	Background

Federal agencies conduct a variety of procurements that are reserved for  small business participation through small business set-asides. SBA Has Implemented One of the Three Changes Made by the 2015 NDAA

As of February 2019, SBA had implemented one of the three changes  that the 2015 NDAA made to the WOSB program—sole-source authority. SBA officials have stated that they will not eliminate self- certification until the new certification process for the WOSB program is in  place, which they expect to be completed by January 1, 2020. Sole-Source Authority Has Been Implemented

In September 2015, SBA published a final rule to implement sole-source  authority for the WOSB program (effective October 2015). However, the SBA OIG’s June 2018 audit report cautioned that  allowing sole-source contracting authority while firms can still self-certify  exposes the WOSB program to unnecessary risk of fraud and abuse, and  the report recommended that SBA implement a new certification process  for the WOSB program per the 2015 NDAA. SBA Has Not Fully Addressed Deficiencies in Oversight and Program Implementation

		SBA Has Not Implemented Procedures to Regularly Monitor and Assess the Performance of Third- Party Certifiers

SBA has not fully addressed deficiencies in its oversight of third-party  certifiers that we identified in our October 2014 report. According to SBA, the purpose of the compliance reviews was  to ensure the certifiers’ compliance with regulations, their signed third- party certifier certification form (or agreement) with SBA, and other  program requirements. In addition, in light of these continued oversight deficiencies, the  implementation of sole-source authority without addressing the other  changes made by the 2015 NDAA could increase program risk. Our analysis of  FPDS-NG data on all obligations to WOSB program set-asides from the  third quarter of fiscal year 2011 through the third quarter of fiscal year  2018 found the following:
3.5 percent (or about $76 million) of WOSB program obligations were  awarded under NAICS codes that were never eligible for the WOSB  program;
10.5 percent (or about $232 million) of WOSB program obligations  made under an EDWOSB NAICS code went to women-owned  businesses that were not eligible to receive awards in EDWOSB- eligible industries; and
17 of the 47 federal agencies that obligated dollars to WOSB program  set-asides during the period used inaccurate NAICS codes in at least  5 percent of their WOSB set-asides (representing about $25 million). Because SBA does not review whether contracts are being  awarded under the appropriate NAICS codes, it cannot provide  reasonable assurance that WOSB program requirements are being met  or identify agencies that may require targeted outreach or additional  training on eligible NAICS codes. 3). Specifically, staff from seven stakeholder groups believed that  the program provided greater opportunities for women-owned small  businesses to obtain contracts in industries in which they are  underrepresented. As a result,  we maintain that our previous recommendations should be addressed. Recommendation for Executive Action

The SBA Administrator or her designee should (1) develop a process for  periodically reviewing FPDS-NG data to determine the extent to which  agencies are awarding WOSB program set-asides under ineligible NAICS  codes and (2) take steps to address any issues identified, such as  providing targeted outreach or training to agencies making awards under  ineligible codes. Appendix I: Objectives, Scope, and Methodology

This report examines (1) the extent to which the Small Business  Administration (SBA) has implemented changes to the Women-Owned  Small Business Program (WOSB program) made by the 2015 National  Defense Authorization Act (2015 NDAA); (2) the extent to which SBA has  implemented changes to address previously identified oversight  deficiencies; and (3) changes in WOSB program use since 2011 and  stakeholder views on its use, including since the 2015 implementation of  sole-source authority. We also interviewed SBA officials, including officials  from SBA’s Office of Government Contracting and Business  Development. We also reviewed SBA documentation on the WOSB program,  including SBA’s 2017 Standard Operating Procedures and 2018 WOSB  Program Desk Guide, results from 2016 compliance reviews of the four  third-party certifiers, and SBA eligibility examinations from fiscal years  2012 through 2018.
Why GAO Did This Study

In 2000, Congress authorized the WOSB program, allowing contracting officers to set aside procurements to women-owned small businesses in industries in which they are substantially underrepresented. To be eligible to participate in the WOSB program, firms have the option to self-certify or be certified by a third-party certifier. However, the 2015 NDAA changed the WOSB program by (1) authorizing SBA to implement sole-source authority, (2) eliminating the option for firms to self-certify as being eligible for the program and (3) allowing SBA to implement a new certification process.
GAO was asked to review the WOSB program. This report discusses (1) the extent to which SBA has addressed the 2015 NDAA changes, (2) SBA's efforts to address previously identified deficiencies, and (3) use of the WOSB program. GAO reviewed relevant laws, regulations, and program documents; analyzed federal contracting data from April 2011 through June 2018; and interviewed SBA officials, officials from contracting agencies selected to obtain a range of experience with the WOSB program, and three of the four private third-party certifiers.

What GAO Found

The Small Business Administration (SBA) has implemented one of the three changes to the Women-Owned Small Business (WOSB) program authorized in the National Defense Authorization Act of 2015 (2015 NDAA). Specifically, in September 2015 SBA published a final rule to implement sole-source authority, effective October 2015. As of February 2019, SBA had not eliminated the option for program participants to self-certify that they are eligible to participate, as required by 2015 NDAA. SBA officials stated that this requirement would be addressed as part of the new certification process for the WOSB program, which they expect to implement by January 1, 2020.
SBA has not addressed WOSB program oversight deficiencies identified in GAO's 2014 review (GAO-15-54). For example, GAO previously recommended that SBA establish procedures to assess the performance of four third-party certifiers—private entities approved by SBA to certify the eligibility of WOSB firms. While SBA conducted a compliance review of the certifiers in 2016, it has no plans to regularly monitor them. By not improving its oversight of the WOSB program, SBA is limiting its ability to ensure third-party certifiers are following program requirements. In addition, the implementation of sole-source authority in light of these continued oversight deficiencies can increase program risk. Consequently, GAO maintains that its prior recommendations should be addressed. In addition, similar to previous findings from SBA's Office of Inspector General, GAO found that about 3.5 percent of contracts using a WOSB set-aside were awarded for ineligible goods or services from April 2011 through June 2018. SBA does not review contracting data that could identify this problem and inform SBA which agencies making awards may need targeted outreach or training. As a result, SBA cannot provide reasonable assurance that WOSB program requirements are being met and that the program is meeting its goals.
While federal contract obligations to all women-owned small businesses and WOSB program set-asides have increased since fiscal year 2012, WOSB program set-asides remain a small percentage (see figure).

What GAO Recommends

GAO recommends that SBA develop a process for periodically reviewing the extent to which WOSB program set-asides are awarded for ineligible goods or services and use the results to address identified issues, such as through targeted outreach or training on the WOSB program. SBA agreed with the recommendation.