
Equipment and Component Manufacturing; 3369--Other Transportation 
Equipment Manufacturing; 4842--Specialized Freight Trucking; 4881--
Support Activities for Air Transportation; 4884--Support Activities for 
Road Transportation; 4885--Freight Transportation Arrangement; 5121--
Motion Picture and Video Industries; 5311--Lessors of Real Estate; 
5413--Architectural, Engineering, and Related Services; 5414--
Specialized Design

[[Page 10037]]

Services; 5415--Computer Systems Design and Related Services; 5416--
Management, Scientific, and Technical Consulting Services; 5419--Other 
Professional, Scientific, and Technical Services; 5611--Office 
Administrative Services; 5612--Facilities Support Services; 5614--
Business Support Services; 5616--Investigation and Security Services; 
5617--Services to Buildings and Dwellings; 6116--Other Schools and 
Instruction; 6214--Outpatient Care Centers; 6219--Other Ambulatory 
Health Care Services; 7115--Independent Artists, Writers, and 
Performers; 7223--Special Food Services; 8111--Automotive Repair and 
Maintenance; 8113--Commercial and Industrial Machinery and Equipment 
(except Automotive and Electronic) Repair and Maintenance; and 8114--
Personal and Household Goods Repair and Maintenance.
    The thirty-eight NAICS codes in which WOSBs are substantially 
underrepresented are: 2372--Land Subdivision; 3152--Cut and Sew Apparel 
Manufacturing; 3231--Printing and Related Support Activities; 3259--
Other Chemical Product and Preparation Manufacturing; 3328--Coating, 
Engraving, Heat Treating, and Allied Activities; 3329--Other Fabricated 
Metal Product Manufacturing; 3371--Household and Institutional 
Furniture and Kitchen Cabinet Manufacturing; 3372--Office Furniture 
(including Fixtures) Manufacturing; 3391--Medical Equipment and 
Supplies Manufacturing; 4841--General Freight Trucking; 4889--Other 
Support Activities for Transportation; 4931--Warehousing and Storage; 
5111--Newspaper, Periodical, Book, and Directory Publishers; 5112--
Software Publishers; 5171--Wired Telecommunications Carriers; 5172--
Wireless Telecommunications Carriers (except Satellite); 5179--Other 
Telecommunications; 5182--Data Processing, Hosting, and Related 
Services; 5191--Other Information Services; 5312--Offices of Real 
Estate Agents and Brokers; 5324--Commercial and Industrial Machinery 
and Equipment Rental and Leasing; 5411--Legal Services; 5412--
Accounting, Tax Preparation, Bookkeeping, and Payroll Services; 5417--
Scientific Research and Development Services; 5418--Advertising, Public 
Relations, and Related Services; 5615--Travel Arrangement and 
Reservation Services; 5619--Other Support Services; 5621--Waste 
Collection; 5622--Waste Treatment and Disposal; 6114--Business Schools 
and Computer and Management Training; 6115--Technical and Trade 
Schools; 6117--Educational Support Services; 6242--Community Food and 
Housing, and Emergency and Other Relief Services; 6243--Vocational 
Rehabilitation Services; 7211--Traveler Accommodation; 8112--Electronic 
and Precision Equipment Repair and Maintenance; 8129--Other Personal 
Services; and 8139--Business, Professional, Labor, Political, and 
Similar Organizations.

VI. Economic Disadvantage

    SBA proposes to clarify current Sec.  127.203 concerning 
economically disadvantaged women-owned small businesses (EDWOSBs) to 
address certain interpretations and policies that have been followed 
informally by SBA with respect to the 8(a) Business Development (BD) 
Program and that SBA believes would apply to the WOSB Program as well. 
This includes certain interpretations and policies SBA recently set 
forth in a rule proposing to amend the 8(a) BD regulations. See 74 FR 
55694 (Oct. 28, 2009). For example, this Proposed Rule specifically 
states that SBA does not take community property laws into account when 
determining economic disadvantage if the woman has no ownership 
interest. This means that property that is legally in the name of the 
husband would be considered wholly the husband's, whether or not the 
couple lived in a community property state. Since community property 
laws are usually applied when a couple separates, and since spouses in 
community property states generally have the freedom to keep their 
property separate while they are married, SBA proposes to treat 
property owned solely by one spouse as that spouse's property for 
economic disadvantage determinations. However, if both spouses own the 
property, SBA would attribute a half interest in such property to the 
woman claiming economic disadvantage, unless there is evidence to show 
that the interest in such property is greater or lesser.
    This policy also results in equal treatment for applicants in 
community and non-community property states. In addition, and along the 
same lines, SBA proposes to provide that it may consider a spouse's 
financial situation in determining an individual's access to capital 
and credit.
    SBA has also proposed exempting funds in Individual Retirement 
Accounts (IRAs) and other official retirement accounts from the 
calculation of net worth, provided that the funds cannot currently be 
withdrawn from the account prior to retirement age without a 
significant penalty. While such funds can be useful to an applicant 
seeking credit, SBA believes that retirement accounts are not assets to 
be currently enjoyed; rather, they are held for purposes of ensuring 
future income when an individual is no longer working. SBA believes it 
is unfair to count those assets as current assets. The basis for this 
proposal stems from SBA's experience with the 8(a) BD Program, where it 
has found that including IRAs and other retirement accounts in the 
calculation of an individual's net worth does not serve to disqualify 
wealthy individuals. Instead, such an exclusion has worked to make 
middle and lower income individuals ineligible to the extent they have 
invested prudently in accounts to ensure income at a time in their 
lives when they are no longer working.
    SBA is cognizant of the potential for abuse of this proposed 
provision, with individuals attempting to hide current assets in funds 
labeled ``retirement accounts.'' SBA does not believe such attempts to 
remove certain assets from an individual's economic disadvantage 
determination would be appropriate. Therefore, this Proposed Rule 
states that in order for funds not to be counted in an economic 
disadvantage determination, the funds cannot be currently withdrawn 
from the account without a significant penalty. A significant penalty 
would be one equal or similar to the additional income tax on early 
distributions under section 72(t) of the Internal Revenue Code. In 
order for SBA to determine whether funds invested in a specific account 
labeled a ``retirement account'' may be excluded from a woman's net 
worth calculation, the woman must provide to SBA information about the 
terms and conditions of the account. SBA is interested in hearing from 
the public about this proposal, and specifically requests comments on 
how best to exclude legitimate retirement accounts without affording 
others a mechanism to circumvent the economic disadvantage criterion.
    SBA has also proposed exempting income from a corporation taxed 
under Subchapter S of Chapter 1 of the Internal Revenue Code (S 
corporation) from the calculation of both income and net worth to the 
extent such income is reinvested in the firm or used to pay taxes 
arising from the normal course of operations of an S corporation. 
Although the income of an S corporation flows through and is taxed to 
individual shareholders in accordance with their interest in the S 
corporation for Federal tax purposes, SBA will take such income into 
account for economic disadvantage purposes

[[Page 10038]]

only if it is not reinvested in the business or used to pay the taxes. 
This proposal would result in equal treatment of corporate income for 
corporations taxed under Subchapter C of Chapter 1 of the Internal 
Revenue Code (C corporations) and S corporations. In cases where that 
income is reinvested in the firm or used to pay taxes arising from the 
normal course of operations of the S corporation and not retained by 
the woman, SBA believes it should be treated the same as C corporation 
income for purposes of determining economic disadvantage. In order to 
be excluded, the owner of the S corporation would be required to 
clearly demonstrate that the S corporation distribution was used to pay 
taxes or was reinvested back into the S corporation within 12 months of 
the distribution of income. Conversely, the woman owner of an S 
corporation could not subtract S corporation losses from the income 
paid by the S corporation to her or from her total income from whatever 
source. S corporation losses, like C corporation losses, are losses 
incurred by the company, not by the individual, and based upon the 
legal structure of the corporation and the protections afforded the 
principals through this structure, the individual is not personally 
liable for the debts representing any of those liabilities. Thus, it is 
inappropriate to consider these personal losses and women should not be 
able to use them to reduce their personal incomes for purposes of the 
economic disadvantage.
    SBA also proposes to provide that it would presume that a woman is 
not economically disadvantaged if her yearly income averaged over the 
past two years exceeds $200,000. SBA considered incorporating into the 
regulation the present policy for the 8(a) BD Program that a woman is 
not economically disadvantaged if her adjusted gross income exceeds 
that for the top two percent of all wage earners according to IRS 
statistics. Under that approach for the 8(a) BD Program, SBA compares 
the income of the individual claiming disadvantage to the most 
currently available, final IRS income tax statistics. In some cases, 
SBA may be comparing IRS statistics relating to one tax year to an 
individual's income from a succeeding tax year because final IRS 
statistics are not available for that succeeding tax year.
    Although that policy has been upheld by SBA's Office of Hearings 
and Appeals (OHA) and the Federal courts (see SRS Technologies v. 
United States, 894 F. Supp. 8 (D.D.C. 1995); Matter of Pride 
Technologies, Inc., SBA No. 557 (1996) SBA No. MSB-557) for the 8(a) BD 
Program, SBA believes that a straight line numerical figure is more 
understandable, easier to implement, and avoids any appearance of 
unfair treatment when statistics for one tax year are compared to an 
income level for another tax year. Therefore, SBA is proposing for the 
WOSB Program an income level of $200,000 because that figure closely 
approximates the income level corresponding to the top two percent of 
all wage earners, which has been upheld as a reasonable indicator of a 
lack of economic disadvantage. Although a $200,000 income may seem 
unduly high as a benchmark, we note that this amount is being used only 
to presume, without more information, that the woman is not 
economically disadvantaged. SBA may consider incomes lower than 
$200,000 as indicative of lack of economic disadvantage. However, it 
would not presume lack of economic disadvantage in that case. It may 
also consider income in connection with other factors when determining 
a woman's access to capital. SBA specifically requests comments on both 
the straight line approach proposed and the current comparison of 
income levels to the IRS statistics.
    This proposed regulation would permit applicants to rebut the 
presumption of lack of economic disadvantage upon a showing that the 
income is not indicative of lack of economic disadvantage. For example, 
the presumption could be rebutted by a showing that the income was 
unusual (inheritance) and is unlikely to occur again. The presumption 
could also be rebutted, for example, by showing that the earnings were 
winnings that are offset by related losses as in the case of winnings 
and losses from gambling resulting in a net gain far less than the 
actual gambling income received. SBA may still consider any unusual 
earnings or windfalls as part of its review of total assets. Thus, 
although an inheritance of $5 million, for example, may be unusual 
income and excluded from SBA's determination of economic disadvantage 
based on income, it would not be excluded from SBA's determination of 
economic disadvantage based on total assets. In such a case, a $5 
million inheritance would render the woman not economically 
disadvantaged based on total assets.
    This rule also proposes to establish an objective standard by which 
a woman may not qualify as economically disadvantaged based on her 
total assets. With respect to the 8(a) BD Program, SBA's findings that 
an individual was not economically disadvantaged with total asset 
levels of $4.1 million and $4.6 million have been upheld as reasonable. 
See Matter of Pride Technologies, SBA No. 557 (1996), and SRS 
Technologies v. U.S., 843 F. Supp. 740 (D.D.C. 1994). Alternatively, 
and again with respect to the 8(a) BD Program, SBA's finding that an 
individual was not economically disadvantaged with total assets of 
$1.26 million was overturned. See Matter of Tower Communications, SBA 
No. 587 (1997). This rule proposes to eliminate any confusion as to 
what level of total assets qualifies as economic disadvantage for 
EDWOSB purposes as has occurred in the 8(a) BD Program. Under this 
Proposed Rule, a woman generally would not be considered economically 
disadvantaged if the fair market value of all her assets exceeds $3 
million. While this Proposed Rule would exclude retirement accounts 
from a woman's net worth in determining economic disadvantage, it would 
not exclude such amounts from her total assets in determining economic 
disadvantage on that basis.

VII. Certification

    The Act sets forth the certification criteria for the WOSB Program. 
Specifically, the Act states that a WOSB or EDWOSB must: (1) Be 
certified by a Federal agency, a State government, or a national 
certifying entity approved by the Administrator, as a small business 
concern owned and controlled by women; or, (2) certify to the 
contracting officer that it is a small business concern owned and 
controlled by women and provide adequate documentation, in accordance 
with standards established by SBA, to support such certification.
    The legislative history for this statutory provision explains that 
certification by a Federal agency, State government or national 
certifying entity should be acceptable if it tracks the statutory and 
regulatory definition of WOSB and EDWOSB. H.R. Rep. No. 106-879, at 4 
(2000). Consequently, to identify approved third-party certifiers, SBA 
will review those entities that certify WOSBs and designate those with 
certification criteria meeting the requirements of this program at a 
later date.
    In addition, the legislative history explains that

the Committee expects the contracting officers will accept self-
certification so long as the documentation provided along with the 
response to the solicitation enables the contracting officer to 
determine that

the WOSB or EDWOSB meets the requirements of the program. Id. As a 
result of the statutory provision, and the

[[Page 10039]]

supporting legislative history, SBA has proposed a rule that will 
require WOSBs and EDWOSBs to first certify their status in the Online 
Representations and Certifications Application (ORCA) at https://orca.bpn.gov, and then provide the contracting officer with certain 
documents verifying their status.
    SBA believes that the statute and supporting legislative history 
permit several means for providing the requisite documents to the 
contracting officer. Therefore, SBA is proposing to establish a 
repository (WOSB Program Repository) for the documents where WOSBs and 
EDWOSBs that certify in ORCA would submit the documents. The documents 
would be stored in a secure, web-based environment that would be 
accessible to WOSB and EDWOSB applicants, contracting community and 
SBA.
    This idea is analogous to a system already utilized in the 
government. CCR

is a web-enabled government-wide application that collects, 
validates, stores, and disseminates business information about the 
Federal government's trading partners in support of the contract 
award, grants, and the electronic payment processes.

