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Tag: SBA

SBA Launches New Audit of Economically Disadvantaged Women-Owned Small Businesses

The Small Business Administration (SBA) has expanded its review of socio-economic contracting programs to include the Economically Disadvantaged Women-Owned Small Business (EDWOSB) program. (Federal News Network June 12, 2026)

Earlier this week, SBA emailed EDWOSB participants and requested that they complete a survey and submit personal and business tax returns for the past three years by June 30. (ibid)

In the email, SBA explained the purpose of the review:

“Pursuant to 13 C.F.R. § 127.400, SBA is conducting a program examination to verify that your firm continues to meet the requirements of the Economically Disadvantaged Women-Owned Small Business (EDWOSB) program,” wrote the agency’s compliance division within the Office of Government Contracting and Business Development. “Specifically, SBA will be verifying that your firm continues to meet the requirement that the woman or women that own at least 51% of the firm are economically disadvantaged, as set forth in 13 CFR 127.203.” (ibid)

Similarities to the 8(a) Program Audit

This review follows SBA’s recent audit of the 8(a) Business Development Program.

In December, SBA requested information from more than 4,300 8(a) firms, including employee lists, bank statements from the previous three fiscal years, and copies of all 8(a) contracts. As a result of that review, SBA suspended more than 1,100 firms and ultimately terminated 154 companies from the program. (ibid)

SBA Proposes Changes to 8(a) Eligibility Requirements

SBA continues to revise the 8(a) Business Development Program. The agency recently released a proposed rule that would change how individuals qualify for the program.

Under the proposal:

“SBA says ‘individuals will no longer be considered” “socially disadvantaged,” and therefore eligible for the 8(a) program, simply because they are a member of a racial minority group. Likewise, no individual may be barred from the 8(a) program simply because they are white. Instead, all applicants will be required to prove their social disadvantage status by submitting verifiable, fact-based evidence.’” (ibid)

The proposed changes would apply only to individually owned firms. SBA would not change eligibility standards for businesses owned by Indian tribes, Alaska Native Corporations (ANCs), Native Hawaiian Organizations (NHOs), or Community Development Corporations (CDCs). (ibid)

Current individually owned 8(a) participants would not be affected. (ibid)

Comments on the proposed rule are due by July 13.

Reactions to the Proposed Rule

Sen. Ed Markey (D-Mass.), ranking member of the Senate Small Business and Entrepreneurship Committee, criticized the proposal. (ibid)

“The SBA’s proposed rule grossly diminishes the history of systemic racial and ethnic discrimination in the United States. Congress created the 8(a) Business Development Program nearly half a century ago to provide entrepreneurs who have faced historic and present-day discrimination with opportunities to partner with the federal government and support to help grow their businesses,” Markey said. (ibid)

“To be clear, the 8(a) program has always been open to anyone that can prove they’ve experienced prejudice or cultural bias, including in education, employment and entrepreneurship. Now, the SBA proposes to define discrimination based on its political whims and allow applicants to self-certify their eligibility. Instead of fighting to right historic wrongs and enable more job creators to grow and thrive, this administration is once again choosing to distort reality to perpetuate its hateful — and harmful — agenda.” (ibid)

Shane McCall, partner at Koprince McCall Pottroff, noted that SBA’s proposal builds on the 2023 Ultima decision. (ibid)

“However, the proposed rule includes a big change in standards for social disadvantage that mostly stem from racial quotas from government or private entities,” McCall said. (ibid)

“Examples include ‘unlawful diversity, equity, and inclusion programs or policies; unlawful affirmative action programs or policies; race-based quotas, set-asides, or hiring targets; or, any government or private entity policies or programs that favored some groups over others on the basis of race.’ We also need to know how SBA will apply these rules.” (ibid)

Questions About the EDWOSB Audit Process

Industry participants have raised concerns about the audit process.

One executive, who requested anonymity, said the review seemed unexpected because the company had recently renewed its certification and remained certified for another three years. (ibid)

The executive also questioned SBA’s use of SurveyMonkey to collect sensitive financial information, including:

  • Cash balances in savings and checking accounts
  • Retirement account information
  • Stock, bond, and mutual fund holdings
  • Life insurance policies with cash surrender value
  • Home ownership, mortgage balances, and property values (ibid)

The survey also asks:

• Has the Qualifying Owner transferred any assets to any immediate family member for less than fair market value in the last two years?

• Do you have any retirement accounts? And if so, provide a list and how much money is in each account.

• Do you have any stocks, bonds or mutual funds? And if so, provide a list, a corresponding number of shares you own and total dollar value for each.

• Do you have a life insurance policy that has a cash surrender value?

• Do you own your primary residence? If so, what is the mortgage of your residence and what is the current value of your residence? (ibid)

The executive said:

“It makes me wonder how much time and effort has been put into this and makes me question the credibility of whatever results we are provided post-evaluation. Will the SBA feed my data into an algorithm or artificial intelligence to determine program eligibility? Or will a human evaluate? Are they comparing our new information with the information provided at application? Or is this a separate examination completely?” (ibid)

SBA did not respond to requests for comment.

