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The GAO released a report citing several important concerns about the WOSB Program. Steven Koprince summarizes the issues in this guest post.
© Voyagerix - Fotolia.com
© Voyagerix – Fotolia.com

The SBA performs only “minimal oversight” of third-party certifiers for the woman-owned small business program, and thus “lacks reasonable assurance that only eligible businesses receive WOSB set-aside contracts,” says the GAO in a recent report on the WOSB Program.

The GAO report identifies numerous weaknesses in the WOSB certification system, and provides a number of recommendations to strengthen WOSB Program oversight.

The WOSB program provides two options for self-certification. First, the WOSB can use what I call “trust but verify,” by submitting a number of required documents to the WOSB Document Repository, then submitting a good faith written certification of compliance. Upon award of a WOSB set-aside contract, the documents are to be reviewed to verify eligibility. Second, the WOSB can obtain a formal certification from a SBA-approved third-party certifier. The WOSB submits its documents to the third-party certifier, which verifies (or declines to verify) eligibility. If the WOSB is certified by a third-party certifier, the certificate takes the place of many of the documents required to be submitted to the WOSB Document Repository, but the business still must self-certify for WOSB set-asides.

Four entities currently provide third-party certifications under agreements with the SBA. But according to the GAO, the SBA has failed to reasonably oversee the efforts of these WOSB third-party certifiers. The problems identified by the GAO include:

  • “SBA has not put in place formal policies to review the performance of third-party certifiers, including their compliance with a requirement to inform businesses of the no-cost, self-certification option.”
  • “The agency has not developed formal policies and procedures for reviewing required monthly reports submitted to SBA by certifiers or standardizing reporting formats for the certifiers.”
  • The SBA has not “addressed most issues raised in the [monthly] reports.”
  • “Although SBA examinations have found high rates of ineligibility among a sample of businesses that previously received set-aside contracts, SBA has not determined the causes of ineligibility or made changes to its oversight of certifications to better ensure that only eligible businesses participate in the program.”

The GAO recommends that the SBA take prompt action to “provide reasonable assurance that only eligible businesses obtain WOSB set-aside contracts.” These recommended actions include developing and implementing procedures for annual examinations of WOSBs, analyzing the reasons why high numbers of ineligible businesses have previously received WOSB contracts and taking steps to address the causes, and implementing ongoing reviews of some portion of self-certified WOSBs.  A letter from the SBA, which is attached to the GAO report, states that the SBA “generally agrees with the recommendations in the GAO report.”

Like most agencies, the SBA must work with limited resources and personnel, which can make oversight more difficult. Nevertheless, if WOSB third-party certificates are to be trusted–by WOSBs and Contracting Officers alike–it is imperative that the SBA exercise effective oversight of those third-party certifiers. Hopefully, the GAO report will lead to some positive changes.

Bill’s comments: 

There’s nobody really assigned as a Government watchdog for the WOSB program, asking, “Is this really a woman-owned company?” The 3rd party certifiers are often requiring massive documentation, not really justified by the requirements. See also, our discussions on the Center for Veterans Enterprise, the organization charged with certifying VOSBs and SDVOSBs.

A separate issue is that the GAO is still criticizing agencies for not meeting the set-aside standards – not actually using the WOSB program. That is a much more serious issue at this time, that few if any agencies met the 5% set-aside goal, even in a year like FY2013, when overall the Government did meet the 23% set-aside goal.

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The All-Small Mentor-Protégé Program

SBA had a well-established mentor-protégé program (MPP) for SBA 8(a) certified firms but lacked an MPP program for other small business concerns and specifically, one for specialized certified concerns such as WOSB, EDWOSB, SDVOSB, & HubZone. The 2010 Jobs Act and 2013 NDAA gave SBA the authorization to address this by establishing an all-encompassing mentor-protégé program. Ms. Sandi Clifford, deputy director of the All Small Mentor-Protégé Program (ASMPP), visited the Mid-Tier Advocacy (MTA) earlier this year to discuss the program. Here are some of the highlights of this candid and informative discussion: As Ms. Clifford explained, mentor services to protégés include: • Management and technical assistance (internal business management systems) • Financial assistance (in the form of equity investments and/or loans) • Contracting assistance (contracting processes, capabilities acquisitions and performance) • International trade education (learn how to export, international trade business plan, finding markets) • Business development assistance (strategy, finding contracting and partnership opportunities) • General and/or administrative assistance (business processes and support) As administrators of the program, SBA provides: • Central HQ as opposed to 8(a) distributive model • Online application – certify.sba.gov • Online course tutorial requirement • Annual review and evaluation • Template agreements, i.e., MPA (Mentor-Protégé Agreement) Other All-Small Mentor-Protégé Program (ASMPP) details: • A protégé may generally only have one mentor at a time; SBA may approve a second (two is the maximum) where no competition exists, or if the protégé registers under a new NAICS or otherwise requires new mentor skills.  • Both protégé and mentor must be for-profit (with exception of protégé being an agriculture cooperative). • A mentor may have no more than three protégés at same time (no lifetime limit). • A participant can be both a protégé and mentor at the same time, if there is no competition or conflict. • The ASMPP is self-certifying and is open to businesses who qualify as small in their primary NAICS code, or who are seeking business development assistance in a secondary NAICs where they also qualify as small.  • SBA will not authorize MPAs in second NAICS in which firm has never performed any work; or where firm would only bring “small” status to Mentor and nothing else. • Existing 8(a) firms in last 6 months of the 8(a) program may transfer their MPA to the ASMPP via the online application process. Coordinate with 8(a) office to fine tune the process but there is no reapplication required. • Application requirements include upload of business plan, but no financial statements or tax returns. • JV agreements: ASMPP will not review and approve joint venture agreements. How to apply for the ASMPP: • Applicants are required to register in the System for Award Management (SAM) prior to submitting their mentor/protégé application. • Complete your business profile in certify.SBA.gov. • Evaluate and select your mentor prior to applying. This is not a matching program. SBA will not find a mentor for you. • Begin the ASMPP application process. • Protégés and mentors must complete the online tutorial and have their certificate of completion and all other required documents ready for upload Thank you to Sandi Clifford, Deputy Director, All Small Mentor-Protégé Program, for this helpful overview. TAPE has mentored several small businesses over it’s life as a large business (we’re large in some NAICS codes, though still small in others) and it has been gratifying, satisfying, and integral to our success. As protégés ourselves, we have benefitted from working with some really classy large businesses, and have also had the experience of being a protégé and really getting no tangible benefits. We are currently working with two small businesses, and negotiating ASMPP agreements. You can learn more about the ASMPP on the SBA site. To join MTA and attend future events like this one, please visit www.midtier.org.
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