See Federal Agency Registration FAQs, publicly available at https://www.bpn.gov/FAR/docs/FAQ.pdf. Although CCR is used to electronically 
share secure and encrypted data with the Federal agencies' finance 
offices to facilitate paperless payments through electronic funds 
transfer, and does not necessarily serve as a repository for documents, 
the concept would be similar.
    WOSBs and EDWOSBs that certify in ORCA would be required to submit 
documents verifying their status to the repository at the time of 
initial self-certification in ORCA and then every year thereafter, and 
in addition if there is a change in such information that would 
necessitate the submission of supplemental or new information. The 
contracting officer would be able to access the documents prior to 
contract award to review the submitted documents. This proposal would 
mean that WOSBs and EDWOSBs would not have to submit documents each 
time they receive a WOSB or EDWOSB contract.
    SBA also proposes that WOSBs or EDWOSBs will submit certain 
documents at the time of self certification in ORCA and then must 
submit additional documents in the event of a protest or program 
examination. SBA intends for those additional documents to be placed 
into the document repository, as well.
    With respect to the specific documents that must be submitted at 
the time of initial certification (and updated anytime after) the 
Proposed Regulation sets forth several documents that will assist in 
verifying ownership and control. For those WOSBs and EDWOSBs that have 
not received an approved third-party certification, SBA reviewed the 
requirements and standards established for a similar program, the 8(a) 
BD Program, in determining which documents must be provided. In the 
8(a) BD Program, the applicant must complete a standard form and 
provide SBA with appropriate documents to support and verify the 
statements made in the application.
    Using the 8(a) BD Program application process as a guide, and in 
accordance with the proposed eligibility criteria for the WOSB Program, 
SBA has proposed that a WOSB or EDWOSB, which has not received a third-
party certification from an approved certifier, provide the following 
documents to the repository:
     WOSBs or EDWOSBs that are corporations would need to 
submit their articles of incorporation, stock certificates (both 
sides), stock ledger, shareholders' agreements, by-laws and amendments.
     WOSBs or EDWOSBs that are LLCs must submit their articles 
of organization (also referred to as the certificate of organization or 
articles of formation) and any amendments and operating agreement with 
any amendments.
     WOSBs or EDWOSBs that are partnerships must submit an 
original and amended partnership agreement.
    In addition, all WOSBs and EDWOSBs must submit evidence of gender 
and U.S. citizenship for women (women) owners(s), such as a copy of a 
birth certificate, naturalization papers or passport. EDWOSBs would 
also need to submit a Form 413, Personal Financial Statement, for at 
least each woman claiming economic disadvantage. Further, all EDWOSBs 
or WOSBs must also provide a copy of the joint venture agreement, if 
applicable.
    SBA anticipates that the repository will also house copies of the 
third party certifications. With respect to those WOSBs or EDWOSBs that 
have received an approved third-party certification, this Proposed Rule 
requires that the WOSB or EDWOSB must provide a copy of the 
certification to the repository at the time of certification in ORCA. 
If the WOSB or EDWOSB has a third-party certification as a DOT 
Disadvantaged Business Enterprise (DBE), it must submit a copy of the 
DBE certification at the time of certification in ORCA showing that it 
received such certification because it is owned and controlled by 
women. In addition, the WOSB or EDWOSB must provide a statement 
identifying the woman or women upon whom eligibility was based and 
documents, such as birth certificates or passports, evidencing that the 
woman or women are citizens of the United States as defined by 13 CFR 
127.102.
    SBA believes that it is not necessary for these concerns to submit 
any other documents to verify eligibility, at that time, since such 
documents have already been submitted to and reviewed by a third party.
    SBA intends that the WOSB Program Repository preclude modification 
or retrieval of any document submitted; however, documents can be 
supplemented in a separate submission. This would allow the system to 
be a historical site for each change in documentation. This historical 
data may be useful in determining whether, over a period of time, the 
data is consistent rather than contradictory.
    Until SBA is able to establish a repository, or if the system is 
otherwise unavailable, then SBA is proposing that the WOSB or EDWOSBs 
submit the documents directly to the contracting officer prior to each 
WOSB or EDWOSB award. The contracting officer must retain these 
documents in the contract file so that SBA may later review the file 
for purposes of a status protest or eligibility examination. However, 
the WOSB or EDWOSB will also be required to post the documents to the 
WOSB Program Repository within thirty (30) days of the repository 
becoming available.
    The Proposed Rule also explains the consequences for failure to 
provide the required documents and the contracting officer's duties in 
those situations. If the apparent successful WOSB or EDWOSB fails to 
provide any of the required documents, the contracting officer cannot 
make a WOSB or EDWOSB award to that concern and must file a protest 
with SBA. In addition, if the contracting officer believes that the 
apparent successful offeror does not meet the requirements of the 
program, the contracting officer must file a protest with SBA 
concerning the status of the concern.
    In addition to the documents, SBA proposes that the WOSB or EDWOSB 
represent that it meets all of the eligibility of the program. 
Therefore, SBA is proposing that the WOSB represent the information in 
Table 1, Proposed WOSB Representations in ORCA, to ORCA.

[[Page 10040]]

Proposed WOSB Representations in ORCA

    (i) It is certified as a WOSB by a certifying entity approved by 
SBA, the certifying entity has not issued a decision currently in 
effect finding that the concern does not qualify as a WOSB, and there 
have been no changes in its circumstances affecting its eligibility 
since its certification.
[ballot] Yes [ballot] No [ballot] N/A
    (ii) It is certified as a as a U.S. Department of Transportation 
(DOT) Disadvantaged Business Enterprise (DBE) because it is owned and 
controlled by one or more women who are citizens of the United States, 
as defined in 13 CFR Sec.  127.102.
[ballot] Yes [ballot] No [ballot] N/A
    (iii) It is certified by the U.S. Small Business Administration as 
an 8(a) BD Program Participant due to the owner(s) status as an 
economically disadvantaged woman (or women).
[ballot] Yes [ballot] No [ballot] N/A
    (iv) If a corporation, the stock ledger and stock certificates 
evidence that at least 51 percent of each class of voting stock 
outstanding and 51 percent of the aggregate of all stock outstanding is 
unconditionally and directly owned by one or more women. In determining 
unconditional ownership of the concern, any unexercised stock options 
or similar agreements held by a woman will be disregarded. However, any 
unexercised stock option or other agreement, including the right to 
convert non-voting stock or debentures into voting stock, held by any 
other individual or entity will be treated as having been exercised.
[ballot] Yes [ballot] No [ballot] N/A
    (v) If a partnership, the partnership agreement evidences that at 
least 51 percent of each class of partnership interest is 
unconditionally and directly owned by one or more women.
[ballot] Yes [ballot] No [ballot] N/A
    (vi) If a limited liability company, the articles of organization 
and any amendments, and operating agreement and amendments, evidence 
that at least 51 percent of each class of member interest is 
unconditionally and directly owned by one or more women.
[ballot] Yes [ballot] No [ballot] N/A
    (vii) The birth certificates, naturalization papers, or passports 
for owners who are women show that the company is at least 51% owned 
and controlled by women who are U.S. citizens.
[ballot] Yes [ballot] No
    (viii) The ownership by women is not subject to any conditions, 
executory agreements, voting trusts, or other arrangements that cause 
or potentially cause ownership benefits to go to another.
[ballot] Yes [ballot] No
    (ix) The 51 percent ownership by women is not through another 
business entity (including employee stock ownership plan) that is, in 
turn, owned and controlled by one or more women.
[ballot] Yes [ballot] No
    (x) The 51 percent ownership by women is held through a trust, the 
trust is revocable, and the woman is the grantor, a trustee, and the 
sole current beneficiary of the trust.
[ballot] Yes [ballot] No [ballot] N/A
    (xi) The management and daily business operations of the concern 
are controlled by one or more women. Control means that both the long-
term decision making and the day-to-day management and administration 
of the business operations are conducted by one or more women.
[ballot] Yes [ballot] No
    (xii) A woman holds the highest officer position in the concern and 
her resume evidences that she has the managerial experience of the 
extent and complexity needed to run the concern.
[ballot] Yes [ballot] No
    (xiii) The woman manager does not have the technical expertise or 
possess the required license for the business but has ultimate 
managerial and supervisory control over those who possess the required 
licenses or technical expertise.
[ballot] Yes [ballot] No [ballot] N/A
    (xiv) The woman who holds the highest officer position of the 
concern manages it on a full-time basis and devotes full-time to the 
business concern during the normal working hours of business concerns 
in the same or similar line of business.
[ballot] Yes [ballot] No
    (xv) The woman who holds the highest officer position does not 
engage in outside employment that prevents her from devoting sufficient 
time and attention to the daily affairs of the concern to control its 
management and daily business operations.
[ballot] Yes [ballot] No
    (xvi) If a corporation, the articles of incorporation and any 
amendments, articles of conversion, by-laws and amendments, shareholder 
meeting minutes showing director elections, shareholder meeting minutes 
showing officer elections, organizational meeting minutes, all issued 
stock certificates, stock ledger, buy-sell agreements, stock transfer 
agreements, voting agreements, and documents relating to stock options, 
including the right to convert non-voting stock or debentures into 
voting stock evidence that one or more women control the Board of 
Directors of the concern. Women are considered to control the Board of 
Directors when either: (1) one or more women own at least 51 percent of 
all voting stock of the concern, are on the Board of Directors and have 
the percentage of voting stock necessary to overcome any super majority 
voting requirements; or (2) women comprise the majority of voting 
directors through actual numbers or, where permitted by state law, 
through weighted voting.
[ballot] Yes [ballot] No [ballot] N/A
    (xvii) If a partnership, the partnership agreement evidences that 
one or more women serve as general partners, with control over all 
partnership decisions.
[ballot] Yes [ballot] No [ballot] N/A
    (xviii) If a limited liability company, the articles of 
organization and any amendments, and operating agreement and amendments 
evidence that one or more women serve as management members, with 
control over all decisions of the limited liability company.
[ballot] Yes [ballot] No [ballot] N/A
    (xix) No males or other entity exercise actual control or have the 
power to control the concern.
[ballot] Yes [ballot] No
    (xx) SBA, in connection with an examination or protest, has not 
issued a decision currently in effect finding that this company does 
not qualify as a WOSB.
[ballot] Yes [ballot] No
    (xxi) All required documents verifying eligibility for a WOSB 
requirement have been submitted to the WOSB Program Repository, 
including any supplemental documents if there have been changes since 
the last representation.
[ballot] Yes [ballot] No
    In addition, the EDWOSB must represent the information in Table 2, 
Proposed EDWOSB Representations in ORCA, to ORCA.

[[Page 10041]]

Proposed EDWOSB Representations in ORCA

    (i) It is certified as an EDWOSB by a certifying entity approved by 
SBA, the certifying entity has not issued a decision currently in 
effect finding that the concern does not qualify as a EDWOSB, and there 
have been no changes in its circumstances affecting its eligibility 
since its certification.
[ballot] Yes [ballot] No [ballot] N/A
    (ii) It is certified as a as a U.S. Department of Transportation 
(DOT) Disadvantaged Business Enterprise (DBE) because it is owned and 
controlled by one or more women who are citizens of the United States, 
as defined in 13 CFR Sec.  127.102.
[ballot] Yes [ballot] No [ballot] N/A
    (iii) It is certified by the U.S. Small Business Administration as 
an 8(a) BD Program Participant due to the owner(s) status as an 
economically disadvantaged woman (or women).
[ballot] Yes [ballot] No [ballot] N/A
    (iv) If a corporation, the stock ledger and stock certificates 
evidence that at least 51 percent of each class of voting stock 
outstanding and 51 percent of the aggregate of all stock outstanding is 
unconditionally and directly owned by one or more women who are 
economically disadvantaged. In determining unconditional ownership of 
the concern, any unexercised stock options or similar agreements held 
by an economically disadvantaged woman will be disregarded. However, 
any unexercised stock option or other agreement, including the right to 
convert non-voting stock or debentures into voting stock, held by any 
other individual or entity will be treated as having been exercised.
[ballot] Yes [ballot] No [ballot] N/A
    (v) If a partnership, the partnership agreement evidences that at 
least 51 percent of each class of partnership interest is 
unconditionally and directly owned by one or more economically 
disadvantaged women.
[ballot] Yes [ballot] No [ballot] N/A
    (vi) If a limited liability company, the articles of organization 
and any amendments, and operating agreement and amendments, evidence 
that at least 51 percent of each class of member interest is 
unconditionally and directly owned by one or more economically 
disadvantaged women.
[ballot] Yes [ballot] No [ballot] N/A
    (vii) The birth certificates, naturalization papers, or passports 
show that the company is at least 51% owned and controlled by 
economically disadvantaged women who are U.S. citizens.
[ballot] Yes [ballot] No
    (viii) The ownership by economically disadvantaged women is not 
subject to any conditions, executory agreements, voting trusts, or 
other arrangements that cause or potentially cause ownership benefits 
to go to another.
[ballot] Yes [ballot] No
    (ix) The 51 percent ownership by economically disadvantaged women 
is not through another business entity (including employee stock 
ownership plan) that is, in turn, owned and controlled by one or more 
economically disadvantaged women.
[ballot] Yes [ballot] No
    (x) The 51 percent ownership by economically disadvantaged women is 
held through a trust, the trust is revocable, and the economically 
disadvantaged woman is the grantor, a trustee, and the sole current 
beneficiary of the trust.
[ballot] Yes [ballot] No [ballot] N/A
    (xi) The management and daily business operations of the concern 
are controlled by one or more economically disadvantaged women. Control 
means that both the long-term decision making and the day-to-day 
management and administration of the business operations are conducted 
by one or more economically disadvantaged women.
[ballot] Yes [ballot] No
    (xii) An economically disadvantaged woman holds the highest officer 
position in the concern and her resume evidences that she has the 
managerial experience of the extent and complexity needed to run the 
concern.
[ballot] Yes [ballot] No
    (xiii) The economically disadvantaged woman manager does not have 
the technical expertise or possess the required license for the 
business but has ultimate managerial and supervisory control over those 
who possess the required licenses or technical expertise.
[ballot] Yes [ballot] No [ballot] N/A
    (xiv) The economically disadvantaged woman who holds the highest 
officer position of the concern manages it on a full-time basis and 
devotes full-time to the business concern during the normal working 
hours of business concerns in the same or similar line of business.
[ballot] Yes [ballot] No
    (xv) The economically disadvantaged woman who holds the highest 
officer position does not engage in outside employment that prevents 
her from devoting sufficient time and attention to the daily affairs of 
the concern to control its management and daily business operations.
[ballot] Yes [ballot] No
    (xvi) If a corporation, the articles of incorporation and any 
amendments, articles of conversion, by-laws and amendments, shareholder 
meeting minutes showing director elections, shareholder meeting minutes 
showing officer elections, organizational meeting minutes, all issued 
stock certificates, stock ledger, buy-sell agreements, stock transfer 
agreements, voting agreements, and documents relating to stock options, 
including the right to convert non-voting stock or debentures into 
voting stock evidence that one or more economically disadvantaged women 
control the Board of Directors of the concern. Economically 
disadvantaged women are considered to control the Board of Directors 
when either: (1) one or more economically disadvantaged women own at 
least 51 percent of all voting stock of the concern, are on the Board 
of Directors and have the percentage of voting stock necessary to 
overcome any super majority voting requirements; or (2) economically 
disadvantaged women comprise the majority of voting directors through 
actual numbers or, where permitted by state law, through weighted 
voting.
[ballot] Yes [ballot] No [ballot] N/A
    (xvii) If a partnership, the partnership agreement evidences that 
one or more economically disadvantaged women serve as general partners, 
with control over all partnership decisions.
[ballot] Yes [ballot] No [ballot] N/A
    (xviii) If a limited liability company, the articles of 
organization and any amendments, and operating agreement and amendments 
evidence that one or more economically disadvantaged women serve as 
management members, with control over all decisions of the limited 
liability company.
[ballot] Yes [ballot] No [ballot] N/A
    (xix) No males or other entity exercise actual control or have the 
power to control the concern.
[ballot] Yes [ballot] No
    (xx) The economically disadvantaged woman or women upon whom 
eligibility is based can demonstrate that their ability to compete in 
the free

[[Page 10042]]

enterprise system has been impaired due to diminished capital and 
credit opportunities as compared to others in the same or similar line 
of business (not considering community property laws when determining 
economic disadvantage when the woman has no ownership interest in the 
property).
[ballot] Yes [ballot] No
    (xxi) The economically disadvantaged woman upon whom eligibility is 
based has read the SBA's regulations defining economic disadvantage and 
can demonstrate that her personal net worth is less than $750,000, 
excluding her ownership interest in the concern and her equity interest 
in her primary personal residence.
[ballot] Yes [ballot] No
    (xxii) The personal financial condition of the woman claiming 
economic disadvantage, including her personal income for the past two 
years (including bonuses, and the value of company stock given in lieu 
of cash), her personal net worth and the fair market value of all of 
her assets, whether encumbered or not, evidences that she is 
economically disadvantaged.
[ballot] Yes [ballot] No
    (xxiii) The adjusted gross income of the woman claiming economic 
disadvantage averaged over the two years preceding the certification 
does not exceed $200,000.
[ballot] Yes [ballot] No
    (xxiv) The adjusted gross income of the woman claiming economic 
disadvantage averaged over the two years preceding the certification 
exceeds $200,000; however, the woman can show that this income level 
was unusual and not likely to occur in the future, that losses 
commensurate with and directly related to the earnings were suffered, 
or that the income is not indicative of lack of economic disadvantage.
[ballot] Yes [ballot] No [ballot] N/A
    (xxv) The fair market value of all the assets (including her 
primary residence and the value of the business concern but excluding 
funds invested in an Individual Retirement Account or other official 
retirement account that are unavailable until retirement age without a 
significant penalty) of the woman claiming economic disadvantage does 
not exceed $3 million.
[ballot] Yes [ballot] No
    (xxvi) The woman claiming economic disadvantage has not transferred 
any assets within two years of the date of the certification.
[ballot] Yes [ballot] No
    (xxvii) The woman claiming economic disadvantage has transferred 
assets within two years of the date of the certification. However, the 
transferred assets were: (1) to or on behalf of an immediate family 
member for that individual's education, medical expenses, or some other 
form of essential support; or (2) to an immediate family member in 
recognition of a special occasion, such as a birthday, graduation, 
anniversary, or retirement.
[ballot] Yes [ballot] No [ballot] N/A
    (xxviii) SBA, in connection with an examination or protest, has not 
issued a decision currently in effect finding that this company does 
not qualify as a EDWOSB.
[ballot] Yes [ballot] No
    (xxix) All required documents verifying eligibility for the EDWOSB 
requirement have been submitted to the WOSB Program Repository, 
including any supplemental documents if there have been changes since 
the last representation.
[ballot] Yes [ballot] No
    SBA is specifically requesting comments on all of these approaches 
to certification, or other alternatives that would meet the statutory 
requirements and ensure that only eligible small businesses receive 
WOSB or EDWOSB contracts.