Growth of the Women-Owned Small Business Program

The Women-Owned Small Business (WOSB) program has grown significantly during the last decade.

Federal data shows:

  • 1,410 new WOSB firms entered the federal market in fiscal 2023.
  • 1,183 entered in 2022.
  • 1,276 entered in 2021. (ibid)

Although agencies failed to meet the governmentwide 5% contracting goal between 2020 and 2024, contract dollars awarded to WOSBs increased substantially. (ibid)

According to SBA’s June 2025 procurement scorecard:

  • Agencies awarded a record $31.7 billion to WOSBs in fiscal 2024.
  • Agencies awarded $27.1 billion in fiscal 2020.(ibid)

Leadership Connect reports that contracting activity with EDWOSBs has declined so far in fiscal 2026:

  • 17 awards totaling $2.3 million during the first eight months of FY 2026.
  • 35 awards totaling $8.7 million during the same period in FY 2024.
  • 29 awards totaling $4.7 million during the same period in FY 2025. (ibid)

Certification and Audit Outcomes

Concerns about program abuse prompted SBA to strengthen certification requirements in 2020. The agency now requires firms to obtain certification through SBA’s online platform or an approved third-party certifier and to recertify every three years. (ibid)

SBA identified two possible outcomes for the current audit:

Continued Certification

“If SBA determines that the firm continues to meet program eligibility requirements, SBA will provide a written notice of continued certification in your firm’s record within MySBA Certifications, and the firm will maintain its certified EDWOSB status in SBS.” (ibid)

Proposed Decertification

“If you fail to submit your program examination response within the required timeframe or SBA determines the firm no longer meets program eligibility requirements, SBA will notify you that your firm has been proposed for decertification from the EDWOSB program in accordance with 13 CFR 127.405.”

The notice will explain the reasons for proposed decertification and require a written response within 20 calendar days. SBA may draw adverse conclusions if a firm fails to cooperate or provide requested information. (ibid)

SBA also stated that firms may voluntarily withdraw from the program before the audit concludes.

McCall summarized the significance of the review:

“While I’ve seen nothing official, it appears that SBA is auditing the economic disadvantage for all EDWOSB participants. This means those companies will have to provide backup documentation showing they meet the EDWOSB economic disadvantage requirements. Those rules are basically the same as the 8(a) economic rules. So, this could represent a shift towards more scrutiny on the EDWOSB program, similar to the 8(a) program.” (ibid)

Legislative Efforts to End the Program

The audit comes as some lawmakers seek to eliminate the Women-Owned Small Business program entirely.

In April, Sen. Mike Lee (R-Utah) and Rep. Glenn Grothman (R-Wis.) introduced the Ending Discrimination in Government Contracting Act. The legislation would eliminate contracting preferences for women-owned and socially and economically disadvantaged businesses. (ibid)

Neither bill has advanced beyond committee review. (ibid)

The Rule of Two to Transform Small Businesses

The SBA proposed a rule on October 25, 2024, aiming to transform small business contracting by requiring agencies to apply the “Rule of Two” to task and delivery orders under multiple-award contracts (MACs). The Rule of Two ensures contracts go to small businesses when at least two qualified small firms can meet price, quality, and delivery standards. This rule will apply to orders exceeding the micro-purchase threshold, with exemptions for orders placed under the General Services Administration’s Federal Supply Schedule or in cases where there are supply chain risks or national security concerns. (HSToday.US November 7, 2024)

Driven by concerns over declining small business participation, the SBA estimates this rule could increase small business contracts by $6.1 billion annually. It supports the Biden administration’s goal of 15% federal contract spending with small disadvantaged businesses (SDBs) by 2025. In fiscal 2023, 28.4% of federal contract dollars went to small businesses, yet new entrants to federal contracting have dropped nearly 60% since 2010. (ibid)

The SBA proposal requires agencies to document their decision when they choose not to set aside a contract under the Rule of Two. Agencies must conduct market research, justify their rationale, and coordinate with small business specialists. For orders under MACs with fewer than two small business contract holders, agencies must explain their decision, with exceptions for contracts under the Federal Supply Schedule and other specific exemptions. (ibid)

This proposal builds on a January 2024 memorandum from the Office of Federal Procurement Policy, which directed agencies to document such decisions. The SBA aims to address inconsistencies in applying the Rule of Two, which arose from differing interpretations by the Court of Federal Claims and the GAO regarding its use in MACs.aiming to improve compliance and Public comments are open until December 24, 2024, with the SBA encouraging input from stakeholders. If adopted, the rule promises to level the playing field, boost small business participation, and diversify the federal supply chain. (ibid)

Questions concerning the Rule of Two? Give us a call.

SBA Certifications Upgrade: What You Need to Know

The Small Business Administration (SBA) will upgrade the process for applying for and managing federal contracting certifications. Here’s what you need to know:

The SBA’s certification upgrade begins August 1, 2024. During the upgrade, the SBA will not accept initial certification applications. The upgraded system should be available for new certifications in early September. (certify.sba.gov)

What Does This Mean for My Firm?

