The Small Business Administration (SBA) has published a Final Rule that makes several changes to the SBA’s Women-Owned Small Business (WOSB) Federal Contract Program regulations, including adding definitions that are not currently included in the regulations, conforming the regulations to current statutes that have not yet been integrated, and most substantively, the restriction on outside employment. The rule adopts similar language to that used in SBA’s other government contracting program regulations regarding requirements for the qualifying individual’s control of an applicant concern and limits on outside employment and makes changes to the process by which an application for certification is reviewed by SBA in order to implement a statutory amendment from the National Defense Authorization Act for Fiscal Year 2022 regarding the effects of a status determination on a small business concern.
What Changed:
Previously, the regulations required that a qualified woman that controls a concern devote full time to the business during the business’s normal hours of operation. As amended in this final rule, the regulations will now permit the business to demonstrate to SBA that the woman has ultimate managerial and supervisory control over both the long-term decision making and day-to-day management of the business although the woman may not meet full-time devotion.
This change brings the restriction on outside employment under the WOSB program into alignment with some other programs and gives WOSBs some additional flexibility in the program’s time commitment requirements.
What It Means:
Previous Rule: For a business to qualify as a Women-Owned Small Business (WOSB), the woman in charge had to work full-time on the business during its normal operating hours. This meant she couldn’t have another job or significant outside commitments that took time away from managing the business.
New Rule: Starting January 3, 2025, the woman in charge doesn’t have to be full-time at the business as long as she can show the SBA (Small Business Administration) that:
- She has ultimate control over big-picture decisions.
- She manages or supervises day-to-day operations.
Consistency Across Programs: This change aligns the WOSB program’s requirements with similar SBA programs that already allow for some outside employment.
Implications:
- More Flexibility for Women Entrepreneurs: Women can now run a WOSB and still have another job, take on outside projects, or manage other responsibilities, as long as they remain the primary decision-maker and manager.
- Potential for Broader Participation: Women who previously couldn’t meet the full-time requirement may now qualify, potentially increasing the number of WOSBs.
- Additional Burden of Proof: Businesses will need to provide clear evidence to the SBA that the woman owner has the required control, which might involve documentation or interviews.
- Opportunities for Growth: The change could allow women business owners to diversify their income streams or gain experience in other roles without jeopardizing their WOSB status.
This rule provides more opportunities for women to qualify as WOSB owners while still maintaining the integrity of the program by requiring proof of their control over the business.
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