VIII. Eligibility Examinations

    SBA also proposes amending current Sec.  127.400 concerning 
eligibility examinations. The rule currently states that SBA will 
conduct an examination to determine eligibility at the time of the 
examination. However, the Act states that the Administrator shall 
establish procedures for verification of the accuracy of any 
certifications and those procedures may provide for program 
examinations, including random examinations. 15 U.S.C. 637(m)(5). It is 
clear that the examinations are to serve as a mechanism against fraud, 
waste and abuse in the program. Thus, SBA believes that the purpose of 
such examinations is broader, and that examinations should be used to 
verify eligibility at any time, including when an EDWOSB or WOSB 
certifies it is such a concern in ORCA, CCR, or at the time of offer or 
award of a contract. Therefore, SBA has amended this rule to explain 
that eligibility examinations will be used to verify eligibility at 
those times, as well.
    In addition, this Proposed Rule states that SBA will conduct such 
examinations, as a way to combat fraud and abuse of the program. 
Further, as permitted by statute, SBA may adopt one or more various 
approaches from time to time and as appropriate by the circumstances 
when determining which WOSBs or EDWOSBs to examine. This may include 
the utilization of robust random sampling, as well as higher levels of 
random examinations of WOSBS or EDWOSBs that have received the most 
contracts or most contract dollars during any applicable period. 
Further, SBA may decide to conduct examinations when it has received 
credible information that certain WOSBS or EDWOSBs do not meet the 
eligibility criteria of the WOSB Program.
    As part of these examinations, the WOSB or EDWOSB must submit 
documents to verify its eligibility. Specifically, this Proposed Rule 
requires WOSBs and EDWOSBs to submit documents to verify eligibility, 
including those submitted under proposed Sec.  127.300(c), as well as 
copies of proposals or bids submitted in response to an EDWOSB or WOSB 
solicitation. In addition, EDWOSBs will be required to submit the two 
most recent personal income tax returns (including all schedules and W-
2 forms) for the women claiming economic disadvantage and their spouses 
and SBA Form 4506-T, Request for Tax Transcript Form. In some cases, 
SBA may be able to obtain those documents from the third-party 
certifier or the contracting officer's contract file.
    However, because the examination may look at eligibility at the 
time of certification in ORCA, this Proposed Rule requires that WOSBs 
or EDWOSBs retain documents demonstrating satisfaction of the 
eligibility requirements for six (6) years from date of self-
certification. SBA believes that WOSBs and EDWOSBs already retain this 
information in the ordinary course of business and that it does not 
impose a burden on these businesses.

IX. Agency-by-Agency Determination

    This Proposed Rule seeks to strike from the 2008 Final Rule the 
requirement at Sec.  127.501 for an agency-by-agency determination of 
discrimination. Specifically, in response to SBA's June 15, 2006 
Proposed Rule, commenters voiced concerns over the requirement in 
proposed Sec.  127.501(b) that the procuring agency conduct its own 
additional analysis of its procurement history and make a determination 
whether the agency itself had discriminated against WOSBs in the 
relevant industry. The comments state

[[Page 10043]]

that this requirement would frustrate Congressional intent by applying 
an erroneous and overly restrictive standard of constitutional 
scrutiny. The comments also state that the disparity study analysis 
conducted by RAND is sufficient to satisfy the intermediate scrutiny 
standard that applies to the WOSB Program and that the agency 
determination of discrimination requirement exceeds what would be 
required even under the strict scrutiny standard applicable to 
classifications based on race and national origin. The comments further 
state that the requirement would inappropriately limit the industries 
in which WOSBs were recognized as underrepresented or substantially 
underrepresented. Lastly, the comments state that this requirement 
would substantially burden the procuring agencies and that the 
procuring agencies would avoid fulfilling the goals of the program to 
avoid self-incrimination and litigation.
    Based on these comments and further analysis, SBA agrees that an 
agency-by-agency analysis is not required.
    First, the equal protection requirements of the Fifth Amendment 
establish that programs that use gender as a factor in distributing 
benefits to individuals must further important governmental objectives 
and employ means that are substantially related to the achievement of 
those objectives. See United States v. Virginia, 518 U.S. 515, 533 
(1996).
    In applying this standard to the WOSB Program, the government has 
an important objective: to redress the effects of past discrimination 
against women in contracting and to ensure that the effects of that 
discrimination do not serve to limit WOSBs' opportunities to 
participate in Federal contracting opportunities. (See City of Richmond 
v. Croson Co., 488 U.S. at 492, ``It is beyond dispute that any public 
entity, state or federal, has a compelling interest in assuring that 
public dollars, drawn from the tax contributions of all citizens, do 
not serve to finance the evil of private prejudice.'')
    This objective--to overcome the effects of past sex discrimination 
and to ensure that the effects of such discrimination are not extended 
into its own procurement activity--is sufficiently ``important'' to 
sustain the WOSB Program. See Califano v. Webster, 430 U.S. 313, 318 
(1977). More specifically, the Court has repeatedly upheld as an 
important government objective the reduction of disparities in 
condition or treatment between men and women caused by the long history 
of discrimination against women. See Califano, 430 U.S. at 317; Miss. 
Univ. for Women v. Hogan, 458 U.S. 718, 728 (1982); Schlesinger v. 
Ballard, 419 U.S. 498 (1975); Kahn v. Shevin, 416 U.S. 351 (1974).
    Moreover, the benefits provided through the WOSB program are not a 
result of ``archaic and overbroad generalizations'' about women, 
Schlesinger, 219 U.S. at 508, or of ``the role-typing society has long 
imposed'' upon women, Stanton v. Stanton, 421 U.S. 7, 15 (1975). 
Instead, they are a targeted means to redress the discrimination to 
which women have long been subjected and which has prevented them from 
competing equally for Federal contracts.
    The means chosen by Congress to implement the WOSB Program ensure 
that the Program is substantially related to its goals. Congress 
expressly limited application of the WOSB Program only to industries in 
which women are substantially underrepresented or underrepresented in 
contracting. The RAND Report, as is more fully explained above, is a 
detailed analysis of WOSBs which identifies the disparity ratio of 
WOSBs in Federal prime contracting by 4-digit NAICS code.
    This Proposed Rule is limited to the eligible industries identified 
in the RAND study, and SBA in the future may conduct new studies or 
update existing studies as appropriate.
    In addition, SBA agrees with commenters that an agency-by-agency 
determination is not required for the WOSB Program to be substantially 
related to an important government objective or to be properly 
implemented. The Supreme Court has rejected the contention that 
government may adopt a race-conscious contracting program only ``to 
eradicate the effects of its own prior discrimination,'' and this 
conclusion also applies to gender-conscious contracting programs. 
Croson, 488 U.S. at 486. Accordingly, this Proposed Rule seeks to 
strike from the Final Rule at Sec.  127.501 the requirement for an 
agency-by-agency determination of discrimination.

X. Contract File

    This Proposed Rule requires contracting officers to document the 
contract file with results of market research and the fact that the 
NAICS code assigned to the contract is for an industry that SBA has 
designated as a substantially underrepresented industry with respect to 
WOSBs. SBA is considering adding the following additional language to 
Sec.  127.503(e):

    In addition, the contracting officer must document the contract 
file showing that the apparent successful offeror's ORCA 
certifications and associated representations were reviewed.

SBA is requesting comments on this proposal.

XI. Joint Venture Requirements

    SBA has also proposed amendments to the current joint venture 
regulation, permitting EDWOSB or WOSB joint ventures for EDWOSB or WOSB 
contracts. The rule currently provides that the EDWOSB or WOSB must 
perform a significant portion of the contract. SBA has proposed 
clarifying this requirement by requiring that not less than 51 percent 
of the net profits earned by the joint venture must be distributed to 
the EDWOSB or WOSB. SBA also proposes clarifying that the joint venture 
agreement must be in writing and set forth the following provisions: 
the purpose of the joint venture, that an EDWOSB or WOSB must be the 
managing venturer, that an employee of the managing venturer must be 
the project manager responsible for the performance of the contract, 
and the responsibilities of the parties with regard to contract 
performance, sources of labor, and negotiation of the EDWOSB or WOSB 
contract.

XII. Request for Comments

    SBA seeks comments on all aspects of this Proposed Rule. This 
includes comments relating to the eligible industries, and especially 
the use of the CCR data set and SBA's concerns with the use of the SBO 
data set. This also includes comments relating to the certification 
procedures, including the certification requirements, representations 
in ORCA, and submission of documents to the document repository.

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

Executive Order 12866
    OMB has determined that this rule is a ``significant'' regulatory 
action under Executive Order 12866. The Regulatory Impact Analysis is 
set forth below.
Regulatory Impact Analysis
1. Necessity of Regulation
    This regulatory action implements section 8(m) of the Act, which 
was enacted as part of section 811 of the Small Business 
Reauthorization Act of 2000, Public Law 106-554. Section 8(m) 
authorizes the creation of the contracting assistance mechanism 
described in this regulation. Under this regulation, contracting 
officers will be

[[Page 10044]]

allowed to restrict competition to EDWOSBs in industries in which SBA 
has determined that WOSBs are underrepresented or substantially 
underrepresented and to WOSBs in industries in which SBA has determined 
that WOSBs are substantially underrepresented and waived the 
economically disadvantaged requirement. This Proposed Rule will 
establish the requirements and procedures necessary to administer these 
restricted competitions.
2. Alternative Approaches to Proposed Rule
    In developing this Proposed Rule, SBA considered the costs and 
benefits of alternatives for certification of small business concerns 
that claim EDWOSB or WOSB status, particularly the alternatives 
provided by section 8(m) of the Act. Specifically, section 8(m)(2)(F) 
provides that in order to qualify as a WOSB or EDWOSB, a concern must 
either be certified by a Federal agency, a State government, or a 
national certifying entity approved by the Administrator, or, 
alternatively, must certify to the contracting officer that it is a 
small business concern owned and controlled by women and provide 
supporting documents. In light of this provision, SBA considered 
performing the certifications by requiring each concern to submit a 
formal application to SBA for a determination of its status. That 
approach, however, is not required or intended by the statute or 
legislative history.
    In addition, SBA considered utilizing third-party certifiers. For 
the reasons set forth in the preamble, SBA has decided to propose the 
use of such third-party certifiers. SBA believes that the proposed 
process would be the most beneficial and cost-effective approach for 
the small business concerns because they will not have to submit formal 
applications to SBA to become eligible for restricted competition for 
WOSB and EDWOSB procurements.
    In this Proposed Rule, SBA has proposed the use of an ORCA 
certification and document submission process, which is similar to the 
one that is used in other existing SBA set-aside programs. For example, 
SBA's program for small businesses permits those concerns to self-
represent their size when submitting offers on Federal contracts. The 
set-aside program for small businesses has worked well for decades. SBA 
believes that the certification process proposed in this rule is 
credible because it supported by robust protest procedures as well as 
eligibility examinations. In addition, the business concern must 
provide documents verifying its eligibility.
    SBA did consider another option with respect to the submission of 
documents to the contracting officer. As discussed in the preamble 
above, the Act states that a WOSB or EDWOSB can certify to the 
contracting officer that it is such an entity and must provide 
supporting documents to the contracting officer verifying its 
eligibility. This Proposed Rule requires the WOSB or EDWOSB to submit 
certain documents to the contracting officer via an electronic 
repository at the time of initial certification in ORCA and then every 
year after that. In addition, WOSBs and EDWOSBs must also provide 
updated documents anytime there is a change that necessitates 
supplementing the original document submission. In the alternative, if 
the repository is not available, the WOSB or EDWOSB must submit those 
documents directly to the contracting officer prior to the award of a 
WOSB or EDWOSB contract. SBA did consider having the EDWOSB or WOSB 
provide all necessary documents to the contracting officer at the time 
of award in order to verify eligibility of the awardee (e.g., tax 
returns, resumes). However, SBA believes this may be a burden on both 
the small business and contracting community and therefore did not 
propose this alternative. SBA is still exploring the feasibility of all 
of these approaches and has requested comments from the public on all 
of them and any other the public may have.
    SBA also considered alternative data sets and measures of 
disparity. SBA proposes to use the CCR database and both numbers and 
dollars approaches for the reasons set forth in the preamble but 
solicits comments on this approach.
3. What Are the Potential Benefits and Costs of This Regulatory Action?
    This rule directs benefits to EDWOSBs and WOSBs at a cost to 
concerns ineligible for the program. In addition, this rule may result 
in new administrative costs of managing a Federal contracting 
assistance program. However, SBA believes that these costs are 
significantly outweighed by the benefits to be gained by reducing the 
inefficiencies caused by discriminatory barriers that currently impede 
WOSBs' full participation in the Federal contracting market.
    Any concern about an increase in product or service cost is 
balanced by the requirement in the statute and Proposed Rule that any 
contract award under the WOSB Program be made at a fair and reasonable 
price. Further, there will not be any additional cost associated with 
the length of the procurement since the process will not be any longer, 
and could in some instances be shorter, than would be the case in the 
absence of the WOSB program. Finally, the creation and development of 
WOSBs could well, over time, result in enhanced bidding for Federal 
contracts, ultimately resulting in lower costs of contracts for the 
Federal government.
    This rule aims to aid EDWOSBs and WOSBs by enabling contracting 
officers to restrict competition to EDWOSBs in industries in which SBA 
has determined that WOSBs are underrepresented and substantially 
underrepresented and to WOSBs in industries in which SBA has determined 
that WOSBs are substantially underrepresented where certain threshold 
determinations are made by an agency. It is difficult to estimate the 
total number of potential beneficiaries that will be eligible for 
Federal small business assistance as a result of this Proposed Rule. 
Utilizing the RAND FPDS/NG data set for the total number of WOSBs 
(identified by Dun and Bradstreet DUNS number) that received obligated 
funds from awards, contracts, orders and modifications to existing 
contracts for FY 2005, approximately 12,000 WOSBs were identified as 
recipients of Federal contracts in the 83 NAICS codes that would be 
eligible under the WOSB Program. It is expected that the number of 
awards to EDWOSBs and WOSBs will increase within these NAICS codes 
should an agency restrict competition to those groups in accordance 
with the procedures in this Proposed Rule.
    To the extent that additional firms become active in government 
programs, additional administrative costs to the Federal government may 
arise due to additional bidders for Federal small business procurement 
programs, additional firms seeking SBA guaranteed lending programs, and 
additional firms eligible for enrollment in SBA's Dynamic Small 
Business Search data base. Among businesses in this group seeking SBA 
assistance, there will be some additional costs associated with 
compliance and verification associated with certification of small 
business status and protests of small business status. However, these 
activities are likely to generate minimal incremental costs since 
mechanisms are currently in place to handle these administrative 
requirements.
    In addition, as more EDWOSBs and WOSBs enter into the Federal 
arena, competition will likely increase, lowering the cost of the 
program and ultimately, we hope, eliminating

