The Small Business Administration is expanding its scrutiny of socio-economic contracting programs to now include a review of the women-owned small business program.<\/p>\n
In an email sent to economically disadvantaged women-owned small businesses earlier this week, SBA is giving these firms until June 30 to respond to a survey and provide the agency with \u201cpersonal and business tax returns for the last three years.\u201d<\/p>\n
\u201cPursuant to\u00a013 C.F.R. \u00a7\u202f127.400<\/a>,\u00a0SBA is conducting a\u00a0program examination\u00a0to verify that your firm continues to meet the requirements of the Economically Disadvantaged Women-Owned\u00a0Small Business (EDWOSB)\u00a0program,\u201d wrote the agency\u2019s compliance division within the Office of Government Contracting and Business Development in an email Federal News Network obtained. \u201cSpecifically, 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\u00a0are\u00a0economically disadvantaged, as\u00a0set forth in\u00a013 CFR 127.203<\/a>.\u201d<\/p>\n The audit of women-owned small firms seems to follow a similar approach SBA took with the 8(a) program. SBA asked similar, but more in-depth questions to more than 4,300 8(a) firms last December<\/a> seeking 13 different types of data, ranging from a list of the company\u2019s employees to bank statements for the last three fiscal years to a copy of all 8(a) contracts, as part of its ongoing audit of the program. That audit led to the suspension of more than 1,100 firms and the eventual termination of 154 8(a) companies.<\/p>\n ]]><\/p>\n SBA continues to try to remake the 8(a) business development program. SBA released a proposed rule<\/a> Thursday that would change the basis for entry into the program. SBA says \u201cindividuals will no longer be considered \u2018socially disadvantaged,\u2019 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.\u201d<\/p>\n The SBA says these changes would apply only to individually-owned firms as the eligibility standards for entity-owned participants, including businesses owned by Indian tribes, Alaska Native Corporations (ANCs), Native Hawaiian Organizations (NHOs), and Community Development Corporations (CDCs), would not change.<\/p>\n Additionally, the proposed rule does not impact current individually-owned participants in the 8(a) program.<\/p>\n Comments on the proposed rule are due by July 13.<\/p>\n Building on Ultima decision<\/p>\n Sen. Ed Markey (D-Mass.), ranking member of the Small Business and Entrepreneurship Committee, said in a statement that SBA\u2019s proposed rule would undermine the program\u2019s mission to provide training, assistance and federal contracting opportunities for businesses that have faced historic discrimination in the United States.<\/p>\n \u201cThe SBA\u2019s 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,\u201d Markey said. \u201cTo be clear, the 8(a) program has always been open to anyone that can prove they\u2019ve 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 \u2014 and harmful \u2014 agenda.\u201d<\/p>\n Shane McCall, a partner with the law firm Koprince McCall Pottroff, which represents small business contractors, said SBA removing the \u201crebuttable presumption\u201d that certain individuals are socially disadvantaged is building on the Ultima decision<\/a> from 2023.<\/p>\n ]]><\/p>\n \u201cHowever, the proposed rule includes a big change in standards for social disadvantage that mostly stem from racial quotas from government or private entities,\u201d McCall said. \u201cExamples include \u2018unlawful 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.\u2019 We also need to know how SBA will apply these rules.\u201d<\/p>\n Both the new women-owned small business audit and the 8(a) proposal are aimed at ensuring contractors are not taking advantage of or being left out of federal programs.<\/p>\n One industry executive said they were surprised to get the email given they had in the last year just renewed their certification and it is good for three more years.<\/p>\n The executive, who requested anonymity for fear of retribution, said the email elicits more questions than answers, including why SBA is using Survey Monkey for an official examination and whether it\u2019s even a secure platform. The Survey Monkey form asks sensitive questions like how much cash on hand the person has, including how much money is in their savings and checking accounts. Among the survey\u2019s 38 questions, SBA also is asking:<\/p>\n Has the Qualifying Owner transferred any assets to any immediate family member for less than fair market value in the last two years? \u201cIt 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,\u201d the executive said. \u201cWill 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?\u201d<\/p>\n An email to SBA seeking comment on the women-owned small business program audit was not returned.<\/p>\n Possible outcomes of SBA\u2019s audit<\/p>\n The women-owned small business program<\/a> has grown significantly over the last decade. After Congress established a 5% goal for agencies<\/a> in 1994 under the Federal Acquisition Streamlining Act, agencies have been building up the industrial base. In fiscal 2023, federal data<\/a> shows 1,410 new WOSB firms entered the federal market, up from 1,183 the year before and 1,276 in 2021. The General Services Administration hasn\u2019t updated the supplier base dashboard since 2023.<\/p>\n While agencies didn\u2019t meet the 5% governmentwide goal between 2020 and 2024, the dollars going to these firms increased too. Agencies awarded a record $31.7 billion to WOSBs in fiscal 2024 up from $27.1 billion in 2020, according to SBA\u2019s procurement scorecard<\/a> from June 2025.<\/p>\n So far in 2026, Leadership Connect has found contracting with economically disadvantaged women-owned small businesses is down.<\/p>\n ]]><\/p>\n Agencies have made 17 awards and obligated $2.3 million during the first eight months of fiscal 2026. During the same periods in 2024 and 2025, agencies awarded EDWOSBs 35 contracts worth $8.7 million and 29 contracts worth $4.7 million, respectively.<\/p>\n Overall, Leadership Connect found all women-owned small businesses have received $61.7 million in contracts since October.<\/p>\n This growth led to concerns about abuse and SBA changed the certification rules in 2020 to require firms to either use the SBA\u2019s online certification platform or apply through one of the third-party certifying organizations. The agency established that every women-owned small firm must be recertified every three years.<\/p>\n In this audit, SBA says there are two possible outcomes:<\/p>\n If SBA determines that the firm continues to meet program eligibility requirements, SBA will provide a written notice of continued certification in your firm\u2019s record within MySBA Certifications<\/a>,\u00a0and the firm will\u00a0maintain\u00a0its certified\u00a0EDWOSB\u00a0status in\u00a0SBS<\/a>. SBA also says economically disadvantaged WOSBs could just \u201cvoluntarily withdraw\u201d from the program ahead of the audit.<\/p>\n \u201cWhile I\u2019ve 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,\u201d McCall said.<\/p>\n
\nDo you have any retirement accounts? And if so, provide a list and how much money is in each account.
\nDo 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.
\nDo you have a life insurance policy that has a cash surrender value?
\nDo you own your primary residence? If so, what is the mortgage of your residence and what is the current value of your residence?<\/p>\n
\nIf 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<\/a>.\u00a0\u00a0This notice will\u00a0state\u00a0the reasons why SBA has proposed decertification, and that the\u00a0firm\u00a0must respond to each of the reasons set forth.\u00a0The\u00a0firm\u00a0must respond in writing to a proposed decertification within 20 calendar days from the date of the proposed decertification.\u00a0SBA may draw an adverse inference from the failure of a\u00a0firm\u00a0to cooperate with a program examination or provide requested information.<\/p>\n