WOSB and EDWOSB Set-aside Performance Issues

1. WOSB and EDWOSB Set-aside Performance Issues Dave Pease NH-PTAP October 28, 2011

2. WOSB & EDWOSB Set-Asides:How were we doing?* • 172 Solicitations Set-Aside • 74 Different NAICS Codes • Lots of confusion, few awards (so far). *8/24/11

3. A Rocky start…. • 79/172 (46%) were OK. • 93/172 (54%) have problems. • 18 different non-allowed NAICS (25/172 or 15%) • 65/172 (38%) set-aside for WOSB under EDWOSB-only NAICS • 3/172 (2%) set aside for EDWOSB under WOSB-only NAICS.

4. The GOOD News • Contract Officers throughout the government are trying to set aside contracts for women. • They are doing so in many fields of business.

5. Non-Manufacturer Rule • Nonmanufacturer Rule Reminders • The NMR does not apply to service contracts. The NMR is an exception to the manufacturing performance requirements (limitations on subcontracting) applicable to supply contracts. Service and construction contracts have different performance requirements. See 13 CFR § 125.6; FAR §§ 19.102(f), 19.502-2(c). • You will designate the proper NAICS code and size standard in the solicitation, selecting the NAICS code which best describes the principal purpose of the product or service being acquired. Primary consideration is given to the industry description in the NAICS, the product or service description in the solicitation and any attachments to it, the relative value and importance of the components of the procurement making up the end item being procured, and the function of the goods or services being purchased. • You cannot assign a wholesale or retail trade to NAICS code to a procurement for supplies.

6. The BAD News • Contracting Officers are very, very confused. • The core problem is that they don’t understand the separation between EDWOSB and WOSB NAICS codes. • The documentation is poor. However, it’s easy to fix with a simple labeling change.

7. Update October 2011 • Two more months have passed. Has performance improved? • Examined 100 most recent postings in FedBizOpps that were WOSB or EDWOSB set-asides. • Methodology not strict – may be some double counting – but it’s a good sample.

8. Still very rocky …. • 41/100 (41%) were OK. • 59/100 (59%) have problems. • 46% set-aside for WOSB under EDWOSB-only NAICS • 11% non-allowed NAICS • 2% set aside for EDWOSB under WOSB-only NAICS.

9. What are the Problems? • Many Contract Officers may not understand distinction between EDWOSB and WOSB. • Poor grasp of which NAICS codes permit set-asides for each category. • Is SBA documentation clear? • Is training adequate? • Is motivation adequate?

10. Documentation Problem SBA uses terms “underrepresented” and “substantially underrepresented”. These are terms of art from the rulemaking process, and were necessary concepts for assigning NAICS codes that would be associated with EDWOSB & WOSB set-asides. Once the NAICS code associations were made, these terms increased potential confusion and engendered a lack of clarity.

11. Solution • Get rid of them! • SBA replaced the confusing 18-page NAICS list with a clear spreadsheet in mid-August. • The Contracting Officer’s Guide to the WOSB Program has not been updated. • Still need better tools to make this easy to get right, hard to mess up.

12. What We Tell Small Businesses - • Stay tuned & be patient – progress is being made. • Check solicitation NAICS code assignments very carefully. Protest if you are being unfairly excluded. Use NH-PTAP and SBA for assistance. • Monitor set-aside solicitations for changes

13. Conclusion! • The program is off to an enthusiastic start. • Everyone needs to learn how to use the program correctly. • It’s not rocket science – it will smoothe out and operate as intended. Eventually.