Women-Owned Small Business Federal Contract Program; Identification of Eligible Industries

AGENCY:

Small Business Administration.

ACTION:

Notice.

SUMMARY:

In order to carry out the Women-Owned Small Business Federal Contract Program (WOSB Program), the U.S. Small Business Administration (SBA) was required by section 825 of the National Defense Authorization Act of 2015 to conduct a new study identifying the industries in which women-owned small businesses are underrepresented in Federal contracting and to report to Congress on the results of that study by January 2, 2016. In accordance with this statutory mandate, SBA has provided this report to Congress and with this notice, notifies the public of the results of this study and identifies the industries designated by SBA as eligible for the WOSB Program.

DATES:

This notice is effective March 3, 2016. The designations of industries contained in this notice apply to all solicitations issued on or after the effective date.

FOR FURTHER INFORMATION CONTACT:

Mr. Leo Sanchez, Office of Government Contracting, U.S. Small Business Administration, 409 Third Street SW., Washington, DC 20416; (202) 619-1658; wosb@sba.gov.

SUPPLEMENTARY INFORMATION:

I. Background

Under section 8(m) of the Small Business Act, 15 U.S.C. 637(m), SBA is responsible for implementing and administering the WOSB Program, which went into effect on February 4, 2011. The purpose of the WOSB Program is to ensure that women-owned small businesses (WOSBs) have an equal opportunity to participate in Federal contracting and to help attain the Federal government's goal of awarding five percent of its prime contract dollars to WOSBs. The WOSB Program authorizes Federal contracting officers to restrict competition for an acquisition to WOSBs if there is a reasonable expectation that at least two WOSBs will submit offers that meet the requirements of the acquisition at a fair and reasonable price and if the acquisition is for a good or service assigned a North American Industry Classification System (NAICS) code in which SBA has determined that WOSBs are “substantially underrepresented.” The WOSB Program also authorizes contracting officers to award a sole source contract assigned such a NAICS code to a WOSB if only one WOSB can be identified that can perform the contract at a fair and reasonable price. In addition, Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) can likewise receive set-asides and sole source awards similar to those described above for WOSBs, and in a larger set of industries where SBA has determined that WOSBs are “underrepresented” but not substantially so.

In order to identify the industries eligible for set-asides under the WOSB Program, the Small Business Act required the SBA Administrator to conduct a study to identify those industries in which small business concerns owned and controlled by women are underrepresented in Federal contracting. 15 U.S.C. 637(m)(4). SBA awarded a contract to the Kauffman-RAND Institute for Entrepreneurship Public Policy (RAND) to complete a study of the underrepresentation of WOSBs in Federal prime contracts by industry code. RAND published the study in April 2007. Prior to the effective date of this notice, SBA used the results of the RAND study to designate 83 four-digit NAICS industry groups as either underrepresented or substantially underrepresented by WOSBs. SBA published the designated NAICS codes on the WOSB Program's Web page on SBA's Web site, at www.sba.gov/wosb.

In 2014, Congress amended the Small Business Act to require SBA to submit a report to Congress reflecting the results of a new study by January 2, 2016, and then continue to conduct a new study every five years. Public Law 113-291 825(c) (Dec. 19, 2014). In response to this statutory mandate, SBA asked the Office of the Chief Economist (OCE) of the U.S. Department of Commerce for assistance in conducting a new study on the WOSB Program, which would analyze data to help SBA determine those NAICS codes in which WOSBs are underrepresented and substantially underrepresented in Federal contracting. OCE looked at whether, holding constant various factors that might influence the award of a contract, the odds of winning Federal prime contracts by firms that were owned by women were greater or less than the odds of winning contracts by otherwise similar businesses.

II. Overview of Study and Results

In its analysis, OCE controlled for the size and age of the firm; its membership in various categories of firms for which the Federal government has government-wide prime contracting goals; its legal form of organization; its level of government security clearance; and its Federal prime contracting past performance ratings. OCE also looked at whether women-owned businesses typically have significantly different experiences in winning contracts depending on their industry. OCE performed this analysis at the four-digit NAICS industry group level. OCE included each firm in its sample in an industry analysis if the firm had registered as being able to perform work in that industry or if the firm had won a contract assigned to that industry.

OCE found that women-owned businesses were less likely to win Federal contracts in 254 of the 304 industries included in the study.

In 109 out of the 304 industries, OCE found that women-owned businesses have statistically significant lower odds of winning Federal contracts than otherwise similar non-women-owned businesses at the 95% confidence level. SBA has determined that the finding by OCE of a statistically significant lower likelihood of winning contracts demonstrates that WOSBs are substantially underrepresented in these 109 NAICS codes. However, of these industries, 17 are in sectors 42 and 44-45, which are not applicable to Federal contracts under SBA's regulations. 13 CFR 121.201. These 17 industry group NAICS codes are set forth in Table 1, Industries Part of Sectors 42 and 44-45, Not Applicable to Federal Contracts Under SBA Regulations.

Since the industry groups above cannot be used to classify Federal contracts, SBA has excluded them from the list of industries designated as substantially underrepresented.

In addition, OCE found that in 145 out of the 304 industries, the odds of women-owned businesses winning contracts were lower than those of otherwise similar non-women-owned businesses, but there was not a statistically significant difference between the odds of winning for the two groups. Although there was not a finding of statistical significance for these industries, 21 of them were previously found by the RAND study to be industries in which WOSBs are underrepresented or substantially underrepresented. Thus, SBA has information showing historical underrepresentation of women-owned businesses in these 21 industries, which is consistent with the OCE finding that women-owned businesses are less likely to win contracts. As a result, SBA finds that it possesses sufficient data to determine that WOSBs are underrepresented in these 21 industries. SBA also believes that this decision fulfills the intent of the Small Business Act, which demonstrates the intent that the designations of eligible industries be based on at least five years of data.

The full OCE study is available on SBA's Web site at www.sba.gov/wosb.

III. Eligible Industries

Based on the above, SBA finds a total of 113 industry groups eligible for Federal contracting under the WOSB Program. This includes 21 4-digit NAICS industry groups in which WOSBs are underrepresented (meaning contracting officers can make EDWOSB set-aside and sole source awards in these industries) and 92 4-digit NAICS industry groups in which WOSBs are substantially underrepresented (meaning contracting officers can make WOSB set-aside and sole source awards in these industries). EDWOSB concerns are eligible to be considered for both WOSB and EDWOSB set-aside and sole source awards for the 113 NAICS industry groups.

The 21 NAICS codes in which WOSBs are underrepresented are set forth in Table 2, NAICS Codes in which WOSBs are Underrepresented.

The 92 NAICS codes in which WOSBs are substantially underrepresented are set forth in Table 3, NAICS Codes in which WOSBs are Substantially Underrepresented.

SBA has posted the list of designated NAICS codes on its Web site at www.sba.gov/wosb and they are effective as set forth in this notice.