[[Page 10045]]

underrepresentation within the industries covered by this Proposed Rule 
and the industry's participation in the program. In the long run, small 
business opportunities--and the amount of competition in the Federal 
procurement market as a whole--will be enhanced by the experience WOSBs 
gain in Federal contracting through participation in this Program. 
While WOSBs gain this experience, moreover, this Rule ensures that any 
contract award to them will be based on a fair and reasonable price to 
the government. Indeed, the current barriers that inhibit WOSBs' 
ability to compete equally for contracts and subcontracts impose upon 
the government increased costs due to lessened competition; these costs 
are likely to be reduced as more WOSBs become economically successful 
and competition for contracts and subcontracts therefore increases.
    This regulatory action promotes the government's objectives. One of 
SBA's goals is to help individual small businesses succeed through fair 
and equitable access to capital and credit, government contracts, and 
management and technical assistance. Implementation of this Proposed 
Rule ensures that the intended beneficiaries have access to small 
business programs designed to assist them. This Proposed Rule does not 
interfere with State, local, and tribal governments in the exercise of 
their government functions. In a few instances, in fact, State and 
local governments have voluntarily adopted SBA's regulations for their 
programs; those state and local governments that do so here will save 
resources that otherwise would be consumed by the need to establish 
their own administrative standards and processes.
    This regulatory action will also enable the Federal government to 
avoid extending the effects of discrimination against women through the 
government's own contracting processes. As explained in Section I, 
Background, of the preamble, the Federal government has an obligation 
to ensure that it is not implementing contracting procedures that 
permit the effects of sex discrimination to continue to impede the 
ability of WOSBs to participate in Federal contracting. As stated in 
Croson, these remedial programs not only help businesses overcome the 
effects of discrimination, but ensure that the public's tax dollars are 
not spent in a discriminatory manner. This program, by creating a 
sheltered market for a very small percentage of Federal contracts, thus 
advances the Federal government's commitment to ensuring equal 
opportunity in its contracting processes.
Executive Order 12988
    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. This action does 
not have retroactive or preemptive effect.
Executive Order 13132
    This rule does not have federalism implications as defined in the 
Executive Order. It will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in Executive Order 13132.
Paperwork Reduction Act (PRA)
    For purposes of the Paperwork Reduction Act, 44 U.S.C. Chapter 35, 
SBA has determined that this Proposed Rule imposes new reporting and 
recordkeeping requirements. The certification process described in 
Subpart C, Sec. Sec.  127.300 to 127.302, is an information collection. 
The proposed self-certification process requires a concern seeking to 
benefit from Federal contracting opportunities designated for WOSBs or 
EDWOSBs to verify its status by using the existing electronic 
contracting system (i.e., ORCA). The WOSB or EDWOSB will have to 
represent in ORCA that it meets each eligibility requirement of the 
program. In addition, the WOSB or EDWOSB will be required to submit 
certain documents verifying eligibility at the time of certification in 
ORCA (and every year after). SBA proposes that these documents be 
submitted to a document repository, or until the repository is 
established, the contracting office upon notice of a proposed award. 
Further, the protest and eligibility examination procedures will 
require the submission of documents from those parties subject to a 
protest and eligibility examination. To reduce the burden on the WOSBs 
or EDWOSBs, the same documents submitted at the time of certification 
will be used for the protests and eligibility examinations, except that 
for protests and eligibility examinations, SBA will also request copies 
of proposals submitted in response to a WOSB or EDWOSB solicitation and 
certain other documents and information to verify the status of an 
EDWOSB.
    Finally this proposed rule also requires the WOSBs or EDWOSBs to 
retain copies of the documents submitted for a period of six (6) years. 
SBA believes, however, that any additional burden imposed by this 
recordkeeping requirement would be de minimus since the firms would 
maintain the information in their general course of business.
    SBA has submitted this information collection to OMB for review.
    Title and Description of Information Collection: Women-Owned Small 
Business Federal Contract Assistance Program Purpose: The information 
collected is modeled on two currently approved information collections: 
SBA Form 1010, OMB Control 3245-0331, SBA's Application for 8(a) 
Business Development, and SBA Form 413, OMB Control 3245-0188, SBA's 
Application for Personal Financial Statement, which are used to collect 
personal and business information on the businesses and owners applying 
to this program. The information requested for this program includes 
information verifying the WOSB/EDWOSB status of the business concern, 
including tax returns, personal statements, and business documents.
    OMB Control Number: New collection.
    Description of and Estimated Number of Respondents: This 
information will be collected from the small business concerns that are 
not already certified by an approved third party certifier and 
therefore must self-certify and verify their status by submitting 
certain required documents to a document repository at the time of ORCA 
certification. This same information must also be collected by the 
third party certifier when making its certification determination. As 
noted above, utilizing the RAND FPDS data set for the total number of 
WOSBs (identified by Dun and Bradstreet DUNS number) that received 
obligated funds from awards, contracts, orders and modifications to 
existing contracts for FY 2005, approximately 12,000 WOSBs were 
identified as recipients of Federal contracts in the 83 NAICS codes 
that would be eligible under the WOSB Program. Estimated Number of 
Responses: In FY 2005, there were 12,000 WOSBs that were identified as 
recipients of Federal contracts in the 83 NAICS codes that would be 
eligible under the WOSB Program. Thus, SBA estimates that there will be 
12,000 responses. In addition, SBA intends to conduct eligibility 
examinations and protests and appeals. The total estimated number of 
responses is 12,200.
    Estimated Response Time: 2 hours. Total Estimated Annual Hour 
Burden: 24,400 hours.
    Please send comments by the closing date for comment for this 
Proposed Rule

[[Page 10046]]

to SBA Desk Officer, Office of Management and Budget, Office of 
Information and Regulatory Affairs, 725 17th Street, NW., Washington, 
DC 20503 and to Dean Koppel, Assistant Director, Office of Government 
Contracting, U.S. Small Business Administration, 409 Third Street, SW., 
Washington, DC 20416.
Regulatory Flexibility Act
    SBA has determined that this Proposed Rule establishing a set-aside 
mechanism for WOSBs may have a significant economic impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act (RFA), 5 U.S.C. 601, et seq. Accordingly, 
SBA has prepared an Initial Regulatory Flexibility Analysis (IRFA) 
addressing the impact of this Rule in accordance with section 603, 
title 5, of the United States Code. The IRFA examines the objectives 
and legal basis for this Proposed Rule; the kind and number of small 
entities that may be affected; the projected recordkeeping, reporting, 
and other requirements; whether there are any Federal rules that may 
duplicate, overlap, or conflict with this Proposed Rule; and whether 
there are any significant alternatives to this Proposed Rule.
1. What Are the Reasons for, and Objectives of, This Proposed Rule?
    SBA is establishing procedures whereby Federal procuring agencies 
may use restricted competition in industries where WOSBs are 
substantially underrepresented, or, in some cases, underrepresented in 
Federal procurement and when certain other conditions are met. The 
purpose of this Proposed Rule is to create an initial framework and 
infrastructure for implementing these new procedures, thereby providing 
a tool for Federal agencies to ensure that WOSBs have an equal 
opportunity to participate in Federal contracting. The objectives of 
this Proposed Rule are to overcome the effects of sex discrimination on 
women's opportunities to participate equally in Federal contracting, to 
ensure a level playing field on which women-owned small businesses have 
a fair opportunity to compete for Federal contracts, and to ensure that 
the WOSB Program is substantially related to the Congressional goals in 
accordance with applicable law.
2. What Is the Legal Basis for This Proposed Rule?
    SBA is proposing this regulation pursuant to section 8(m) of the 
Small Business Act, 15 U.S.C. 637(m), which authorizes the creation and 
implementation of a new mechanism for Federal contracting with WOSBs.
3. What Is SBA's Description and Estimate of the Number of Small 
Entities to Which the Rule Will Apply?
    The RFA directs agencies to provide a description, and where 
feasible, an estimate of the number of small business concerns that may 
be affected by the rule. This Proposed Rule will ultimately establish 
in the FAR a new procurement mechanism to benefit WOSBs. Therefore, 
WOSBs that compete for Federal contracts are the specific group of 
small business concerns most directly affected by this rule. The rule 
may also affect other small businesses to the extent that small 
businesses not owned and controlled by women may be excluded from 
competing for certain Federal contracting opportunities.
    SBA searched CCR's DSBS and determined that there were 
approximately 76,000 WOSBs listed. However, it is not likely that all 
of these firms will be affected by this rule because not all of these 
firms likely do business in one of the 83 four-digit NAICS codes 
identified as underrepresented or substantially underrepresented by the 
Proposed Rule. SBA attempted to approximate the number of WOSBs in the 
83 industries, but there is no simple method of determining how many 
firms actually participated in these NAICS codes. SBA did review the 
DSBS to determine that, as of June 30, 2009, there were approximately 
230,005 WOSBs identified in the 83 industries that will be eligible for 
contract assistance under the WOSB Program. However, this approach 
counted a WOSB multiple times if it listed itself in more than one 
NAICS code, and therefore likely overstates the number of WOSBs that 
will be affected by this rule. Therefore, the best estimate of the 
maximum number of currently registered WOSBs that could be affected by 
this rule is approximately 76,000. However, there may be more WOSBs 
affected if additional firms list themselves in DSBS or if SBA approves 
additional industries for set-aside procurements under these 
procedures. However, the number could be less because many otherwise-
qualified EDWOSBs and WOSBs will not find it advantageous to 
participate in the WOSB Program, since the industries in which they do 
business are not one of the 83 eligible industries.
    This Proposed Rule would affect small businesses other than WOSBs 
that are excluded from competition for Federal contracts that are 
included in the Program. Non-WOSBs in the 83 designated industries may 
be excluded from opportunities from which they would have otherwise 
benefited. However, the Federal government purchases billions of 
dollars of goods and services every year, and SBA believes that there 
are sufficient acquisitions available for all small businesses. 
Therefore, the number of small businesses that could be excluded under 
the proposed determination of eligible industries or future such 
determinations is not known at this time.
    Additional contracting opportunities identified by Federal agencies 
as candidates for the WOSB program will come from new contracting 
requirements and contracts currently performed by small and large 
businesses. At this time, SBA cannot accurately predict how the 
existing distribution of contracts by business type may change by this 
rule.
4. What Are the Projected Reporting, Recordkeeping, Paperwork Reduction 
Act and Other Compliance Requirements?
    WOSBs are not required to be certified as such in order to contract 
with the Federal Government; this will still be true if this Proposed 
Rule is adopted. For a WOSB to be eligible for Federal contracts 
restricted to WOSBs or EDWOSBs, however, it will have to self-certify 
its status as a WOSB in ORCA and CCR. Any WOSB or EDWOSB that is the 
apparent successful offeror will have to provide certain documents to 
the contracting officer, prior to award, to verify its eligibility. 
This procedure is required by statute. This requirement ensures that 
participation in certain contracting opportunities is restricted to 
qualified WOSBs according to the terms of section 8(m) of the Act and 
the criteria in this Proposed Rule. In addition, concerns would have to 
submit information to SBA in the context of a protest or examination. 
In the case of a protest or examination, SBA might request that a 
particular WOSB submit documentation to substantiate its claim. WOSBs 
or EDWOSBs are required to retain documentation demonstrating 
satisfaction of the eligibility requirements for six (6) years from 
date of self-certification in ORCA. SBA proposes to require the 
documents be kept for six (6) years from the date of a self-
certification because the government can bring an action under 31 
U.S.C. 3730 for false claims six (6) years from the date the false 
claim is made. 31 U.S.C. 3731.
    The proposed document retention will require WOSBs and EDWOSBs to

[[Page 10047]]

have a filing system to retain the documents; however, SBA believes 
this information is already retained by a WOSB or EDWOSB in the 
ordinary course of business. Therefore this Proposed Rule will not 
likely impose any additional burden on WOSBs and EDWOSBs. To the extent 
that WOSBs and EDWOSBs typically retain this information for less than 
six (6) years, the concern may have to increase the capacity of its 
filing and document tracking system.
    In addition, any documents submitted to a contracting officer as 
part of an offer are considered source selection sensitive under FAR 
and cannot be released prior to award of a contract. 48 CFR 3.104-3. 
After award of a contract, all information and/or documents submitted 
to a Federal agency, including SBA, are protected to the fullest extent 
permitted by law, including the Privacy Act and Freedom of Information 
Act, 5 U.S.C. 552.
    The Paperwork Reduction Act requirements are addressed further 
below. SBA would welcome any comments on the process as described.
5. What Relevant Federal Rules May Duplicate, Overlap, or Conflict With 
This Rule?
    SBA has not identified any relevant Federal rules currently in 
effect that duplicate or conflict with this rule. The restricted-
competition feature of the WOSB program will be an addition to the 
existing contracting programs that agencies currently administer, such 
as small business set-asides, HUBZone set-asides, service-disabled 
veteran-owned small business set-asides, and contracts reserved for the 
8(a) Business Development Program. For any particular contract, a 
contracting officer may have a range of set-aside options from which to 
select. Because any contract awarded to a WOSB will also count towards 
an agency's small business goal, these procedures may lead a 
contracting officer to select this program in lieu of another.
    Therefore, although there may be some overlap, the addition of the 
set-aside mechanism for women-owned small business should complement 
rather than conflict with the goals of existing set-aside programs.
6. What Significant Alternatives Did SBA Consider That Accomplish the 
Stated Objectives and Minimize Any Significant Economic Impact on Small 
Entities?
    The RFA requires agencies to identify alternatives to the rule in 
an effort to minimize any significant economic impact of the rule on 
small entities. SBA has determined that this rule may have a 
significant economic impact on a substantial number of small entities. 
This rule will implement the set-aside mechanism for WOSBs, as 
established by section 8(m) of the Act. All of the provisions of this 
rule reflect requirements under that statute.
    The legislation does provide SBA with alternative approaches, 
however, for the certification of WOSBs. Specifically, a WOSB may be 
certified by a Federal agency, a State government, or a national 
certifying entity approved by the Administrator. SBA has reviewed some 
sources and believes that such certification is different depending on 
the location and size of the business and that the range for such a 
certification is approximately $200-$1000 for the initial certification 
and every year thereafter for recertification. In some cases, the costs 
may be higher. Thus, the WOSB may, in the alternative, self-certify in 
ORCA and provide adequate documentation to the contracting officer (via 
an electronic repository or directly to the contracting officer if the 
repository is unavailable) that it is a WOSB in accordance with 
standards established by the Administration, with minimal costs (to 
include document retention). SBA did consider limiting certification to 
either third party certification or self-certification with the 
provision of documents, but SBA believes that this Proposed Rule 
provides the most flexibility to WOSBs and EDWOSBs in participating in 
the program. SBA estimates that implementation of this regulation will 
require no additional proposal costs for WOSBs, as compared to 
submitting proposals under any other small business set-aside program. 
Moreover, WOSBs currently represent their status for purposes of data 
collection that is needed to implement 15 U.S.C. 644(g). In addition, 
although WOSBs or EDWOSBs must make available documentation to the 
contracting officer at the time of certification in ORCA, the documents 
provided are kept in the normal course of business and therefore should 
not require additional proposal costs.

List of Subjects

13 CFR Part 121

    Government procurement, Government property, Grant programs--
business, Individuals with disabilities, Loan programs--business, Small 
businesses.

13 CFR Part 127

    Government procurement, Reporting and recordkeeping requirements, 
Small businesses.

13 CFR Part 134

    Administrative practice and procedure, Claims, Equal access to 
justice, Lawyers, Organization and functions (Government agencies).

