First Look

Sen. Ernst leads bills seeking higher standard for federal small business contracting goals

The top Republican on the Senate Small Business Committee is calling for higher standards for federal small business contracting goals.

Committee Ranking Member Joni Ernst (R-Iowa) introduced legislation Thursday that would require agencies to only count women-owned small businesses (WOSBs) and service-disabled veteran-owned small businesses (SDVOSBs) certified by the Small Business Administration as part of their governmentwide contracting targets.

Agencies have met or exceeded governmentwide SDVOSB contracting goals for more than a decade, but have only met their WOSB contracting goals in fiscal years 2019 and 2015.

One of the bills introduced by Ernst would require federal agencies that fail to meet their WOSB contracting goals to testify before the House and Senate small business committees.

“There are no real consequences if federal agencies do not meet their goals to support women-owned and disabled veteran-owned small businesses. Failure has become routine,” Ernst told Federal News Network in a statement Thursday. “As departments continue to take credit for contract awards made to ineligible businesses, I’m fighting to bring accountability to federal contracting.”

The Accountability in Women-Owned Small Business Contracting Act would only allow agencies to count prime and subcontract awards to SBA-certified women-owned small businesses toward a governmentwide goal of 5% of federal contracting dollars going to WOSBs.

The Stop Stolen Valor for Service-Disabled Veteran-Owned Small Business Contractors Act would stop self-certified service-disabled, veteran-owned small businesses from being included in the count toward a governmentwide goal of 3% of federal contracting dollars going to SDVOSBs.

SBA in 2020 ended its self-certification process for women-owned small businesses after the agency’s inspector general found contract awards went to vendors that didn’t meet the criteria for the program.

Congress in the FY 2015 National Defense Authorization Act (NDAA) required SBA to end the self-certification for women-owned small businesses.

The Government Accountability Office, in a 2019 report, found about 3.5% of contracts awarded through the WOSB program between 2011 and 2018 were ineligible for those awards.

WOSBs and Economically Disadvantaged WOSBs that are not certified through SBA or one of four third-party certification authorities are no longer eligible to compete for set-aside or sole-source contracts under the WOSB program.

However, SBA still allows other women-owned small businesses to self-certify their status as a WOSB and receive contracts outside the WOSB program that count toward an agency’s 5% women-owned small business contracting goal.

SBA also allows companies to self-certify as service-disabled veteran-owned small businesses, receive contracts outside the SDVOSB program, and have those awards count toward an agency’s 3% SDVOSB contracting goal.

SBA’s Director of Policy, Planning and Liaison Sam Le said small businesses need certification to qualify for SBA program contracts — including 8(a) contracts, HUBZone contracts and WOSB contracts.

However, Le said agencies also award small-business set-aside contracts that aren’t particular to a specific certification type.

“Those are still available for self-certification. But we have a very robust protest process that ensures that firms that receive small business set-asides are legitimately small businesses,” Le said in an interview Wednesday.

The Accountability in Women-Owned Small Business Contracting Act would require any federal agency that fails to meet its WOSB contracting goal to submit a report to the House and Senate small business committees, as well as testify before the committees.

The bill would also require SBA to partner with the Commerce, Agriculture and Treasury departments on an interagency report on barriers for women-owned small businesses.

The agencies leading the report would be required to work with the Office of Federal Procurement Policy on recommendations for increasing the number of federal contract opportunities for women-owned small businesses.

The report would detail the impact of inflation and supply chain disruptions on small businesses, as well as opportunities for the federal government to improve access to capital for women-owned small businesses.

Since the 5% governmentwide WOSB contracting goal was authorized in 1994, agencies have only met the goal twice — once in fiscal 2015 and once in 2019.

Federal agencies have a goal of 3% of federal contracting dollars going to Service-Disabled Veteran-Owned Small Businesses, but agencies have met or exceeded that goal every year since fiscal 2012.

SBA earlier this year began certifying the veteran-owned status of small businesses looking to compete for federal contracts.

SBA’s VetCert program now serves as the governmentwide hub to verify the status of veteran-owned small businesses (VOSBs) and service-disabled veteran-owned small businesses (SDVOSBs).

The agency is taking over this work from the Department of Veterans Affairs, as required under the 2021 NDAA.  SBA is migrating about 2.2 million records from VA to stand up the VetCert program.

Certified veteran-owned small businesses are eligible to compete for sole-source and set-aside contracts at the VA, while certified service-disabled veteran-owned small businesses can compete for sole-source and set-aside contracts governmentwide.

Federal agencies spent $25 billion in government contract spending with SDVOSBs in fiscal 2021.

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