Integrity of WOSB Program Receives Attention From Congress, Dept of Justice, OIG

There has been recent activity on the WOSB program from The Hill and from legal watch dogs.

  • Senator Shaheen sends letter to the SBA; integrity of the WOSB program at stake
  • Legal team forecast DOJ's increased focus on certification fraud
  • SBA Office of Inspector General report highlights weaknesses in SBA's controls over the WOSB program

On The Hill: Senator Shaheen Supports Women-Owned Firms

Shaheen_bioThe U.S. Women's Chamber of Commerce is pleased to advise women-owned firms that Senator Shaheen has stepped up to support fair access to federal contracts by legitimately women-owned small businesses by notifying SBA Administrator Contreras-Sweet via letter1 of her concerns about the integrity of the program -- specifically ending the self-certification.

Senator Shaheen states:

"I also write to express my desire to work with you to address concerns that have been raised about the integrity of the program. As you are aware, both the General Accountability Office2 and the Small Business Administration Office of Inspector General3 have issued reports in the past year illustrating program integrity and management concerns that echo those heard from business owners. It would be helpful for Congress to hear what steps the Small Business Administration plans to take to increase oversight and reduce fraud in the WOSB contract program. . . "

"In addition, I would like to hear more from you about your plans for implementation of the certification component of the sole source authority provision of WOSBs. As you know, the Fiscal Year 2015 National Defense Authorization Act called for certain certification elements of the WOSB contract program to be amended, and to require advanced third-party certification for WOSBs. It is important that separate regulations for third-party certification be crafted with careful consideration given to program integrity, oversight, fraud prevention, costs to the taxpayer and the WOSB community."


The False Claims Act Will Be Used to Protect the Integrity of Small Business Programs and Certification Fraud

On October 19, 2015, attorneys from Morrison & Foerster LLP provided their views that the Department of Justice (DOJ) has ramped up efforts to identify and punish false certifications made in connection with SBA programs and is using the wide net of the False Claims Act (FCA).

They note recent settlements related to businesses owned by disabled veterans, 8(a) and HUBZone programs and expect increased focused on Women Majority-Owned Small Businesses in FY 2016.

After referencing recent False Claims Act activity, the SBA Office of Inspector General Report and the Government Accountability Office Report -- Morrison & Foerster LLP state, "The OIG3 and GAO2 reports are likely to thrust the WOSB program into the spotlight moving forward. Just this month, DOJ intervened in an FCA action alleging that an aerospace contractor falsely certified that it was a WOSB to obtain a competitive advantage in securing subcontracts funded by the federal government. As a result of the misrepresentation, DOJ asserted that the defendant was paid approximately $48 million from prime contractors that originated from the federal government as a result of fraudulently certified claims for payment.  The contractor and its former president recently agreed to settle the allegations for approximately $20 million."


SBA Office of Inspector General Names Weaknesses in WOSB Oversight as a Top Concern in FY 2016

Each year, the SBA Office of Inspector General provides a report of the most serious management and performance challenges facing the SBA. For more than a decade, the top concern has been listed as "procurement flaws allow large firms to obtain small business awards, and allow agencies to count contracts performed by large firms towards their small business goals."

In the FY 2016 report, filed on October 15, 2015, the SBA OIG altered this statement slightly as, "Weaknesses in Small Business Contracting Programs and Inaccurate Procurement Data Undermine the Reliability of Contracting Goals."6

In this report, in addition to the concern regarding large firms obtaining small business awards, the SBA OIG has specifically referenced concern for the integrity of the WOSB program.

The SBA OIG states, "OIG and GAO have both recently reported weaknesses in SBA’s controls that would ensure only eligible firms receive contracts set-aside for the Women Owned Small Business Federal Contracting Program (WOSBP). The National Defense Authorization Acts (NDAA) for FY 2013 and FY 2015 made major programmatic changes to WOSBP. Specifically, the NDAA for 2013 removed previously existing contract caps on set-aside awards for which WOSB and economically disadvantaged WOSB firms were able to compete. The NDAA for 2015 granted contracting officers the authority to award sole-source awards to firms in WOSBP and required firms to be certified by a Federal agency, a State government, the Administrator, or a national certifying entity approved by the Administrator. However, SBA has opted to implement the sole-source authority provision first—separate from a certification program. We believe allowing sole source contracting authority in WOSBP, without implementing the contemporaneously required certification program, is Challenge 1. Weaknesses in Small Business Contracting Programs and Inaccurate Procurement Data Undermine the Reliability of Contracting Goals Achievements 2 inconsistent with SBA’s statutory authorization and exposes the program to abuse. Absent a certification program, the Government is more likely to award WOSBP contracts to ineligible firms."

 

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