    Accordingly, for the reasons stated in the preamble, SBA withdraws 
the Proposed Rule published on October 1, 2008 at 73 FR 57014, and 
proposes to amend 13 CFR parts 121, 127 and 134 as follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

    1. The authority citation for 13 CFR part 121 continues to read as 
follows:

    Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637, 644, and 
662(5); and Pub. L. 105-135, sec. 401 et seq., 111 Stat. 2592.

    2. Revise Sec.  121.401 to read as follows:


Sec.  121.401  What procurement programs are subject to size 
determinations?

    The rules set forth in Sec. Sec.  121.401 through 121.413 apply to 
all Federal procurement programs for which status as a small business 
is required or advantageous, including the small business set-aside 
program, SBA's Certificate of Competency program, SBA's 8(a) Business 
Development program, SBA's HUBZone program, the Women Owned Small 
Business (WOSB) Federal Contract Assistance Program, SBA's Service-
Disabled Veteran-Owned Small Business program, the Small Business 
Subcontracting program, and the Federal Small Disadvantaged Business 
(SDB) program.
    3. Amend Sec.  121.1001 by revising paragraph (a)(9) to read as 
follows:


Sec.  121.1001  Who may initiate a size protest or request a formal 
size determination?

    (a) * * *
    (9) For SBA's WOSB Federal Contracting Assistance Program, the 
following entities may protest:
    (i) Any concern that submits an offer for a specific requirement 
set aside for WOSBs or WOSBs owned by one or more women who are 
economically disadvantaged (EDWOSB) pursuant to part 127 of this 
chapter;
    (ii) The contracting officer;
    (iii) The SBA Government Contracting Area Director; and
    (iv) The Director for Government Contracting, or designee.
* * * * *
    4. Amend Sec.  121.1008(a) by adding a sentence after the third 
sentence to read as follows:

[[Page 10048]]

Sec.  121.1008  What occurs after SBA receives a size protest or 
request for a formal size determination?

    (a) * * * If the protest pertains to a requirement set aside for 
WOSBs or EDWOSBs, the Area Director will also notify SBA's Director for 
Government Contracting of the protest. * * *
    5. Revise part 127 to read as follows:

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

Subpart A--General Provisions
Sec.
127.100 What is the purpose of this part?
127.101 What type of assistance is available under this part?
127.102 What are the definitions of the terms used in this part?
Subpart B--Eligibility Requirements To Qualify as an EDWOSB or WOSB
127.200 What are the requirements a concern must meet to qualify as 
an EDWOSB or WOSB?
127.201 What are the requirements for ownership of an EDWOSB and 
WOSB?
127.202 What are the requirements for control of an EDWOSB or WOSB?
127.203 What are the rules governing the requirement that 
economically disadvantaged women must own EDWOSBs?
Subpart C--Certification of EDWOSB or WOSB Status
127.300 How is a concern certified as an EDWOSB or WOSB?
127.301 When may a contracting officer accept a concern's self-
certification?
127.302 What third-party certifications may a concern use as 
evidence of its status as a qualified EDWOSB or WOSB?
127.303 How will SBA select and identify approved certifiers?
127.304 How does a concern obtain certification from an approved 
certifier?
127.305 May a concern determined not to qualify as an EDWOSB or WOSB 
submit a self-certification for a particular EDWOSB or WOSB 
requirement?
Subpart D--Eligibility Examinations
127.400 What is an eligibility examination?
127.401 What is the difference between an eligibility examination 
and an EDWOSB or WOSB status protest pursuant to subpart F of this 
part?
127.402 How will SBA conduct an examination?
127.403 What happens if SBA verifies the concern's eligibility?
127.404 What happens if SBA is unable to verify a concern's 
eligibility?
127.405 What is the process for requesting an eligibility 
examination?
Subpart E--Federal Contract Assistance
127.500 In what industries is a contracting officer authorized to 
restrict competition under this part?
127.501 How will SBA determine the industries that are eligible for 
EDWOSB or WOSB requirements?
127.502 How will SBA identify and provide notice of the designated 
industries?
127.503 When is a contracting officer authorized to restrict 
competition under this part?
127.504 What additional requirements must a concern satisfy to 
submit an offer on an EDWOSB or WOSB requirement?
127.505 May a non-manufacturer submit an offer on an EDWOSB or WOSB 
requirement for supplies?
127.506 May a joint venture submit an offer on an EDWOSB or WOSB 
requirement?
Subpart F--Protests
127.600 Who may protest the status of a concern as an EDWOSB or 
WOSB?
127.601 May a protest challenging the size and status of a concern 
as an EDWOSB or WOSB be filed together?
127.602 What are the grounds for filing an EDWOSB or WOSB status 
protest?
127.603 What are the requirements for filing an EDWOSB or WOSB 
protest?
127.604 How will SBA process an EDWOSB or WOSB status protest?
127.605 What are the procedures for appealing an EDWOSB or WOSB 
status protest decision?
Subpart G--Penalties
127.700 What penalties may be imposed under this part?


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

Subpart A--General Provisions


Sec.  127.100  What is the purpose of this part?

    Section 8(m) of the Small Business Act authorizes certain 
procurement mechanisms to ensure that women-owned small businesses 
(WOSBs) have an equal opportunity to participate in Federal 
contracting, and to ensure that the WOSB Program is substantially 
related to Congressional goals in accordance with applicable law.


Sec.  127.101  What type of assistance is available under this part?

    This part authorizes contracting officers to restrict competition 
to eligible Economically Disadvantaged Women-Owned Small Businesses 
(EDWOSBs) for certain Federal contracts in industries in which the 
Small Business Administration (SBA) determines that Women-Owned Small 
Businesses (WOSBs) are underrepresented or substantially 
underrepresented in Federal procurement and to eligible WOSBs for 
certain Federal contracts in industries in which SBA determines that 
WOSBs are substantially underrepresented in Federal procurement and has 
waived the economically disadvantaged requirement.


Sec.  127.102  What are the definitions of the terms used in this part?

    For purposes of this part:
    8(a) Business Development (8(a) BD) concern means a concern that 
SBA has certified as an 8(a) BD program participant.
    AA/GC&BD means SBA's Associate Administrator for Government 
Contracting and Business Development.
    Central Contractor Registration (CCR) means the system that 
functions as the central registration and repository of contractor data 
for the Federal government and is a means for conducting searches of 
small business contractors. In general, prospective Federal contractors 
must be registered in CCR prior to award of a contract or purchase 
agreement, unless the award results from a solicitation issued on or 
before May 31, 1998.
    Citizen means a person born or naturalized in the United States. 
Resident aliens and holders of permanent visas are not considered to be 
citizens.
    Concern means a firm that satisfies the requirements in Sec.  
121.105 of this chapter.
    Contracting officer has the meaning given to that term in Section 
27(f)(5) of the Office of Federal Procurement Policy Act (codified at 
41 U.S.C. 423(f)(5)).
    D/GC means SBA's Director for Government Contracting.
    Economically disadvantaged WOSB (EDWOSB) means a concern that is 
small pursuant to part 121 of this chapter and that is at least 51 
percent owned and controlled by one or more women who are U.S. citizens 
and who are economically disadvantaged in accordance with Sec. Sec.  
127.200, 127.201, 127.202 and 127.203. An EDWOSB automatically 
qualifies as a WOSB.
    EDWOSB requirement means a Federal requirement for services or 
supplies for which a contracting officer has restricted competition to 
EDWOSBs.
    Immediate family member means father, mother, husband, wife, son, 
daughter, stepchild, brother, sister, grandfather, grandmother, 
grandson, granddaughter, father-in-law, mother-in-law, son-in-law, and 
daughter-in-law.
    Interested party means any concern that submits an offer for a 
specific EDWOSB or WOSB requirement, the contracting activity's 
contracting officer, or SBA.
    ORCA means the Online Representations and Certifications 
Application at https://orca.bpn.gov, a required registration for 
contractors interested in submitting an offer, bid or quote on most 
Federal contracts.
    Primary industry classification means the six-digit North American 
Industry Classification System (NAICS) code designation that best 
describes the

[[Page 10049]]

primary business activity of the concern. The NAICS code designations 
are described in the NAICS manual available via the Internet at http://www.census.gov/NAICS. In determining the primary industry in which a 
concern is engaged, SBA will consider the factors set forth in Sec.  
121.107 of this chapter.
    Same or similar line of business means business activities within 
the same four-digit ``Industry Group'' of the NAICS Manual as the 
primary industry classification of the applicant or Participant.
    Substantial underrepresentation means a disparity ratio which is 
less than 0.5.
    Underrepresentation means a disparity ratio between 0.5 and 0.8.
    WOSB means a concern that is small pursuant to part 121 of this 
chapter, and that is at least 51 percent owned and controlled by one or 
more women in accordance with Sec. Sec.  127.200, 127.201 and 127.202.
    WOSB Program Repository means a secure, web-based application that 
collects, stores and disseminates documents to the contracting 
community and SBA, which verify the eligibility of a business concern 
for a contract to be awarded under a WOSB or EDWOSB requirement.
    WOSB requirement means a Federal requirement for services or 
supplies for which a contracting officer has restricted competition to 
eligible WOSBs.

Subpart B--Eligibility Requirements To Qualify as an EDWOSB or WOSB


Sec.  127.200  What are the requirements a concern must meet to qualify 
as an EDWOSB or WOSB?

    (a) Qualification as an EDWOSB. To qualify as an EDWOSB, a concern 
must be:
    (1) A small business as defined in part 121 of this chapter; and
    (2) Not less than 51 percent unconditionally and directly owned and 
controlled by one or more women who are United States citizens and are 
economically disadvantaged.
    (b) Qualification as a WOSB. To qualify as a WOSB, a concern must 
be:
    (1) A small business as defined in part 121 of this chapter; and
    (2) Not less than 51 percent unconditionally and directly owned and 
controlled by one or more women who are United States citizens.


Sec.  127.201  What are the requirements for ownership of an EDWOSB and 
WOSB?

    (a) General. To qualify as an EDWOSB or WOSB, one or more women 
must unconditionally and directly own at least 51 percent of the 
concern. Ownership will be determined without regard to community 
property laws.
    (b) Requirement for unconditional ownership. To be considered 
unconditional, the ownership must not be subject to any conditions, 
executory agreements, voting trusts, or other arrangements that cause 
or potentially cause ownership benefits to go to another. The pledge or 
encumbrance of stock or other ownership interest as collateral, 
including seller-financed transactions, does not affect the 
unconditional nature of ownership if the terms follow normal commercial 
practices and the owner retains control absent violations of the terms.
    (c) Requirement for direct ownership. To be considered direct, the 
qualifying women must own 51 percent of the concern directly. The 51 
percent ownership may not be through another business entity or a trust 
(including employee stock ownership plan) that is, in turn, owned and 
controlled by one or more women or economically disadvantaged women. 
However, ownership by a trust, such as a living trust, may be treated 
as the functional equivalent of ownership by a woman or economically 
disadvantaged woman where the trust is revocable, and the woman is the 
grantor, a trustee, and the sole current beneficiary of the trust.
    (d) Ownership of a partnership. In the case of a concern that is a 
partnership, at least 51 percent of each class of partnership interest 
must be unconditionally owned by one or more women. The ownership must 
be reflected in the concern's partnership agreement. For purposes of 
this requirement, general and limited partnership interests are 
considered different classes of partnership interest.
    (e) Ownership of a limited liability company. In the case of a 
concern that is a limited liability company, at least 51 percent of 
each class of member interest must be unconditionally owned by one or 
more women.
    (f) Ownership of a corporation. In the case of a concern that is a 
corporation, at least 51 percent of each class of voting stock 
outstanding and 51 percent of the aggregate of all stock outstanding 
must be unconditionally owned by one or more women. In determining 
unconditional ownership of the concern, any unexercised stock options 
or similar agreements held by a woman will be disregarded. However, any 
unexercised stock option or other agreement, including the right to 
convert non-voting stock or debentures into voting stock, held by any 
other individual or entity will be treated as having been exercised.


Sec.  127.202  What are the requirements for control of an EDWOSB or 
WOSB?

    (a) General. To qualify as a WOSB, the management and daily 
business operations of the concern must be controlled by one or more 
women. To qualify as an EDWOSB, the management and daily business 
operations of the concern must be controlled by one or more women who 
are economically disadvantaged. Control by one or more women means that 
both the long-term decision making and the day-to-day management and 
administration of the business operations must be conducted by one or 
more women.
    (b) Managerial position and experience. A woman must hold the 
highest officer position in the concern and must have managerial 
experience of the extent and complexity needed to run the concern. The 
woman manager need not have the technical expertise or possess the 
required license to be found to control the concern if she can 
demonstrate that she has ultimate managerial and supervisory control 
over those who possess the required licenses or technical expertise. 
However, if a man possesses the required license and has an equity 
interest in the concern, he may be found to control the concern.
    (c) Limitation on outside employment. The woman who holds the 
highest officer position of the concern must manage it on a full-time 
basis and devote full-time to the business concern during the normal 
working hours of business concerns in the same or similar line of 
business. The woman who holds the highest officer position may not 
engage in outside employment that prevents her from devoting sufficient 
time and attention to the daily affairs of the concern to control its 
management and daily business operations.
    (d) Control over a partnership. In the case of a partnership, one 
or more women must serve as general partners, with control over all 
partnership decisions.
    (e) Control over a limited liability company. In the case of a 
limited liability company, one or more women must serve as management 
members, with control over all decisions of the limited liability 
company.
    (f) Control over a corporation. One or more women must control the 
Board of Directors of the concern. Women are considered to control the 
Board of Directors when either:
    (1) One or more women own at least 51 percent of all voting stock 
of the concern, are on the Board of Directors and have the percentage 
of voting stock necessary to overcome any super majority voting 
requirements; or

[[Page 10050]]

    (2) Women comprise the majority of voting directors through actual 
numbers or, where permitted by state law, through weighted voting.
    (g) Involvement in the concern by other individuals or entities. 
Men or other entities may be involved in the management of the concern 
and may be stockholders, partners or limited liability members of the 
concern. However, no males or other entity may exercise actual control 
or have the power to control the concern.


Sec.  127.203  What are the rules governing the requirement that 
economically disadvantaged women must own EDWOSBs?

    (a) General. To qualify as an EDWOSB, the concern must be at least 
51 percent owned by one or more women who are economically 
disadvantaged. A woman is economically disadvantaged if she can 
demonstrate that her ability to compete in the free enterprise system 
has been impaired due to diminished capital and credit opportunities as 
compared to others in the same or similar line of business. SBA may 
consider a spouse's financial situation in determining a woman's access 
to credit and capital. SBA does not take into consideration community 
property laws when determining economic disadvantage when the woman has 
no ownership interest in the property.
    (b) Limitation on personal net worth.
    (1) In order to be considered economically disadvantaged, the 
woman's personal net worth must be less than $750,000, excluding her 
ownership interest in the concern and her equity interest in her 
primary personal residence.
    (2) Income received from an S corporation will be excluded from net 
worth where the EDWOSB provides documentary evidence demonstrating that 
the income was reinvested in the business concern or the distribution 
was solely for the purposes of paying taxes arising in the normal 
course of operations of the business concern.
    (3) Funds invested in an Individual Retirement Account (IRA) or 
other official retirement account that are unavailable until retirement 
age without a significant penalty will not be considered in determining 
a woman's net worth. In order to properly assess whether funds invested 
in a retirement account may be excluded from a woman's net worth, she 
must provide information about the terms and restrictions of the 
account to SBA.
    (c) Factors that may be considered.
    (1) General. The personal financial condition of the woman claiming 
economic disadvantage, including her personal income for the past two 
years (including bonuses, and the value of company stock given in lieu 
of cash), her personal net worth and the fair market value of all of 
her assets, whether encumbered or not, may be considered in determining 
whether she is economically disadvantaged.
    (2) Income.
    (i) When considering a woman's personal income, if the adjusted 
gross yearly income averaged over the two years preceding the 
certification exceeds $200,000, SBA will presume that she is not 
economically disadvantaged. The presumption may be rebutted by a 
showing that this income level was unusual and not likely to occur in 
the future, that losses commensurate with and directly related to the 
earnings were suffered, or by evidence that the income is not 
indicative of lack of economic disadvantage.
    (ii) Income earned by S corporations, which is reinvested in or the 
distribution was solely for the purposes of paying taxes arising in the 
normal course of operations of the business concern, is exempted from 
income for purposes of this section provided that documentary evidence 
is submitted demonstrating this use. Likewise, S corporation losses may 
not be subtracted from a woman's income to reduce that income.
    (3) Fair market value of all assets. A woman will generally not be 
considered economically disadvantaged if the fair market value of all 
her assets (including her primary residence and the value of the 
business concern) exceeds $3 million. The only assets excluded from 
this determination are funds excluded under paragraph (b)(3) of this 
section as being invested in a qualified IRA account or other official 
retirement account.
    (d) Transfers within two years. Assets that a woman claiming 
economic disadvantage transferred within two years of the date of the 
concern's certification will be attributed to the woman claiming 
economic disadvantage if the assets were transferred to an immediate 
family member, or to a trust that has as a beneficiary an immediate 
family member. The transferred assets within the two-year period will 
not be attributed to the woman if the transfer was:
    (1) To or on behalf of an immediate family member for that 
individual's education, medical expenses, or some other form of 
essential support; or
    (2) To an immediate family member in recognition of a special 
occasion, such as a birthday, graduation, anniversary, or retirement.

