SUPPLEMENTARY INFORMATION:

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1. Background

Under section 8(m) of the Small Business Act, 15 U.S.C. 637(m), SBA is responsible for implementing and administering the WOSB Program, which went into effect on February 4, 2011. 75 FR 62258 (February 4, 2011). The WOSB Program authorizes Federal contracting officers to restrict competition for an acquisition to WOSBs, provided that the following conditions are met: (1) The acquisition is for a good or service assigned a NAICS code in which SBA has determined that WOSBs are substantially underrepresented; (2) There is a reasonable expectation that at least two WOSBs will submit offers; and (3) The award will be made at a fair and reasonable price. The WOSB Program also authorizes contracting officers to award a sole source contract to a WOSB if only one WOSB can perform the contract at a fair and reasonable price.

In addition, Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) can likewise receive set-asides and sole source awards similar to those described above in NAICS codes in which SBA has determined that WOSBs are underrepresented.

In order to identify the industries eligible for set-asides under the WOSB Program, the Small Business Act required the SBA Administrator to periodically conduct a study to identify those industries in which small business concerns owned and controlled by women are underrepresented in Federal contracting. 15 U.S.C. 637(m)(4).

Pursuant to that statutory requirement, SBA awarded a contract to the Kauffman-RAND Institute for Entrepreneurship Public Policy (RAND) to complete a study of the underrepresentation of WOSBs in Federal prime contracts by industry code. The RAND study was published in April 2007.^[1] SBA used the results of the RAND study to designate 83 four-digit NAICS industry groups where WOSBs were found to be either underrepresented or substantially underrepresented in Federal contracting and therefore eligible for contracting under the WOSB Program. In October 2010, SBA published a Final Rule identifying those eligible NAICS codes. 75 FR 62258 (October 7, 2010).

In 2014, Congress amended the Small Business Act to require SBA to submit a report to Congress reflecting the results of a new study by January 2, 2016, and then continue to conduct a new study every five years. Public Law 113-291 825(c) (Dec. 19, 2014). In response to this statutory mandate, SBA asked the Office of the Chief Economist (OCE) of the U.S. Department of Commerce for assistance in conducting a new study of the WOSB Program. OCE looked at whether, holding constant various factors that might influence the award of a contract, the odds of winning Federal prime contracts by firms that were owned by women were greater or less than the odds of winning them by otherwise similar businesses.^[2]

As a result of the OCE study findings, SBA increased the number of 2012 NAICS codes authorized for use under the WOSB Program to 113 four-digit NAICS industry groups, effective March 3, 2016. 81 FR 11340 (March 3, 2016). Consequently, WOSBs have been able to compete for and receive contract awards in 92 four-digit NAICS industry groups or 365 six-digit NAICS codes. EDWOSBs have been able to compete for and receive contract awards in 21 designated four-digit NAICS industry groups or 80 six-digit NAICS codes, in addition to those authorized for WOSBs.

On August 8, 2016, OMB published its most recent update to the NAICS industry groups, NAICS 2017, “Notice of NAICS 2017 final decisions,” in the Federal Register . 81 FR 52584 (August 8, 2016). The Notice of NAICS 2017 final decisions stated that Federal statistical establishment data published for years beginning on or after January 1, 2017, should be published using NAICS 2017. Accordingly, on April 18, 2017, SBA published a proposed rule seeking comments on its proposed size standards under NAICS 2017. 82 FR 18523 (April 18, 2017). A final rule which adopted the revisions to small business size standards as proposed was published in the Federal Register on September 27, 2017. 82 FR 44886 (September 27, 2017).

In order to align the WOSB Program with the Notice of NAICS 2017 final decisions and SBA's adoption of NAICS 2017 for its size standards, SBA is issuing this notice to amend the NAICS codes eligible for use under the WOSB Program.

2. Changes in Eligible NAICS Codes

After review and comparison of the NAICS 2012 and NAICS 2017 industry groups, SBA has determined that NAICS 2017 reduces the number of four-digit NAICS industry groups eligible for procurements under the WOSB Program from 113 to 112 because NAICS 2017 merged two NAICS 2012 industry groups, NAICS 5171 and 5172, into one—5173.^[3]

NAICS 2017 also reduces the number of eligible six-digit NAICS codes for WOSBs to compete in under the WOSB Program from 365 to 364. The number of eligible six-digit NAICS codes for EDWOSBs to compete in under the WOSB Program (80 NAICS codes) remains the same.

The changes to the eligible six-digit NAICS industry groups resulted from the following updates in the NAICS 2017:

NAICS 2017 created new four-digit NAICS industries by merging NAICS 2012 industries. As a result of the merges, the following changes are made to the six-digit NAICS codes eligible for WOSBs under the WOSB Program:

• 2012 NAICS codes 333911 and 333913 are merged into 2017 NAICS code 333914; and
• 2012 NAICS codes 512210 and 512220 are merged into 2017 NAICS code 512250.

Additionally, six-digit NAICS codes were changed without changing their definitions or titles. In order to accommodate these changes, the following six-digit NAICS codes eligible under the WOSB Program will be revised as follows:

• 2012 NAICS code 517110 will be changed to 2017 NAICS code 517311; and
• 2012 NAICS code 517210 will be changed to 2017 NAICS code 517312

EDWOSBs are eligible to pursue set-aside or sole source contracts with 2017 NAICS code 517311. For their part, WOSBs are eligible to compete for set-aside or sole source contracts with 2017 NAICS code 517312.

Under NAICS 2017, new industries were created by splitting two industries into two parts with one part of each industry defined as a separate industry and combining other parts of the two industries to form a separate new industry. As a result of this change, the following six-digit NAICS codes eligible for WOSBs under the WOSB Program will be amended as follows:

• 2012 NAICS code 541711 will correspond to 2017 NAICS codes 541713 and 541714; and ( printed page 47279)
• 2012 NAICS code 541712 will correspond to 2017 NAICS codes 541713 and 541715.

Table 1, WOSB NAICS Code Changes from NAICS 2012 to NAICS 2017, illustrates the six-digit WOSB and EDWOSB NAICS codes that are being updated as a result of implementing 2017 NAICS.

Table 2, 2017 NAICS Codes Authorized for Use under the WOSB Program—WOSB, indicates all 364 six-digit NAICS codes available for use for WOSB set-aside and sole source procurement under the WOSB Program.

Table 3, 2017 NAICS Codes Authorized for Use under the WOSB Program—EDWOSB, shows all 80 six-digit NAICS codes authorized for use for EDWOSB set-aside and sole source procurements under the WOSB Program.

SBA will post the lists of designated 2017 NAICS codes set forth in this Notice on the WOSB Program's Web page on SBA's Web site, at www.sba.gov/​wosb.