Women-owned small businesses may find it easier to obtain SBA financing, as a result of an interim final rule (yep, Uncle Sam has interim final rules), the Administration announced last week. Essentially, the rule change did away with several limitations that limited the ability of the government’s contracting officers to set aside contracts for women-owned and economically-disadvantaged-women-owned small businesses (EDWOSB).

The Women-Owned Small Business (WOSB) Program authorizes federal contracting officers to restrict competition for some contracts to eligible women-owned businesses, subject to certain criteria. Most recently, a set-aside for women-owned businesses was allowed as long as the anticipated contract didn’t exceed $6.5 million for manufacturing contracts and $4 million for all others. Of course, these caps hindered contracting officers’ ability to set aside WOSB contracts.

The interim final rule implements Section 1697 of the National Defense Authorization Act for fiscal year 2013, which does away with these limitations. Contracting officers now can set aside any contracts for WOSBs and EDWOSBs if the contracting officer believes the contract can be awarded at a fair and reasonable price; the contract itself can be for any dollar amount.

Another criteria: The contracting officer should have a reasonable expectation that if the industry is one in which WOSBs are under-represented, at least two EDWOSBs will present offers for the contract, and if WOSBs are substantially under-represented, two or more WOSBs will submit offers for the contract.

One driver behind the change is the recognition that the Federal government awarded less than 4% of its contracts to WOSBs in fiscal 2011, falling short of its 5% goal. “By removing the limitations on the dollar amount of a contract award that can be set-aside for WOSBs or EDWOSBs in the regulations, the SBA will be clarifying that there are more contracting opportunities for WOSBs, which should result in more contracts being awarded to this group of small businesses,” the SBA said.

To qualify as a WOSB, one or more women must own and control the firm. The women must be U.S. citizens, and the firm must be considered small according to SBA standards, the Administration said. Firms considered economically disadvantaged need to meet additional specific financial requirements.

Just what does the SBA consider a small business? It must be independently owned and operated, for profit and not dominant in its field. The exact size can vary by industry: manufacturing firms may have up to 1,500 employees, while wholesaling firms are limited to 500 employees.

The WOSB Program has identified 83 North American Industry Classification System (NAIC) codes in which WOSBs are under-represented or substantially under-represented. These include utility system construction, forging and stamping, and electrical equipment manufacturing, among others, according to the Small Entity Compliance Guide to the WOSB Program, which was issued in 2011. 

The SBA is accepting comments on the rule through June 6, 2013.