Subpart C--Certification of EDWOSB or WOSB Status


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

    (a) General. At the time a concern submits an offer on a specific 
contract reserved for competition under this Part, it must be 
registered in the Central Contractor Registration (CCR) and have a 
current self-certification posted on the Online Representations and 
Certifications Application (ORCA) that it qualifies as an EDWOSB or 
WOSB.
    (b) Form of certification. In conjunction with its required 
registration in the CCR database, the concern must submit a self-
certification to the electronic annual representations and 
certifications at http://orca.bpn.gov, that it is a qualified EDWOSB or 
WOSB. The self-certification must include a representation, subject to 
penalties for misrepresentation, that:
    (1) The concern is certified as an EDWOSB or WOSB by a certifying 
entity approved by SBA and there have been no changes in its 
circumstances affecting its eligibility since certification;
    (2) The concern meets each of the applicable individual eligibility 
requirements described in subpart B of this part, including that:
    (i) It is a small business concern under the size standard assigned 
to the particular procurement;
    (ii) It is at least 51 percent owned and controlled by one or more 
women who are United States citizens, or it is at least 51 percent 
owned and controlled by one or more women who are United States 
citizens and are economically disadvantaged; and
    (iii) Neither SBA, in connection with an examination or protest, 
nor an SBA-approved certifier has issued a decision currently in effect 
finding that it does not qualify as an EDWOSB or WOSB.
    (c) Documents provided to contracting officer. All of the documents 
set forth in paragraphs (d) and (e) of this section must be provided to 
the contracting officer to verify eligibility at the time of initial 
offer. The documents will be provided via the WOSB Program Repository 
or, if the repository is unavailable, directly to the contracting 
officer. The documents must be retained for a minimum of six (6) years.
    (d) Third Party Certification.
    (1) General. At the time of certification in ORCA, the WOSB or 
EDWOSB that has been certified as a WOSB or EDWOSB by a certifying 
entity approved by SBA must provide a copy of the certification to the 
WOSB Program Repository. If the repository is unavailable, then prior 
to the award of

[[Page 10051]]

a WOSB or EDWOSB contract, the apparent successful offeror WOSB or 
EDWOSB that has been certified as a EDWOSB or WOSB by a certifying 
entity approved by SBA must provide a copy of the certification to the 
contracting officer verifying that it was a WOSB or EDWOSB at the time 
of initial offer. In addition, the EDWOSB or WOSB must also provide a 
copy of the joint venture agreement, if applicable. Within thirty (30) 
days of the repository becoming available, the WOSB or EDWOSB must 
provide the same documents to the repository.
    (2) U.S. Department of Transportation (DOT) Certification. At the 
time of certification in ORCA, the WOSB or EDWOSB that has been 
certified as a as a DOT Disadvantaged Business Enterprise must submit a 
copy of the DBE certification showing that it received such 
certification because it is owned and controlled by one or more women 
to the WOSB Program Repository. If the repository is unavailable, then 
prior to award of a WOSB or EDWOSB contract, the apparent successful 
offeror must provide a copy of the DOT Disadvantaged Business 
Enterprise certification to the contracting officer showing that it 
received such certification because it is owned and controlled by one 
or more women, verifying that it was a WOSB or EDWOSB at the time of 
initial offer. In addition, the WOSB or EDWOSB must provide a statement 
identifying the woman or women upon whom eligibility was based and 
documents, such as birth certificates or passports, evidencing that the 
women are citizens of the United States, as defined in Sec.  127.102. 
Within thirty (30) days of the repository becoming available, the WOSB 
or EDWOSB must provide the same documents to the repository.
    (e) Non-Third Party Certification. A concern that has not been 
certified as a WOSB or EDWOSB by a third-party certifier approved by 
SBA must provide documents to the WOSB Program Repository. If the 
repository is unavailable, then prior to award of a WOSB or EDWOSB 
contract, the apparent successful offeror must provide a copy of the 
documents to the contracting officer verifying that it was a WOSB or 
EDWOSB at the time of initial offer. Within thirty (30) days of the 
repository becoming available, the WOSB or EDWOSB must provide the same 
documents to the repository. These documents must include the 
following:
    (1) Birth certificates, Naturalization papers, or passports for 
owners who are women;
    (2) Copy of the joint venture agreement, if applicable;
    (3) For limited liability companies:
    (i) Articles of organization (also referred to as certificate of 
organization or articles of formation) and any amendments; and
    (ii) Operating agreement, and any amendments;
    (4) For corporations:
    (i) Articles of incorporation and any amendments;
    (ii) By-laws and any amendments;
    (iii) All issued stock certificates, including the front and back 
copies, signed in accord with the by-laws;
    (iv) Stock ledger; and
    (v) Voting agreements, if any;
    (5) For partnerships, the partnership agreement and any amendments;
    (6) For sole proprietorships, the assumed/fictitious name 
certificate(s); and
    (7) For EDWOSBs, in addition to the above, the SBA Form 413, 
Personal Financial Statement, available to the public at http://www.sba.gov/tools/Forms/index.html, for each woman claiming economic 
disadvantage.
    (f) Update of certification and documents.
    (1) The concern must update its EDWOSB and WOSB representations and 
self-certification on ORCA as necessary, but at least annually, to 
ensure they are kept current, accurate, and complete. The 
representations and self-certification are effective for a period of 
one year from the date of submission or update to ORCA.
    (2) The WOSB or EDWOSB must update the documents submitted to the 
contracting officer via the WOSB Program Repository as necessary to 
ensure they are kept current, accurate and complete. If the repository 
is not available, the WOSB or EDWOSB must provide current, accurate and 
complete documents to the contracting officer for each contract award. 
Within thirty (30) days of the repository becoming available, the WOSB 
or EDWOSB must provide the same documents to the repository.


Sec.  127.301  When may a contracting officer accept a concern's self-
certification?

    (a) General.
    (1) Third Party Certifications. A contracting officer may accept a 
concern's self-certification on ORCA as accurate for a specific 
procurement reserved for award under this Part if the apparent 
successful offeror WOSB or EDWOSB provided the required documents, 
which are set forth in Sec.  127.300(d), and there has been no protest 
or other credible information that calls into question the concern's 
eligibility as a EDWOSB or WOSB. An example of such credible evidence 
includes information that the concern was determined by SBA or an SBA-
approved certifier not to qualify as an EDWOSB or WOSB.
    (2) Non-Third Party Certification. A contracting officer may accept 
a concern's self-certification in ORCA if the apparent successful 
offeror WOSB or EDWOSB has provided the required documents, which are 
set forth in Sec.  127.300(e). If the apparent successful offeror WOSB 
or EDWOSB fails to submit any of the required documents, the 
contracting officer cannot award a WOSB or EDWOSB contract to that 
business concern.
    (b) Referral to SBA. When the contracting officer has information 
that calls into question the eligibility of a concern as an EDWOSB or 
WOSB or the concern fails to provide all of the required documents to 
verify its eligibility, the contracting officer shall refer the 
concern's self-certification to SBA for verification of the concern's 
eligibility by filing an EDWOSB or WOSB status protest pursuant to 
subpart F of this part.


Sec.  127.302  What third-party certifications may a concern use as 
evidence of its status as a qualified EDWOSB or WOSB?

    In order for a concern to use a certification by another entity as 
evidence of its status as a qualified EDWOSB or WOSB in support of its 
representations in ORCA pursuant to Sec.  127.300(b), the concern must 
have a current, valid certification from:
    (a) SBA as an 8(a) BD Program participant due to their status as a 
women-owned concern; or
    (b) An entity designated as an SBA-approved certifier on SBA's Web 
site located at http://www.sba.gov/GC.


Sec.  127.303  How will SBA select and identify approved certifiers?

    (a) General. SBA may enter into written agreements to accept the 
EDWOSB or WOSB certification of a Federal agency, State government, or 
national certifying entity if SBA determines that the entity's 
certification process complies with SBA-approved certification 
standards and tracks the EDWOSB or WOSB eligibility requirements set 
forth in subpart B of this part. The written agreement will include a 
provision authorizing SBA to 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 EDWOSB or WOSB eligibility requirements as set forth in 
subpart B of this part.

[[Page 10052]]

    (b) Required certification standards. In order for SBA to enter 
into an agreement to accept the EDWOSB or WOSB certification of a 
Federal agency, State government, or national certifying entity, the 
entity must establish the following:
    (1) It will render fair and impartial EDWOSB or WOSB eligibility 
determinations.
    (2) It will retain the documents submitted by the approved WOSB or 
EDWOSB for a period of six (6) years from the date of certification 
(initial and any recertification).
    (3) Its certification process will require applicant concerns to 
pre-register on CCR and submit sufficient information as determined by 
SBA to enable it to determine whether the concern qualifies as an 
EDWOSB or WOSB. This information must include documentation 
demonstrating whether the concern is:
    (i) A small business concern under SBA's size standards for its 
primary industry classification;
    (ii) At least 51 percent owned and controlled by one or more women 
who are United States citizens; and
    (iii) In the case of a concern applying for EDWOSB certification, 
at least 51 percent owned and controlled by one or more women who are 
United States citizens and economically disadvantaged.
    (4) It will not decline to accept a concern's application for 
EDWOSB or WOSB certification on the basis of race, color, national 
origin, religion, age, disability, sexual orientation, or marital or 
family status.
    (c) List of SBA-approved certifiers. SBA will maintain a list of 
approved certifiers on SBA's Internet Web site at http://www.sba.gov/GC. Any interested person may also obtain a copy of the list from the 
local SBA district office.


Sec.  127.304  How does a concern obtain certification from an approved 
certifier?

    A concern that seeks EDWOSB or WOSB certification from an SBA-
approved certifier must submit its application directly to the approved 
certifier in accordance with the specific application procedures of the 
particular certifier. Any interested party may obtain such 
certification information and application by contacting the approved 
certifier at the address provided on SBA's list of approved certifiers.


Sec.  127.305  May a concern determined not to qualify as an EDWOSB or 
WOSB submit a self-certification for a particular EDWOSB or WOSB 
requirement?

    A concern that SBA or an SBA-approved certifier determines does not 
qualify as an EDWOSB or WOSB may not represent itself to be an EDWOSB 
or WOSB, as applicable, unless SBA subsequently determines that it is 
an eligible EDWOSB or WOSB pursuant to the examination procedures under 
Sec.  127.405, and there have been no material changes in its 
circumstances affecting its eligibility since SBA's eligibility 
determination. Any concern determined not to be a qualified EDWOSB or 
WOSB may request that SBA conduct an examination to determine its 
EDWOSB or WOSB eligibility at any time once it believes in good faith 
that it satisfies all of the eligibility requirements to qualify as an 
EDWOSB or WOSB.

Subpart D--Eligibility Examinations


Sec.  127.400  What is an eligibility examination?

    Eligibility examinations are investigations that verify the 
accuracy of any certification made or information provided as part of 
the certification process or in connection with an EDWOSB or WOSB 
contract. In addition, eligibility examinations may verify that a 
concern meets the EDWOSB or WOSB eligibility requirements at the time 
of the examination. SBA will, in its sole discretion, perform 
eligibility examinations at any time after a concern self-certifies in 
CCR or ORCA that it is an EDWOSB or WOSB. SBA may conduct the 
examination, or parts of the examination, at one or all of the 
concern's offices. SBA may consider protest allegations set forth in a 
protest in determining whether to conduct an examination of a concern 
pursuant to this subpart D of this part, notwithstanding a dismissal or 
denial of a protest pursuant to Sec.  127.604. SBA may also consider 
information provided to the D/GC by a third party that questions the 
eligibility of a WOSB or EDWOSB that has certified its status in ORCA 
or CCR in determining whether to conduct an eligibility examination.


Sec.  127.401  What is the difference between an eligibility 
examination and an EDWOSB or WOSB status protest pursuant to subpart F 
of this part?

    (a) Eligibility examination. An eligibility examination is the 
formal process through which SBA verifies and monitors the accuracy of 
any certification made or information provided as part of the 
certification process or in connection with an EDWOSB or WOSB contract. 
If SBA is conducting an eligibility examination on a concern that has 
submitted an offer on a pending EDWOSB or WOSB procurement and SBA has 
credible information that the concern may not qualify as an EDWOSB or 
WOSB, then SBA may initiate a protest pursuant to Sec.  127.600 to 
suspend award of the contract for fifteen (15) business days pending 
SBA's determination of the concern's eligibility.
    (b) EDWOSB or WOSB protests. An EDWOSB or WOSB status protest 
provides a mechanism for challenging or verifying the EDWOSB or WOSB 
eligibility of a concern in connection with a specific EDWOSB or WOSB 
requirement. SBA will process EDWOSB or WOSB protests in accordance 
with the procedures and timeframe set forth in subpart F, and will 
determine the EDWOSB or WOSB eligibility of the protested concern as of 
the date the concern represented its EDWOSB or WOSB status as part of 
its initial offer including price. SBA's protest determination will 
apply to the specific procurement to which the protest relates and to 
future procurements.


Sec.  127.402  How will SBA conduct an examination?

    (a) Notification. No less than five (5) business days before 
commencing an examination, SBA will notify the concern in writing that 
it will conduct an examination to verify the status of the concern as 
an EDWOSB or WOSB. However, SBA reserves the right to conduct a site 
visit without prior notification to the concern.
    (b) Request for information. SBA will request that the concern or 
contracting officer provide documentation and information related to 
the concern's EDWOSB or WOSB eligibility. These documents will include 
those submitted under Sec.  127.300(c) and any other pertinent 
documents requested by SBA at the time of eligibility examination to 
verify eligibility, including but not limited to, documents submitted 
by a concern in connection with any WOSB or EDWOSB certification. SBA 
may also request copies of proposals or bids submitted in response to 
an EDWOSB or WOSB solicitation. In addition, EDWOSBs will be required 
to submit a copy of a SBA Form 413, Personal Financial Statement, the 
two most recent personal income tax returns (including all schedules 
and W-2 forms) for the women claiming economic disadvantage and their 
spouses, unless the individuals and their spouses are legally 
separated, and SBA Form 4506-T, Request for Tax Transcript Form, 
available to the public at http://www.sba.gov/tools/Forms/index.html. 
SBA may draw an adverse inference where a concern fails to cooperate in 
providing the requested information.

[[Page 10053]]

The WOSB or EDWOSB must retain documentation demonstrating satisfaction 
of the eligibility requirements for six (6) years from date of self-
certification.


Sec.  127.403  What happens if SBA verifies the concern's eligibility?

