SBA Might Be Awarding Contracts to Ineligible Women-Owned Business

The SBA Women-Owned Small Business Program is intended to provide greater access to Federal contracting opportunities for firms that are women-owned small business (WOSBs) and economically disadvantaged women-owned small businesses (EDWOSBs) that meet program requirements. In the 2015 NDAA, Congress provided more access to the program by authorizing the sue of sole-source contracts for program set-aside contract but it also required that firms be certified by a Federal agency, a State government, the SBA Administrator, or a national certifying entity approved by SBA. In October 2015, SBA issued regulations that allowed contracting officers to award program contracts on a sole-source basis. According to the Inspector General of the SBA however, SBA did not implement the required certification process.

This month, the SBA Office of Inspector General (SBA-IG) issued its report on an audit to determine whether contractors awarded on a sole-source basis complied with the requirements of the program and whether firms that received set-aside contracts on a sole-source basis conformed to the self-certification requirements. The SBA-IG studied 56 contracts averaging about $1 million each that were awarded over a 16-month period ending April 2017. That was a pretty representative sample-size as it included 81 percent of all awards during that period.

The results of the SBA-IG's audit were not encouraging. Of the 56 contracts sampled, contracting officers and firms did not comply with Federal regulations for 50 of them. As a result, the U.S. Small Business Administration had no clue whether these contracts were awarded to firms that were eligible to receive sole-source contracts.

The SBA-IG recommended that SBA establish and implement a certification process as required by the NDAA and made several other recommendations designed to improve SBA's oversight of the program.

SBA agreed to make some changes in the program but the SBA-IG was not at all satisfied with SBA's proposed corrective actions. Although SBA agreed to implement a certification process, its time-frame for doing so was unreasonable, according to the SBA-IG. SBA did agree to review each and everyone of the 56 sole-source awards and conduct eligibility reviews and to initiate debarment proceedings on any contractor that falsified its status. If you are one of those 56 contractors, you can expect queries and data requests real soon.

The SBA-IG admonished the SBA for its lack of due diligence. It wrote: "SBA ... must ensure that it takes all necessary measures to ensure the integrity of the program. This includes conducting more frequent eligibility reviews, addressing incomplete data and errors, and coordinating with the Office of Federal Procurement Policy and the General Services Administration to strengthen controls ..."

You can read the full Inspector General's report here.