SBA’s Office of Government Contracting administers the WOSB program  by publishing regulations for the program, conducting eligibility  examinations of businesses that received contracts under the WOSB or  EDWOSB set-aside, deciding protests related to eligibility for a WOSB  program contract award, conducting studies to determine eligible  industries, and working with other federal agencies in assisting WOSBs  and EDWOSBs. When  using the self-certification option, businesses must provide documents  supporting their status to the online document repository for the WOSB  program that SBA maintains. For third-party certification, businesses submit documentation to  approved certifiers. SBA’s Oversight of Certifiers Has Been Minimal and Does Not Provide Reasonable Assurance That Only Eligible Businesses Obtain Set-Aside Contracts

SBA generally has not overseen third-party certifiers and lacks  reasonable assurance that only eligible businesses receive WOSB set- aside contracts. SBA Generally Has Not Reviewed Certifier Performance

To date, SBA generally has not conducted performance reviews of third- party certifiers and does not have procedures in place for such reviews. Third-party certifiers agree to be subject to  performance reviews by SBA at any time to ensure that they meet the  requirements of the agreement with SBA and program certification  regulations—including requirements related to the certification process,  obtaining supporting documents, informing businesses about the no-cost  option for WOSB program certification, and reporting to SBA on certifier  activities. But SBA has not yet  estimated when it would complete written procedures for certifier  oversight or the SOP. Without ongoing monitoring and oversight of the activities and  performance of third-party certifiers, SBA cannot reasonably ensure that  certifiers have fulfilled the performance requirements of their agreement  with SBA—including informing businesses about no-cost certification. According to federal standards for internal control, agencies should have  documented procedures, conduct monitoring, and ensure that any review  findings and deficiencies are brought to the attention of management and  are resolved promptly. According to SBA  officials, both self- and third-party certified businesses were found  ineligible at the time of review. In turn,  this would continue to expose the program to the risk that ineligible  businesses may receive set-aside contracts. The Department of Defense (DOD),  the Department of Homeland Security (DHS), and the General Services  Administration (GSA) accounted for the majority of these obligations. The  WOSB program set-asides represented less than 1 percent of total  federal awards to women-owned small businesses. Contracting officers,  WOSBs, and others with whom we spoke suggested a number of  program changes that might increase use of the WOSB program,  including increasing awareness, allowing for sole-source awards, and  expanding the list of eligible industries for the set-aside program. For example, some noted that allowing sole-source contracts could  increase program use. To provide reasonable assurance that only eligible businesses obtain  WOSB set-aside contracts, the Administrator of SBA should enhance  examination of businesses that register to participate in the WOSB  program, including actions such as: promptly completing the development of procedures to conduct  annual eligibility examinations and implementing such procedures; analyzing examination results and individual businesses found to be  ineligible to better understand the cause of the high rate of ineligibility  in annual reviews, and determine what actions are needed to address  the causes; and  implementing ongoing reviews of a sample of all businesses that have  represented their eligibility to participate in the program. Appendix I: Objectives, Scope, and Methodology

This report examines the Women-Owned Small Business (WOSB)  program of the Small Business Administration (SBA). More specifically,  the report (1) describes how WOSBs and economically disadvantaged  WOSBs (EDWOSBs) are certified as eligible for the program, (2)  examines the extent to which SBA has implemented internal control and  oversight procedures of WOSB program certifications, and (3) discusses  the effect the program has had on federal contracting opportunities  available to WOSBs or EDWOSBs. We interviewed SBA officials from the  Office of Government Contracting. To determine what effect, if any, the WOSB program has had on federal  contracting opportunities available to WOSBs, we identified set-aside  contract obligations in FPDS-NG from April 2011 through May 2014 to  identify trends in program participation by contracting agencies included  in both FPDS-NG and SBA goaling reports.
Why GAO Did This Study

In 2000, Congress authorized the WOSB program to increase contracting opportunities for WOSBs by allowing contracting officers to set aside procurements to such businesses. SBA, which administers the program, issued implementing regulations that became effective in 2011. GAO was asked to review the WOSB program. This report examines (1) how businesses are certified as eligible for the WOSB program, (2) SBA's oversight of certifications, and (3) the effect the program has had on federal contracting opportunities available to WOSBs or EDWOSBs. GAO reviewed relevant laws, regulations, and program documents; analyzed federal contracting data from April 2011 through May 2014; and interviewed SBA, officials from contracting agencies selected to obtain a range of experience with the WOSB program, third-party certifiers, WOSBs, and organizations that represent their interests.

What GAO Found

Businesses have two options to certify their eligibility for the women-owned small business (WOSB) program. Whether self-certifying at no cost or using the fee-based services of an approved third-party certifier, businesses must attest that they are a WOSB or an economically disadvantaged WOSB (EDWOSB). Businesses also must submit documents supporting their attestation to a repository the Small Business Administration (SBA) maintains (required documents vary depending on certification type), and, if they obtain a third-party certification, to the certifier.
SBA performs minimal oversight of third-party certifiers and has yet to develop procedures that provide reasonable assurance that only eligible businesses obtain WOSB set-aside contracts. For example,
SBA generally has not reviewed certifier performance or developed or implemented procedures for such reviews, including determining whether certifiers inform businesses of the no-cost self-certification option, a requirement in the agency's agreement with certifiers.
SBA also has not completed or implemented procedures to review the monthly reports that third-party certifiers must submit.
Without ongoing monitoring and oversight of the activities and performance of third-party certifiers, SBA cannot reasonably assure that certifiers fulfill the requirements of the agreement. Moreover, in 2012 and 2013, SBA found that more than 40 percent of businesses (that previously received contracts) it examined for program eligibility should not have attested they were WOSBs or EDWOSBs at the time of SBA's review. SBA officials speculated about possible reasons for the results, including businesses not providing adequate documentation or becoming ineligible after contracts were awarded, but SBA has not assessed the results of the examinations to determine the actual reasons for the high numbers of businesses found ineligible. SBA also has not completed or implemented procedures to conduct eligibility examinations. According to federal standards for internal control, agencies should have documented procedures, conduct monitoring, and ensure that any review findings and deficiencies are resolved promptly. As a result of inadequate monitoring and controls, potentially ineligible businesses may continue to incorrectly certify themselves as WOSBs, increasing the risk that they may receive contracts for which they are not eligible.
The WOSB program has had a limited effect on federal contracting opportunities available to WOSBs. Set-aside contracts under the program represent less than 1 percent of all federal contract obligations to women-owned small businesses. The Departments of Defense and Homeland Security and the General Services Administration collectively accounted for the majority of the $228.9 million in set-aside obligations awarded under the program between April 2011 and May 2014. Contracting officers, business owners, and industry advocates with whom GAO spoke identified challenges to program use and suggested potential changes that might increase program use, including allowing sole-source contracts rather than requiring at least two businesses to compete and expanding the list of 330 industries in which WOSBs and EDWOSBs were eligible for a set-aside.

What GAO Recommends

GAO recommends that SBA, among other things, establish and implement procedures to monitor certifiers and improve annual eligibility examinations, including by analyzing examination results. SBA generally agreed with GAO's recommendations.