    If SBA verifies that the concern satisfies the applicable EDWOSB or 
WOSB eligibility requirements, then the D/GC will send the concern a 
written decision to that effect and will allow the concern's EDWOSB or 
WOSB designation in CCR and ORCA to stand and the concern may continue 
to self-certify its EDWOSB or WOSB status.


Sec.  127.404  What happens if SBA is unable to verify a concern's 
eligibility?

    (a) Notice of proposed determination of ineligibility. If SBA is 
unable to verify that the concern qualifies as an EDWOSB or WOSB, then 
the D/GC will send the concern a written notice explaining the reasons 
SBA believes the concern did not qualify at the time of certification 
or does not qualify as an EDWOSB or WOSB. The notice will advise the 
concern that it has fifteen (15) calendar days from the date it 
receives the notice to respond.
    (b) SBA determination. Following the fifteen (15) day response 
period, the D/GC or designee will consider the reasons of proposed 
ineligibility and any information the concern submitted in response, 
and will send the concern a written decision with its findings. The D/
GC's decision is effective immediately and remains in full force and 
effect unless a new examination verifies the concern is an eligible 
EDWOSB or WOSB or the concern is certified by a third party certifier.
    (1) If SBA determines that the concern does not qualify as an 
EDWOSB or WOSB, then the D/GC will send the concern a written decision 
explaining the basis of ineligibility, and will require that the 
concern remove its EDWOSB or WOSB designation in the CCR and ORCA 
within five (5) calendar days after the date of the decision.
    (2) If the concern has already certified itself as a WOSB or EDWOSB 
on a pending procurement the concern must immediately inform the 
officials responsible for the procurement of the adverse determination.
    (3) If SBA determines that the concern did not qualify as an EDWOSB 
or WOSB at the time it submitted its initial offer for an EDWOSB or 
WOSB contract, the contracting officer may terminate the contract, not 
exercise any option, or not award further task or delivery orders.
    (4) Whether or not a contracting officer decides to allow or not 
allow an ineligible concern to fully perform a contract under paragraph 
(b)(2) of this section, the contracting officer cannot count the award 
as one to an EDWOSB or WOSB and must update the Federal Procurement 
Data System--Next Generation (FPDS-NG) and other databases from the 
date of award accordingly.
    (c) A concern that has been found to be ineligible may not 
represent itself as a WOSB or EDWOSB until it cures the reason for its 
ineligibility and SBA determines that the concern qualifies as a WOSB 
or EDWOSB. A concern that believes in good faith that it has cured the 
reason(s) for its ineligibility may request an examination under the 
procedures set forth in this section.


Sec.  127.405  What is the process for requesting an eligibility 
examination?

    (a) General. A concern may request that SBA conduct an examination 
to verify its eligibility as an EDWOSB or WOSB at any time after it is 
determined by SBA not to qualify as an EDWOSB or WOSB, if the concern 
believes in good faith that it satisfies all of the EDWOSB or WOSB 
eligibility requirements under subpart B of this part.
    (b) Format. The request for an examination must be in writing and 
must specify the particular reasons the concern was determined not to 
qualify as an EDWOSB or WOSB.
    (c) Submission of request. The concern must submit its request 
directly to the Director for Government Contracting, U.S. Small 
Business Administration, 409 Third Street, SW., Washington, DC 20416, 
or by fax to (202) 205-6390, marked ``Attn: Request for Women-Owned 
Small Business Program Examination.''
    (d) Notice of receipt of request. SBA will immediately notify the 
concern in writing once SBA receives its request for an examination. 
SBA will request that the concern provide documentation and information 
related to the concern's EDWOSB or WOSB eligibility and may draw an 
adverse inference if the concern fails to cooperate in providing the 
requested information.
    (e) Determination of eligibility. The D/GC will send the concern a 
written decision finding that it either qualifies or does not qualify 
as an EDWOSB or WOSB.
    (1) If the D/GC determines that the concern does not qualify as an 
EDWOSB or WOSB, the decision will explain the specific reasons for the 
adverse determination and advise the concern that it is prohibited from 
self-certifying as an EDWOSB or WOSB. If the concern self-certifies as 
an EDWOSB or WOSB notwithstanding SBA's adverse determination, the 
concern will be subject to the penalties under subpart G of this part.
    (2) If the D/GC determines that the concern qualifies as an EDWOSB 
or WOSB, then the D/GC will send the concern a written decision to that 
effect and will advise the concern that it may self-certify as an 
EDWOSB or WOSB, as applicable.
    (f) Effect of decision. The D/GC's decision is effective 
immediately and remains in full force and effect unless a new 
examination verifies the concern is an eligible EDWOSB or WOSB or the 
concern is certified by a third party certifier. If the concern has 
already certified itself as a WOSB or EDWOSB on a pending procurement 
the concern must immediately inform the officials responsible for the 
procurement of the adverse determination.
    (g) A concern that has been found to be ineligible may not 
represent itself as a WOSB or EDWOSB until it cures the reason for its 
ineligibility and SBA determines that the concern qualifies as a WOSB 
or EDWOSB. A concern that believes in good faith that it has cured the 
reason(s) for its ineligibility may request an examination under the 
procedures set forth in this section.

Subpart E--Federal Contract Assistance


Sec.  127.500  In what industries is a contracting officer authorized 
to restrict competition under this part?

    A contracting officer may restrict competition under this part only 
in those industries in which SBA has determined that WOSBs are 
underrepresented or substantially underrepresented in Federal 
procurement, as specified in Sec.  127.501.


Sec.  127.501  How will SBA determine the industries that are eligible 
for EDWOSB or WOSB requirements?

    (a) Based upon its analysis, SBA will designate by NAICS Industry 
Subsector Code those industries in which WOSBs are underrepresented and 
substantially underrepresented.
    (b) In determining the extent of disparity of WOSBs, SBA may 
request that the head of any Federal department or agency provide SBA, 
data or information necessary to analyze the extent of disparity of 
WOSBs.


Sec.  127.502  How will SBA identify and provide notice of the 
designated industries?

    SBA will post on its Internet Web site a list of NAICS Industry 
Subsector industries it designates under Sec.  127.501. The list of 
designated industries also

[[Page 10054]]

may be obtained from the local SBA district office and may be posted on 
the General Services Administration Internet Web site.


Sec.  127.503  When is a contracting officer authorized to restrict 
competition under this part?

    (a) EDWOSB requirements. For requirements in industries designated 
by SBA pursuant to Sec.  127.501, a contracting officer may restrict 
competition to EDWOSBs if the contracting officer has a reasonable 
expectation based on market research that:
    (1) Two or more EDWOSBs will submit offers for the contract;
    (2) The anticipated award price of the contract (including options) 
does not exceed $5,000,000, in the case of a contract assigned an NAICS 
code for manufacturing; or $3,000,000, in the case of all other 
contracts; and
    (3) Contract award may be made at a fair and reasonable price.
    (b) WOSB requirements. Only if the contracting officer determines 
that the market research indicates that the criteria in paragraph (a) 
of this section are not met for restricting competition to EDWOSBs may 
the contracting officer then restrict competition to WOSBs. In 
addition, to restrict competition to WOSBs, the contractor must 
determine that the following criteria are met:
    (1) The requirement is in an industry that SBA has designated as 
substantially underrepresented with respect to WOSBs; and
    (2) The contracting officer has a reasonable expectation based on 
market research that--
    (i) Two or more WOSBs will submit offers;
    (ii) The anticipated award price of the contract (including 
options) will not exceed $5,000,000, in the case of a contract assigned 
an NAICS code for manufacturing, or $3,000,000 in the case of all other 
contracts; and
    (iii) Contract award may be made at a fair and reasonable price.
    (c) 8(a) BD requirements. A contracting officer may not restrict 
competition to eligible EDWOSBs or WOSBs if an 8(a) BD Participant is 
currently performing the requirement under the 8(a) BD Program or SBA 
has accepted the requirement for performance under the authority of the 
8(a) BD program, unless SBA consented to release the requirement from 
the 8(a) BD program.
    (d) Contracting Among Small Business Programs.
    (1) Acquisitions Valued At or Below $100,000/Simplified Acquisition 
Threshold. The contracting officer shall set aside any acquisition with 
an anticipated dollar value exceeding $3,000 ($15,000 for acquisitions 
as described in the Federal Acquisition Regulation (FAR) at 48 CFR 
13.201(g)(1)) but valued below $100,000 ($250,000 for acquisitions 
described in paragraph (1) of the Simplified Acquisition Threshold 
definition in the FAR at 48 CFR 2.101) for small business concerns when 
there is a reasonable expectation that offers will be obtained from at 
least two small business concerns that are competitive in terms of 
quality and delivery and award will be made at fair market prices. This 
requirement does not preclude a contracting officer from awarding a 
contract under the 8(a) BD, HUBZone, Service Disabled Veteran Owned 
(SDVO), or WOSB programs.
    (2) Acquisitions Valued Above $100,000/Simplified Acquisition 
Threshold. The contracting officer shall set aside any acquisition with 
an anticipated dollar value exceeding $100,000 ($250,000 for 
acquisitions described in paragraph (1) of the Simplified Acquisition 
Threshold definition in the FAR at 48 CFR 2.101) for small business 
concerns when there is a reasonable expectation that offers will be 
obtained from at least two small business concerns that are competitive 
in terms of quality and delivery and award will be made at fair market 
prices. However, after conducting market research, the contracting 
officer shall first consider a set-aside or sole source award under the 
8(a) BD, HUBZone, SDVO SBC or WOSB programs before setting aside the 
requirement as a small business set-aside. There is no order of 
precedence among the 8(a) BD, HUBZone, SDVO SBC or WOSB programs. SBA 
believes that progress in fulfilling the various small business goals, 
as well as other factors such as the results of market research, 
programmatic needs specific to the procuring agency, anticipated award 
price, and the acquisition history, should be considered in making a 
decision as to which program to use for the acquisition.
    (e) Contract file. When restricting competition to WOSBs or EDWOSBs 
in accordance with Sec.  127.503, the contracting officer must document 
the contract file accordingly, including the type and extent of market 
research and the fact that the NAICS code assigned to the contract is 
for an industry that SBA has designated as a as underrepresented or, 
with respect to WOSBs, substantially underrepresented, industry.


Sec.  127.504  What additional requirements must a concern satisfy to 
submit an offer on an EDWOSB or WOSB requirement?

    In order for a concern to submit an offer on a specific EDWOSB or 
WOSB requirement, the concern must ensure that the appropriate 
representations and certifications on ORCA are accurate and complete at 
the time it submits its offer to the contracting officer, including, 
but not limited to, the fact that:
    (a) It is small under the size standard corresponding to the NAICS 
code assigned to the contract;
    (b) It is listed on CCR and ORCA as an EDWOSB or WOSB;
    (c) There has been no material change in any of its circumstances 
affecting its EDWOSB or WOSB eligibility; and
    (d) It will meet the applicable percentages of work requirement as 
set forth in Sec.  125.6 of this chapter (limitations on subcontracting 
rule).


Sec.  127.505  May a non-manufacturer submit an offer on an EDWOSB or 
WOSB requirement for supplies?

    An EDWOSB or WOSB that is a non-manufacturer, as defined in Sec.  
121.406(b) of this chapter, may submit an offer on an EDWOSB or WOSB 
contract for supplies, if it meets the requirements under the non-
manufacturer rule set forth in Sec.  121.406(b) of this chapter.


Sec.  127.506  May a joint venture submit an offer on an EDWOSB or WOSB 
requirement?

    A joint venture may submit an offer on an EDWOSB or WOSB contract 
if the joint venture meets all of the following requirements:
    (a) Except as provided in Sec.  121.103(h)(3) of this chapter, the 
combined annual receipts or employees of the concerns entering into the 
joint venture must meet the applicable size standard corresponding to 
the NAICS code assigned to the contract;
    (b) The EDWOSB or WOSB participant of the joint venture must be 
designated on the CCR and the ORCA as an EDWOSB or WOSB;
    (c) The parties to the joint venture must enter into a written 
joint venture agreement. The joint venture agreement must contain a 
provision:
    (1) Setting forth the purpose of the joint venture.
    (2) Designating an EDWOSB or WOSB as the managing venturer of the 
joint venture, and an employee of the managing venturer as the project 
manager responsible for the performance of the contract;
    (3) Stating that not less than 51 percent of the net profits earned 
by the joint venture will be distributed to the EDWOSB or WOSB;

[[Page 10055]]

    (4) Specifying the responsibilities of the parties with regard to 
contract performance, sources of labor, and negotiation of the EDWOSB 
or WOSB contract; and
    (5) Requiring the final original records be retained by the 
managing venturer upon completion of the EDWOSB or WOSB contract 
performed by the joint venture.
    (d) The joint venture must perform the applicable percentage of 
work required of the EDWOSB or WOSB offerors in accordance with Sec.  
125.6 of this chapter (limitations on subcontracting rule);
    (e) The procuring activity will execute the contract in the name of 
the EDWOSB or WOSB or joint venture.

Subpart F--Protests


Sec.  127.600  Who may protest the status of a concern as an EDWOSB or 
WOSB?

    An interested party may protest the EDWOSB or WOSB status of an 
apparent successful offeror on an EDWOSB or WOSB contract. Any other 
party or individual may submit information to the contracting officer 
or SBA in an effort to persuade them to initiate a protest or to 
persuade SBA to conduct an examination pursuant to subpart D of this 
part.


Sec.  127.601  May a protest challenging the size and status of a 
concern as an EDWOSB or WOSB be filed together?

    An interested party seeking to protest both the size and the EDWOSB 
or WOSB status of an apparent successful offeror on an EDWOSB or WOSB 
requirement must file two separate protests, one size protest pursuant 
to part 121 of this chapter and one EDWOSB or WOSB status protest 
pursuant to this subpart. An interested party seeking to protest only 
the size of an apparent successful EDWOSB or WOSB offeror must file a 
size protest to the contracting officer pursuant to part 121 of this 
chapter.


Sec.  127.602  What are the grounds for filing an EDWOSB or WOSB status 
protest?

    SBA will consider a protest challenging the status of a concern as 
an EDWOSB or WOSB if the protest presents credible evidence that the 
concern is not owned and controlled by one or more women who are United 
States citizens and, if the protest is in connection with an EDWOSB 
contract, that the concern is not at least 51 percent owned and 
controlled by one or more women who are economically disadvantaged. In 
addition, SBA will consider a protest challenging the status of a 
concern as an EDWOSB or WOSB if the contracting officer has protested 
because the WOSB or EDWOSB apparent successful offeror has failed to 
provide all of the required documents, as set forth in Sec.  
127.300(c).


Sec.  127.603  What are the requirements for filing an EDWOSB or WOSB 
protest?

