OIG’s Semiannual Report Paints an Unsatisfactory Picture of SBA’s WOSB Certification

By Laila Hawkins

In the Semiannual Report to Congress, SBA’s Office of Inspector General (OIG) reviewed the integrity of key SBA contracting and counseling programs. The SBA is charged with maximizing procurement and contract award opportunities for small businesses.

The report covers SBA’s Implementation of the Women-Owned Small Business Certification Program, released in September 2022. In FY2020, the government awarded $27.1 billion (4.8%) of federal contracting dollars to WOSBs. Of the $27.1 billion, $1.2 billion was spent through WOSB set-aside or sole source awards. The objective of this report was to determine whether SBA implemented controls to prevent ineligible firms from being certified/obtaining WOSB set-aside contracts. The OIG identified three primary issues areas regarding the program:

1. Inadequate verification requirements for WOSB certifications

2. Lack of oversight for third-party certifiers

3. An unreliable database and certification platform (beta.certify)

The report notes that SBA’s current average processing time for WOSB determinations is 112 days, even though SBA is required issue determinations within 90 days. These delays caused a serious backup in the applicant portal – as of September 2022, there were 8,352 applications waiting for a certification decision. Regarding inadequate verification requirements for WOSB certifications, OIG found that SBA approved all 25 firms reviewed but did not ensure that the business was small. OIG also found that SBA approved three of the 25 firms without documenting how the business resolved doubts that a woman controlled the business. In response to these concerns, the OIG gave six recommendations to the SBA regarding its oversight of the WOSB certification program:

1. Update and implement standard operating procedures to ensure consistent eligibility reviews

2. Update application instructions and require WOSB applicants to submit documentation for program officials to verify that the business meets small business size standards

3. Perform eligibility examinations for the three WOSB firms that did not have adequate evidence that a woman controlled the business and take appropriate action

4. Implement a plan to mitigate or remedy beta.certify issues affecting SBA’s ability to maintain records, accurately report data, and work with other federal databases, minimizing the possibility of awarding contracts to ineligible businesses

5. Assess the technological resources, staffing levels, and service contracts needed to reduce application wait time and ensure application reviews are conducted in a prompt manner in accordance with regulatory requirements. Use the results of the assessment to improve processing times

6. Develop standard operating procedures to ensure program officials assess third-party certifications, establish a risk-based sampling plan for selecting files to review, and document the results of the compliance reviews

Thus far, SBA’s planned actions have resolved three recommendations, 3, 5 and 6. The SBA partially agreed with recommendations 1 and 6 and disagreed with recommendations 2, 3, 4, and 5. The OIG responded with some suggestions for improvement, leaving the recommendations open until SBA management can provide evidence that it has properly implemented the suggestions. As we continue to advocate for strengthening the WOSB federal contracting program, specifically increasing WOSB direct awards and set-asides, we understand the value of integrity in the program. The WOSB certification is the gateway to the program and its functionality is instrumental to success.