Women-Owned Small Businesses Can Now be Awarded Sole Source Federal Contracts

Effective December 31, 2015, contracting officers can make sole source awards to Women-Owned Small Businesses (WOSBs) and Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs). See FAR 19.1506. 

Why is this important? 
A sole source award is the surest way for a company to be awarded a government contract. While the awardee has to be the only entity capable of performing the contract to merit a sole source award, sole source awards are not unusual in federal contracting. 

Before making a sole source award under this section the government must first determine that: (1) there is no reasonable expectation that offers would be received from two or more EDWOSB or WOSB concerns; (2) there are no exclusions applicable under FAR 19.104; (3) the total contract value is less than $4 million ($6.5 million for manufacturers); and (4) the Small Business Association (SBA) has determined the specific industry section (NAICS code) is underrepresented or substantially underrepresented by WOSB concerns.

Government contractors possessing a valid “preference” can have a significant advantage in securing contract awards. For example, a small disadvantaged business (SDB) (i.e., under the SBA 8(a) Program), an historically underutilized business zone small business (HUBZone), a service-disabled veteran-owned small business (SDVOSB), an Alaskan-Native Owned company (ANC), a WOSB or an EDWOSB can be “set-aside” a specific federal contract to attempt to increase the share of government contracts awarded to that category of business. Only companies that meet the requirements for the specific preference are eligible to compete for an award under a set-aside solicitation. 

An even greater advantage occurs when the contracting officer awards a contract to a specific company under the contracting officer’s sole source authority (when certain prerequisites are met). Sole source options have been available to contracting officers for 8(a), SDVOSB and HUBZone concerns for many years (FAR 6-302-5). WOSBs and EDWOSBs were not eligible for sole source contracts before last year. The federal government, dissatisfied with the failure of various agencies to meet contracting goals for WOSBs over the last two years, took steps in 2015 to allow for WOSB and EDWOSB sole source contracts.  

The National Defense Authorization Act (NDAA) for FY 2015, Public Law 113-291, provided the Congressional authority for sole source awards to WOSBs. The rules implementing that law are only now being published for WOSBs. SBA guidelines went into effect on October 14, 2015. The FAR Council (DOD, GSA and NASA) issued interim rules amending the Federal Acquisition Regulation (FAR) on December 31, 2015. The interim FAR rules are intended to be consistent with previous regulatory changes issued by the SBA that provide authority to award sole source contracts to WOSBs and EDWOSBs.

It has been suggested that contracting officers have been reluctant to exercise their WOSB sole source authority in the absence of a FAR provision, even though the NDAA and SBA regulations arguably were sufficient authority. This interim rule should remove further hesitation by contracting officers to exercise sole source authority for eligible WOSBs and EDWOSBs for future contracts.

For more information about the content covered in this Alert, please visit SmithLaw.com or contact David L. Hayden or Jackson Moore.