Big news for women-owned businesses! It’s certainly been a long time coming, but self-certification for women-owned small businesses is finally on its way out. For those of you unfamiliar with this issue, here’s a little background.
When the Small Business Administration (SBA) created the Women-Owned Small Business program in 2011, the regulations allowed women owned small businesses (WOSBs) and economically disadvantaged women owned small business (EDWOSB) to self-certify for participation in the program. Compare this to the SBA’s 8(a) program, for example, which does not allow self-certification and instead requires a company to go through a rigorous application process. During that application process, the SBA ensures that all of the eligibility criteria are, in fact, satisfied. Because the WOSB/EDWOSB program allowed women to self-certify without going through an arduous application process, many women-owned businesses did just that. Others chose to use third-party certifiers. (Though not required, third-party certification offers the added benefit of conferring eligibility under certain state-run women-owned business programs.)
Over time, criticism of WOSB self-certification mounted. Various reports from the GAO and other governmental watchdogs noted high levels of fraud, and industry insiders began lobbying for change. Legitimate WOSBs wanted a more robust review process, to eliminate fraudulent “front” companies from the program. In response, Congress passed the 2015 NDAA, which eliminated self-certification for WOSBs and EDWOSBs. The NDAA directed the SBA to modify its regulations, abolish self-certification, and create an application process to vet potential participants. A year later, the SBA published a notice, indicating that it did plan on drafting the regulations Congress ordered . . . but no regulations were forthcoming. In 2016, the SBA set up a new online portal – certify.sba.gov – through which WOSB status could be managed. But, again, no actual changes to the regulation were proposed, let alone completed. A 2017 GAO report found that “[a]s a result of inadequate monitoring and controls, such as not implementing a full certification program, potentially ineligible businesses may continue to incorrectly certify themselves as WOSBs.” Still…crickets from the SBA.
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