GAO Identifies WOSB Program FlawsPosted: January 7, 2015
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.
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.