    (a) Format. Protests must be in writing and must specify all the 
grounds upon which the protest is based. A protest merely asserting 
that the protested concern is not an eligible EDWOSB or WOSB, without 
setting forth specific facts or allegations, is insufficient.
    (b) Filing. Protestors may deliver their written protests in 
person, by facsimile, by express delivery service, e-mail, or by U.S. 
mail (received by the applicable date) to the following:
    (1) To the contracting officer, if the protestor is an offeror for 
the specific contract; or
    (2) To the D/GC, if the protest is initiated by the contracting 
officer or SBA.
    (c) Timeliness.
    (1) For negotiated acquisitions, a protest from an interested party 
must be received by the contracting officer prior to the close of 
business on the fifth business day after notification by the 
contracting officer of the apparent successful offeror or notification 
of award.
    (2) For sealed bid acquisitions, a protest from an interested party 
must be received by close of business on the fifth business day after 
bid opening.
    (3) Any protest received after the time limit is untimely, unless 
it is from SBA or the contracting officer. A contracting officer or SBA 
may file an EDWOSB or WOSB protest at any time after bid opening or 
notification of intended awardee, whichever applies.
    (4) Any protest received prior to bid opening or notification of 
intended awardee, whichever applies, is premature.
    (5) A timely filed protest applies to the procurement in question 
even if filed after award.
    (d) Referral to SBA. The contracting officer must forward to SBA 
any protest received, notwithstanding whether he or she believes it is 
premature, sufficiently specific, or timely. The contracting officer 
must send all protests, along with a referral letter and documents, 
directly to the Director for Government Contracting, U.S. Small 
Business Administration, 409 Third Street, SW., Washington, DC 20416, 
or by fax to (202) 205-6390, Attn: Women-Owned Small Business Status 
Protest. The contracting officer's referral letter must include 
information pertaining to the solicitation that may be necessary for 
SBA to determine timeliness and standing, including: the solicitation 
number; the name, address, telephone number and facsimile number of the 
contracting officer; whether the protestor submitted an offer; whether 
the protested concern was the apparent successful offeror; when the 
protested concern submitted its offer; whether the procurement was 
conducted using sealed bid or negotiated procedures; the bid opening 
date, if applicable; when the protest was submitted to the contracting 
officer; when the protestor received notification about the apparent 
successful offeror, if applicable; and whether a contract has been 
awarded. In addition, the contracting officer must send copies of any 
documents provided to the contracting officer pursuant to Sec.  
127.300(c)(2) (if the repository is unavailable). The D/GC or designee 
will decide the merits of EDWOSB or WOSB status protests.


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

    (a) Notice of receipt of protest. Upon receipt of the protest, SBA 
will notify the contracting officer and the protestor of the date SBA 
received the protest and whether SBA will process the protest or 
dismiss it under paragraph (b) of this section. The contracting officer 
may award the contract after receipt of a protest if the contracting 
officer determines in writing that an award must be made to prevent 
significant harm to the public interest.
    (b) Dismissal of protest. If SBA determines that the protest is 
premature, untimely, nonspecific, or is based on nonprotestable 
allegations, SBA will dismiss the protest and will send the contracting 
officer and the protestor a notice of dismissal, citing the reason(s) 
for the dismissal. Notwithstanding SBA's dismissal of the protest, SBA 
may, in its sole discretion, consider the protest allegations in 
determining whether to conduct an examination of the protested concern 
pursuant to subpart D of this part or submit a protest itself.
    (c) Notice to protested concern. If SBA determines that the protest 
is timely, sufficiently specific and is based upon protestable 
allegations, SBA will:
    (1) Notify the protested concern of the protest and request 
information and documents responding to the protest within five (5) 
business days from the date of the notice. These documents will include 
those that verify the eligibility of the concern, respond to the 
protest allegations, and copies of proposals or bids submitted in 
response to an EDWOSB or WOSB solicitation. In addition, EDWOSBs will 
be required to submit a copy of SBA Form 413,

[[Page 10056]]

Personal Financial Statement, the two most recent personal income tax 
returns (including all schedules and W-2 forms) for the women claiming 
economic disadvantage and their spouses, unless the individuals and 
their spouses are legally separated, and SBA Form 4506-T, Request for 
Tax Transcript Form. SBA may draw an adverse inference where a concern 
fails to cooperate in providing the requested information and 
documents; and
    (2) Forward a copy of the protest to the protested concern.
    (d) Time period for determination. SBA will determine the EDWOSB or 
WOSB status of the protested concern within fifteen (15) business days 
after receipt of the protest, or within any extension of that time that 
the contracting officer may grant SBA. If SBA does not issue its 
determination within the fifteen (15)-day period, the contracting 
officer must contact SBA to ascertain when SBA estimates that it will 
issue its decision, and may award the contract if he or she determines 
in writing that there is an immediate need to award the contract and 
that waiting until SBA makes it determination will harm public 
interest.
    (e) Notification of determination. SBA will notify the contracting 
officer, the protestor, and the protested concern in writing of its 
determination. If SBA sustains the protest, SBA will issue a decision 
explaining the basis of its determination and requiring that the 
concern remove its designation on the CCR and ORCA as an EDWOSB or 
WOSB, as appropriate. Regardless of a decision not to sustain the 
protest, SBA may, in its sole discretion, consider the protest 
allegations in determining whether to conduct an examination of the 
protested concern pursuant to subpart D of this part.
    (f) Effect of determination. SBA's determination is effective 
immediately and is final unless overturned by SBA's Office of Hearings 
and Appeals on appeal pursuant to Sec.  127.605.
    (1) A contracting officer may award the contract to a protested 
concern after the D/GC either has determined that the protested concern 
is an eligible WOSB or EDWOSB or has dismissed all protests against it. 
If OHA subsequently overturns the D/GC's determination or dismissal, 
the contracting officer may apply the OHA decision to the procurement 
in question.
    (2) A contracting officer may not award the contract to a protested 
concern that the D/GC has determined is not an EDWOSB or WOSB for the 
procurement in question.
    (i) If a contracting officer receives such a determination after 
contract award, and no OHA appeal has been filed, the contracting 
officer shall terminate the award.
    (ii) If a timely OHA appeal has been filed after contract award, 
the contracting officer must consider whether performance can be 
suspended until an appellate decision is rendered.
    (iii) If OHA affirms the initial determination finding that the 
protested concern is ineligible, the contracting officer shall either 
terminate the contract or not exercise the next option.
    (2) The contracting officer must update the Federal Procurement 
Data System-Next Generation (FPDS-NG) and other procurement reporting 
databases to reflect the final agency decision.
    (3) A concern that has been found to be ineligible may not 
represent itself as a WOSB or EDWOSB on another procurement until it 
cures the reason for its ineligibility. A concern that believes in good 
faith that it has cured the reason(s) for its ineligibility may request 
an examination under the procedures set forth in Sec.  127.405.


Sec.  127.605  What are the procedures for appealing an EDWOSB or WOSB 
status protest decision?

    The protested concern, the protestor, or the contracting officer 
may file an appeal of a WOSB or EDWOSB status protest determination 
with SBA's Office of Hearings and Appeals (OHA) in accordance with part 
134 of this chapter.

Subpart G--Penalties


Sec.  127.700  What penalties may be imposed under this part?

    Persons or concerns that falsely self-certify or otherwise 
misrepresent a concern's status as an EDWOSB or WOSB for purposes of 
receiving Federal contract assistance under this part are subject to:
    (a) Suspension and Debarment pursuant to the procedures set forth 
in the Federal Acquisition Regulations, 48 CFR 9.4;
    (b) Administrative and civil remedies prescribed by the False 
Claims Act, 31 U.S.C. 3729-3733 and under the Program Fraud Civil 
Remedies Act, 31 U.S.C. 3801-3812;
    (c) Administrative and criminal remedies as described at Sections 
16(a) and (d) of the Small Business Act, 15 U.S.C. 645(a) and (d), as 
amended;
    (d) Criminal penalties under 18 U.S.C. 1001; and
    (e) Any other penalties as may be available under law.

PART 134--RULES OF PROCEDURE GOVERNING CASES BEFORE THE OFFICE OF 
HEARINGS AND APPEALS

    6. The Authority citation for part 134 continues to read as 
follows:

    Authority:  5 U.S.C. 504, 15 U.S.C. 632, 634(b)(6), 637(a), 
637(m), 648(l), 656(i) and 687(c); E.O. 12549, 51 FR 6370, 3 CFR, 
1986 Comp., p. 189.

Subpart A--General Rules

    7. Section 134.102(s) is republished to read as follows:


Sec.  134.102  Jurisdiction of OHA

* * * * *
    (s) Appeals from Women-Owned Small Business or Economically-
Disadvantaged Women-Owned Small Business protest determinations under 
Part 127 of this chapter;
* * * * *

Subpart E--Rules of Practice for Appeals From Service-Disabled 
Veteran Owned Small Business Concern Protests

    8. Section 134.515(b) is republished to read as follows:


Sec.  134.515  What are the effects of the Judge's decision?

* * * * *
    (b) The Judge may reconsider an appeal decision within twenty (20) 
calendar days after issuance of the written decision. Any party who has 
appeared in the proceeding, or SBA, may request reconsideration by 
filing with the Judge and serving a petition for reconsideration on all 
the parties to the appeal within twenty (20) calendar days after 
service of the written decision. The request for reconsideration must 
clearly show an error of fact or law material to the decision. The 
Judge may also reconsider a decision on his or her own initiative.
* * * * *
    9. Revise Subpart G to read as follows:
Subpart G--Rules of Practice for Appeals From Women-Owned Small 
Business Concern (WOSB) and Economically Disadvantaged WOSB Concern 
(EDWOSB) Protests
Sec.
134.701 What is the scope of the rules in this subpart G?
134.702 Who may appeal?
134.703 When must a person file an appeal from an WOSB or EDWOSB 
protest determination?
134.704 What are the effects of the appeal on the procurement at 
issue?
134.705 What are the requirements for an appeal petition?
134.706 What are the service and filing requirements?

[[Page 10057]]

134.707 When does the D/GC transmit the protest file and to whom?
134.708 What is the standard of review?
134.709 When will a Judge dismiss an appeal?
134.710 Who can file a response to an appeal petition and when must 
such a response be filed?
134.711 Will the Judge permit discovery and oral hearings?
134.712 What are the limitations on new evidence?
134.713 When is the record closed?
134.714 When must the Judge issue his or her decision?
134.715 Can a Judge reconsider his decision?

Subpart G--Rules of Practice for Appeals From Women-Owned Small 
Business Concern (WOSB) and Economically Disadvantaged WOSB Concern 
(EDWOSB) Protests


Sec.  134.701  What is the scope of the rules in this subpart G?

    (a) The rules of practice in this subpart G apply to all appeals to 
OHA from formal protest determinations made by the Director for 
Government Contracting (D/GC) in connection with a Women-Owned Small 
Business Concern (WOSB) or Economically Disadvantaged WOSB Concern 
(EDWOSB) protest. Appeals under this subpart include issues related to 
whether the concern is owned and controlled by one or more women who 
are United States citizens and, if the appeal is in connection with an 
EDWOSB contract, that the concern is at least 51 percent owned and 
controlled by one or more women who are economically disadvantaged. 
This includes appeals from determinations by the D/GC that the protest 
was premature, untimely, nonspecific, or not based upon protestable 
allegations.
    (b) Except where inconsistent with this subpart, the provisions of 
subparts A and B of this part apply to appeals listed in paragraph (a) 
of this section.
    (c) Appeals relating to formal size determinations and NAICS Code 
designations are governed by subpart C of this part.


Sec.  134.702  Who may appeal?

    Appeals from WOSB or EDWOSB protest determinations may be filed 
with OHA by the protested concern, the protestor, or the contracting 
officer responsible for the procurement affected by the protest 
determination.


Sec.  134.703  When must a person file an appeal from an WOSB or EDWOSB 
protest determination?

    Appeals from a WOSB or EDWOSB protest determination must be 
commenced by filing and serving an appeal petition within ten (10) 
business days after the appellant receives the WOSB or EDWOSB protest 
determination (see Sec.  134.204 for filing and service requirements). 
An untimely appeal must be dismissed.


Sec.  134.704  What are the effects of the appeal on the procurement at 
issue?

    Appellate decisions apply to the procurement in question. If the 
contracting officer awarded the contract to a concern that OHA finds to 
be ineligible, then the contracting officer shall terminate the 
contract, not exercise any options, or not award further task or 
delivery orders.


Sec.  134.705  What are the requirements for an appeal petition?

    (a) Format. There is no required format for an appeal petition. 
However, it must include the following information:
    (1) The solicitation or contract number, and the name, address, and 
telephone number of the contracting officer;
    (2) A statement that the petitioner is appealing a WOSB or EDWOSB 
protest determination issued by the D/GC and the date that the 
petitioner received it;
    (3) A full and specific statement as to why the WOSB or EDWOSB 
protest determination is alleged to be based on a clear error of fact 
or law, together with an argument supporting such allegation; and
    (4) The name, address, telephone number, facsimile number, and 
signature of the appellant or its attorney.
    (b) Service of appeal. The appellant must serve the appeal petition 
upon each of the following:
    (1) The D/GC at U.S. Small Business Administration, 409 3rd Street, 
SW., Washington, DC 20416, facsimile (202) 205-6390;
    (2) The contracting officer responsible for the procurement 
affected by a WOSB or EDWOSB determination;
    (3) The protested concern (the business concern whose WOSB or 
EDWOSB status is at issue) or the protester; and
    (4) SBA's Office of General Counsel, Associate General Counsel for 
Procurement Law, U.S. Small Business Administration, 409 3rd Street, 
SW., Washington, DC 20416, facsimile number (202) 205-6873.
    (c) Certificate of Service. The appellant must attach to the appeal 
petition a signed certificate of service meeting the requirements of 
Sec.  134.204(d).


Sec.  134.706  What are the service and filing requirements?

    The provisions of Sec.  134.204 apply to the service and filing of 
all pleadings and other submissions permitted under this subpart unless 
otherwise indicated in this subpart.


Sec.  134.707  When does the D/GC transmit the protest file and to 
whom?

    Upon receipt of an appeal petition, the D/GC will send to OHA a 
copy of the protest file relating to that determination. The D/GC will 
certify and authenticate that the protest file, to the best of his or 
her knowledge, is a true and correct copy of the protest file.


Sec.  134.708  What is the standard of review?

    The standard of review for an appeal of a WOSB or EDWOSB protest 
determination is whether the D/GC's determination was based on clear 
error of fact or law.


Sec.  134.709  When will a Judge dismiss an appeal?

    (a) The presiding Judge must dismiss the appeal if the appeal is 
untimely filed under Sec.  134.703.
    (b) The matter has been decided or is the subject of adjudication 
before a court of competent jurisdiction over such matters. However, 
once an appeal has been filed, initiation of litigation of the matter 
in a court of competent jurisdiction will not preclude the Judge from 
rendering a final decision on the matter.


Sec.  134.710  Who can file a response to an appeal petition and when 
must such a response be filed?

    Although not required, any person served with an appeal petition 
may file and serve a response supporting or opposing the appeal if he 
or she wishes to do so. If a person decides to file a response, the 
response must be filed within seven (7) business days after service of 
the appeal petition. The response should present argument.


Sec.  134.711  Will the Judge permit discovery and oral hearings?

    Discovery will not be permitted, and oral hearings will not be 
held.


Sec.  134.712  What are the limitations on new evidence?

    The Judge may not admit evidence beyond the written protest file 
nor permit any form of discovery. All appeals under this subpart will 
be decided solely on a review of the evidence in the written protest 
file, arguments made in the appeal petition, and response(s) filed 
thereto.


Sec.  134.713  When is the record closed?

    The record will close when the time to file a response to an appeal 
petition expires pursuant to Sec.  134.710.

[[Page 10058]]

Sec.  134.714  When must the Judge issue his or her decision?

    The Judge shall issue a decision, insofar as practicable, within 
fifteen (15) business days after close of the record.


Sec.  134.715  Can a Judge reconsider his decision?

    (a) The Judge may reconsider an appeal decision within twenty (20) 
calendar days after issuance of the written decision. Any party who has 
appeared in the proceeding, or SBA, may request reconsideration by 
filing with the Judge and serving a petition for reconsideration on all 
the parties to the appeal within twenty (20) calendar days after 
service of the written decision. The request for reconsideration must 
clearly show an error of fact or law material to the decision. The 
Judge may also reconsider a decision on his or her own initiative.
    (b) The Judge may remand a proceeding to the D/GC for a new WOSB or 
EDWOSB determination if the D/GC fails to address issues of decisional 
significance sufficiently, does not address all the relevant evidence, 
or does not identify specifically the evidence upon which it relied. 
Once remanded, OHA no longer has jurisdiction over the matter, unless a 
new appeal is filed as a result of the new WOSB or EDWOSB 
determination.

    Dated: February 19, 2010.
Karen Gordon Mills,
Administrator.
[FR Doc. 2010-3887 Filed 3-2-10; 4:15 pm]
BILLING CODE 8025-01-P