SUPPLEMENTARY INFORMATION: ( printed page 15469)

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. 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 a contract to WOSBs if (1) 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 (2) 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 a WOSB Program-eligible NAICS code, provided that only one WOSB can be identified that can perform the contract at a fair and reasonable price.

Economically disadvantaged women-owned small businesses (EDWOSBs) can likewise receive set-asides and sole-source contracts similar to those described above for WOSBs. Federal agencies may reserve contract opportunities for EDWOSB set-asides and sole-source awards in industries where SBA has determined that WOSBs are “underrepresented.” The WOSB and EDWOSB preferences are set forth in SBA's regulations at 13 CFR 127.500-.509.

The Small Business Reauthorization Act of 2000, Public Law 106-554, 1(a)(9) [title VIII, § 811], required the SBA Administrator to conduct an initial study to identify those industries in which small business concerns owned and controlled by women are underrepresented in Federal contracting, in order to designate those industries as eligible for set-asides and sole-source contracts under the WOSB Program. 15 U.S.C. 637(m)(4). In 2014, Congress amended the Small Business Act to require SBA to conduct a new study every five years and to submit a report to Congress reflecting the results of each new study. Public Law 113-291, § 825(c). SBA last conducted a study in 2016, relying on analysis from the Department of Commerce. 81 FR 11340 (March 3, 2016). An SBA regulation, 13 CFR 127.501, provides that SBA's study will designate NAICS Industry Subsector codes in which WOSBs are underrepresented and substantially underrepresented.

On October 1, 2020, SBA issued a Notice and Request for Comments in the Federal Register , 85 FR 62004, announcing that SBA was preparing to conduct a new study. SBA also sought public input on specific questions regarding the study methodology.

SBA recently conducted a new study and discusses the results below.

II. Overview of Study and Results

In Fiscal Year 2020 (FY 2020), SBA contracted with an independent research firm to study the representation of WOSBs in government procurement at the industry level during the previous three fiscal years (FY 2016-FY 2019). The research firm used a methodology similar to that developed by Kauffman-RAND Institute for Entrepreneurship Public Policy (RAND) for the WOSB Program study issued in 2007, https://www.rand.org/​pubs/​technical_​reports/​TR442.html. As with the RAND study, the firm's study defined industries using 4-digit NAICS codes.

The study methodology compares two WOSB utilization rates to the WOSB availability rate in each industry. The two utilization rates are, first, the percentage of small-business eligible contracts that were awarded to WOSBs, and, second, the percentage of small-business eligible dollars that were obligated to WOSBs, as reported in the Federal Procurement Data System. The availability rate is the percentage of all businesses registered as interested in competing for contracts that identify as WOSBs in the System for Award Management (SAM). From those rates, the study calculates disparity ratios. A disparity ratio of 1 indicates that WOSBs are utilized proportionately to their availability, whereas a ratio less than 1 indicates a discrepancy between WOSBs' utilization rate and their availability. The RAND study had previously set disparity ratio thresholds of 0.5 and 0.8 disparity ratio for finding WOSBs to be substantially underrepresented and underrepresented, respectively. SBA adopted the same thresholds here. SBA designated an industry as eligible based on underrepresentation if either of two disparity ratios for that industry fell below the threshold for finding underrepresentation.

To determine the stability of each disparity ratio, the study applied a statistical power analysis using the number of contracts issued in an industry. The power analysis showed, in some industries, that the number of contracts issued within the study time frame was insufficient to calculate a reliable disparity ratio measuring WOSB representation. Additionally, to confirm the study's findings about existing WOSB Program industries where the study did not find underrepresentation, SBA re-calculated disparity ratios removing WOSB and EDWOSB set-aside and sole-source contracts from utilization ratio calculations. Not doing so would mask underrepresentation that would occur if WOSBs were not provided set-aside opportunities. SBA also replicated the above methodology using FY 2020 data to examine potential impact of the COVID-19 pandemic on government contracting. Results did not provide sufficient evidence to deviate from the study's FY 2016-FY 2019 conclusions.

III. Eligible Industries and Responses to Comments

Based on the above, SBA finds a total of 759 NAICS code industries eligible for Federal contracting under the WOSB Program. This includes 113 NAICS code industries in which WOSBs are underrepresented (meaning contracting officers can make EDWOSB set-aside and sole-source awards in these industries) and 646 NAICS code industries 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 all 759 NAICS code industries. These new designations are effectively immediately.

In response to the October 2020 Request for Comments, SBA received 375 comments. From those, 261 commenters recommended that SBA identify all industry NAICS codes as being part of the WOSB program. The remaining comments were either out of scope or identified specific industries in which SBA should closely investigate disparities among WOSB firms.

Although neither the statute nor SBA's regulations permit SBA to designate all industries as eligible, the results of this most recent study designate 759 of 891 procurement NAICS codes as eligible for either WOSB or EDWOSB procurement procedures. This is over 85% of the procurement NAICS codes. Using Fiscal Year 2021 data, these NAICS codes account for 92% of the Federal government's small-business spending. Only 2% of the Federal government's small-business spending came in current NAICS codes that are not eligible for either WOSB or EDWOSB procedures under these designations ( printed page 15470) (the remainder was spent in NAICS codes that are no longer active). Prior to these changes, fewer than 50% of procurement NAICS codes were eligible for the WOSB Program, and those industries accounted for 75% of small-business spending. Thus, given the requirements of the statute and regulations, the new list of eligible industries addresses the commenters' desire to expand the NAICS codes eligible for the WOSB Program.

As noted in Section II above, SBA determined WOSB and EDWOSB eligibility at the 4-digit NAICS industry group level. For practical reasons, SBA is reporting the results at the 6-digit NAICS industry level. However, only those 6-digit NAICS codes for which SBA has Federal contracting data are included because those are the only industries in which it is possible to determine underrepresentation. Please also note that any sub-industry activities (commonly known as “exceptions” in SBA's table of size standards) that fall under one of the listed NAICS codes below also qualify for WOSB or EDWOSB set-asides or sole-source awards.

The 113 NAICS codes in which WOSBs are underrepresented are set forth in Table 1, NAICS Codes in Which WOSBs are Underrepresented.

The 646 NAICS codes in which WOSBs are substantially underrepresented are set forth in Table 2, NAICS Codes in Which WOSBs are Substantially Underrepresented.

87 FR 15468