Outside Employment

The qualifying individual’s limitation on outside employment has always been something that applied to the WOSB, 8(a), and SDVOSB programs. And it still does. After all, if the qualifying individual is focusing all of its efforts on outside ventures, it’s difficult for that person to have control of the applicant/participant. However, what was allowed and what was considered “outside employment” was not consistent between the SBA’s 8(a), WOSB/EDWOSB, and VOSB/SDVOSB programs. Once effective, WOSB rules at 13 C.F.R. § 127.202(c)(1)-(c)(2) will be consistent with 13 C.F.R. § 128.203(i), which discusses SDVOSB outside employment. 13 C.F.R. § 127.202(c) will now state:

(1) A woman or economically-disadvantaged woman generally must devote full-time to the business concern during its normal hours of operations. The woman or economically-disadvantaged woman who holds the highest officer position of the business concern may not engage in outside employment that prevents her from devoting sufficient time and attention to the business concern to control its management and daily operations.

SBA will also add a new provision at 13 C.F.R. § 127.202(c)(3) that addresses beginning outside employment after the concern is already certified as a WOSB. That states:

Any qualifying woman or economically disadvantage woman who seeks to engage in outside employment after certification must notify SBA of the nature and anticipated duration of the outside employment and demonstrate to SBA that the outside employment will not prevent her from controlling the business concern.

This is a new requirement that is not yet accounted for in either the WOSB/EDWOSB or VOSB/SDVOSB programs but is included in a similar fashion in the 8(a) Business Development Program regulations.

Certification Documentation

Another change to the WOSB regulations focuses on the certification process. The SBA will add a new section, 13 C.F.R. 127.303(a)(1)(iii), to discuss documentation that the SBA will accept to prove WOSB/EDWOSB status. If a WOSB or EDWOSB applicant is certified under the Veteran Small Business Certification Program, it may submit “documentation of its VOSB  or SDVOSB certification or most recent recertification in support of its application for WOSB certification. If the concern is also seeking EDWOSB certification, the concern must also submit documentation demonstrating that it is owned and controlled by one or more women who are economically disadvantaged in accordance with § 127.203(b)(3).”

Application Acceptance

The final rule also revises the language in 13 C.F.R. § 127.304(a), which currently states, “SBA will advise each applicant within 15 calendar days after the receipt of an application whether the application is complete and suitable for evaluation and, if not, what additional information or clarification is required to complete the application.” The revision will break 13 C.F.R. § 127.304(a) into smaller subsections and remove the requirement that SBA notify applicants within 15 days of submission as to whether it needs additional information as follows:

(a) The SBA’s Director of Government Contracting (D/GC) or designee is authorized to approve or decline applications for certification. SBA must receive all required information and supporting documents before it will begin processing a concern’s application. SBA will not process incomplete applications.

(1) SBA will advise each applicant after the receipt of an application whether the application is complete and suitable for evaluation and, if not, what additional information or clarification is required to complete the application.

(2) SBA will make its determination within ninety (90) calendar days after receipt of a complete package, whenever practicable.

It will be interesting to see if the removal of the 15-calendar day requirement results in any substantive change to how long applicants are notified of their application’s completeness.

Third-Party Certification

SBA makes a change to its third-party certifier process as well. Initially, the third-party certifier was responsible for uploading “all documents used to determine that a concern is approved for certification” to certify.sba.gov. 13 C.F.R. § 127.356(c). But SBA is changing that requirement, shifting the responsibility from the third-party certifier to the concern revising 13 C.F.R. § 127.356(c) to say, “[t]he concern must ensure that all documents necessary to determine its eligibility for certification by an approved certifier are uploaded in https://certify.sba.gov or any successor system.”

Proposal Submission for Pending Applications

Additionally, 13 C.F.R. § 127.504(a) currently allows WOSB/EDWOSB applicants to submit offers on a WOSB/EDWOSB set-aside contract while its WOSB/EDWOSB application is pending so long as (1) the WOSB/EDWOSB submitted a complete application for certification to the SBA or to a third-party certifier; and (2) the WOSB/EDWOSB has not received a negative determination. Yet there is no indication of what is considered a “pending” application, though an application was generally considered “pending” when it was marked on the SBA’s Dynamic Small Business Search as such.

The final rule helps to clarify what is “pending,” adding that “[a]n application is pending upon notification from SBA that the application is deemed complete and has sufficient documentation for full analysis” to the end of 13 C.F.R. § 127.504(a). Once effective, applicants will need to be notified by the SBA that its application is complete and has sufficient documentation. It will be interesting to see how long it takes SBA to notify applicants of a complete application. Especially when you take into consideration the fact that SBA removed the requirement in 13 C.F.R. § 127.304(a) that currently requires the SBA to notify applicants within 15 days of application submission whether their application is complete or not.

Status Protests

Finally, SBA revises its rule on WOSB/EDWOSB status protests creating new notification responsibilities for concerns that upon final determination are determined to not meet the requirements of a WOSB/EDWOSB. A new section, 13 C.F.R. § 127.604(f)(5), will require concerns to notify contracting officers and update its SAM registration in the case of a status protest that results in decertification within two business days of a final determination. Additionally, a concern that self-certifies as a WOSB/EDWOSB following a negative final determination in a status protest “may be in violation of criminal laws, including section 16(d) of the Small Business Act, 15 U.S.C. 645(d).”

As you can see, a number of changes are coming to the WOSB/EDWOSB rules. While most help align the WOSB/EDWOSB rules with the other SBA program rules, some expand SBA’s discretion further (lookin’ at you, pending application rules). Regardless, SBA’s efforts to streamline the various SBA program rules are a good step in the right direction.

Questions about this post? Email us. Need legal assistance, call 785-200-8919.

Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.