Five years have come and gone, so you know what that means, it’s time for the SBA to study what industries are lacking in women-owned small businesses.
The SBA is preparing to study the underrepresentation of Women Owned Small Businesses (“WOSBs”) in federal contracting, and it wants your input. The results of the SBA’s study will impact the WOSB set-asides and sole-source contracts for years to come, so this is an excellent opportunity for current and prospective WOSB firms to get engaged.
As a general matter, the goal of the WOSB program is to provide woman owned firms with equal opportunity to participate in federal contracting. For those businesses that qualify for participation in the program, the benefits can be significant, including set-aside procurements and sole-source awards.
Importantly, the WOSB program makes set-asides and sole source awards contingent on the procurement being conducted in industries where woman owned businesses are underrepresented.
[The WOSB regulations authorize] contracting officers to restrict competition or award sole source contracts or orders to eligible Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) for certain Federal contracts or orders in industries in which the Small Business Administration (SBA) determines that WOSBs are underrepresented in Federal procurement. [The WOSB regulations also authorize] contracting officers to restrict competition or award sole source contracts or orders to eligible WOSBs for certain Federal contracts or orders in industries in which SBA determines that WOSBs are substantially underrepresented in Federal procurement and has waived the economically disadvantaged requirement.
The question becomes, how does the SBA identify industries where woman businesses are either underrepresented, or substantially underrepresented? The short answer: through studies.
In 2006, the SBA hired the Kauffman-RAND Institute for Entrepreneurship Public Policy. The study developed “disparity ratios” by comparing the use of WOSBs in certain NAICS codes to their availability. Industries with disparity ratios less than 1.0 were indicative of underrepresentation. Disparity ratios of less than 0.5 indicated substantial underrepresentation.
Nearly a decade later, the SBA worked with the Department of Commerce to conduct another study of industry underrepresentation for WOSBs. This study took a different approach for defining underrepresentation. Instead of disparity ratios, the Department of Commerce used statistical regression analysis to identify industries where WOSBs were underrepresented. Through this process, the Department of Commerce identified 109 industries where WOSBs have a statistically lower odds of winning a contract.
In 2014, Congress passed the 2015 National Defense Authorization Act, which instructed the SBA to conduct a study of WOSB underrepresentation every five years. Since it’s been almost five years since the Department of Commerce study, the SBA is now planning how to move forward.
The SBA is seeking public comments on how to improve upon its previous studies. The notice in the Federal Register acknowledges that “[a]s both the RAND and OCE studies indicate, there is no single solution to determine underrepresentation, with each study methodology choice having its own benefits and shortcomings.” To try and minimize short comings the SBA is seeking input on four issues:
- Whether it should revise its evaluation metrics to look beyond the mere dollar value of contracts for establishing WOSB underrepresentation. “SBA is seeking input on whether a hybrid approach should be used accounting for both value of contracts and number of contracts in a given industry.”
- How it should establish WOSBs that are “ready, willing, and able” to participate in the federal marketplace. Registrations on sam.gov had historically been used for this purpose, but the SBA has concerns that this may not be representative.
- Whether the ratio thresholds for underrepresented and substantially underrepresented should be revised.
- How industries with low-volumes of participants or contracting dollars should be evaluated.
Public comments on these questions are due November 2, 2020.
Since industry underrepresentation is connected directly to set-aside and sole-source opportunities, the methods the SBA uses in its study could have far reaching impacts on the WOSB program for years to come. Given what’s at stake, it’s good the SBA is seeking comment early.