  • Most certified firms will not be impacted by the application pause.
  • New or prospective applicants should wait to apply after the upgrade.
  • The SBA will process applications submitted before August 1, 2024, in the order received.
  • Firms needing to renew should receive guidance from their certification program.
  • Firms facing a critical contracting deadline can contact ce************@*ba.gov and provide the proposal number, agency, and bid due date. (ibid)

Which Certifications Are Impacted by the Upgrade?

  • Women-Owned Small Business (WOSB)
  • Economically Disadvantaged Women-Owned Small Business (EDWOSB)
  • 8(a) Business Development Program
  • Veteran Small Business Certification (VOSB)
  • Service-Disabled Veteran-Owned Small Business (SDVOSB)
  • Historically Underutilized Business Zones (HUBZone) Program (ibid)

The SBA will provide more resources and guidance in the coming days.

Have questions or need additional guidance, give us a call.

The Bad, the Ugly and some Good

Small businesses experienced a mixed bag in their pursuit of federal contracts during fiscal year 2023. On one hand, the government allocated a record-breaking $178.6 billion to small businesses, marking a significant increase from previous years. However, this surge in funding was accompanied by a concerning trend: a decline in the number of small businesses securing prime government contracts, dropping by 2.2 percent compared to the previous fiscal year. (INC. May 1, 2024)

Despite receiving a larger share of federal contracting dollars, small businesses faced formidable challenges in competing for contracts. The competitive landscape remains dominated by larger, more established players, placing smaller enterprises at a disadvantage due to their limited resources. Contract bundling further exacerbates the issue by consolidating contracts into larger, more complex opportunities that are often inaccessible to smaller firms. (ibid)

Another hurdle for small businesses is the complexity of federal contracts, which can be daunting to navigate. The House of Representatives recently passed a bill aimed at simplifying the language within federal contracts to make them more accessible and comprehensible to small businesses. This initiative seeks to level the playing field and enhance the competitiveness of smaller players in the federal contracting arena. (ibid)

Despite these challenges, the Small Business Administration (SBA) under Administrator Isabel Guzman has implemented initiatives to expand contracting opportunities for small businesses. This includes revising size standards to broaden access to agency programs, benefitting thousands of entrepreneurs across various industries. While progress has been made in meeting procurement spending targets for certain small-business categories, there is still work to be done to ensure that all small businesses have equitable access to federal contracting opportunities. (ibid)

Do you have questions about size standards or a particular upcoming opportunity? Please give us a call.

SBA aims to boost Black Business Dollars

The U.S. Small Business Administration (SBA) aims to boost federal contracting dollars for Black businesses through an upgraded government contract training program and other initiatives. The agency is revitalizing its SBA 7(j) Training Program, now known as Empower to Grow (E2G), to enhance small, disadvantaged businesses’ readiness for federal contracting, as stated in a recent SBA press release. (Black Enterprise February 5, 2024)

This revamped program coincides with the release of new data from fiscal years 2022 and 2021, indicating record-breaking federal contracting dollars for small businesses across various demographics, including an uptick in contracting dollars for Small Disadvantaged Businesses. (ibid)

In line with these efforts, the Biden-Harris administration has announced measures to broaden small business access to federal contracts, recognizing the federal government’s significant purchasing power globally. The White House specifically acknowledges the E2G program when discussing strategies to bolster support for small businesses and ultimately building wealth in underserved communities. (ibid)

President Joe Biden has set an ambitious goal of allocating 15% of federal prime contracting to small, disadvantaged businesses (SDB) by fiscal year 2025, potentially injecting $100 billion into minority-owned and underserved businesses. (ibid)

The SBA underscores that the E2G program represents just one facet of comprehensive efforts by the Biden-Harris administration and the SBA to achieve the SDB goal. Already, these efforts have resulted in a half-billion-dollar increase in federal contracts awarded to Black-owned small businesses in 2023. (ibid)

SBA Administrator Isabel Casillas Guzman emphasizes the role of small business growth in job creation and community strengthening, highlighting the administration’s commitment to equity and a level playing field for all small business owners. (ibid)

Despite progress, disparities persist, with Black-owned small businesses receiving $9.5 billion from federal contracts in 2022, up $490 million from 2021, while Native Americans captured $19 billion, up $1.62 billion from the previous year. However, these figures pale in comparison to the almost $163 billion spent on all federal contracts that year.(ibid)

Acknowledging these disparities, the SBA is actively addressing barriers to entry for Black businesses in securing government contracts. Additional resources are being allocated to assist more disadvantaged business owners, including Black firms, in overcoming these barriers. (ibid)

Program enhancements to E2G include customizable one-on-one coaching and expanded offerings tailored to the needs of Black-owned firms, with the aim of facilitating connections with state and local contracting opportunities.(ibid)

E2G will introduce new tools to access $2 trillion in state and local bid opportunities, further bridging the gap for Black-owned firms seeking state and local contracting opportunities. (ibid)

The SBA emphasizes that the program’s impact on contracting dollars for Black-owned businesses hinges on participation, with the bid win rate expected to rise due to the heightened emphasis on added E2G resources. (ibid)

Would you like to know more about the program enhancements, one-on-one coaching and expanded offerings of E2G? Give us a call.