If your small business is woman-owned, the federal government wants to do business with you. After ten years and countless revisions, the U.S. Small Business Administration recently adopted a final rule creating the Women-Owned Small Business Program, offering special incentives for women-owned companies to participate in the $500 billion federal marketplace. Later this year, federal agencies are expected to begin setting aside up to 5% of procurement dollars–more than $20 billion annually–exclusively for competition among woman-owned small businesses.
To qualify as a woman-owned small business for federal contracting purposes, your company must meet three primary criteria:
- It must be “small” under the North American Industrial Classification System (“NAICS”) code applicable to the procurement. For more on calculating your company’s size, see Nolo’s article Federal Small Business Contract Eligibility: Is Your Business ‘Small’?
- It must be at least 51% unconditionally “owned” by one or more women who are U.S. citizens. If, for instance, ownership of a company is split 50/50 between a husband and wife, the company will not qualify.
- One or more women who are U.S. citizens must “control” the company’s management and daily business operations. To satisfy this requirement, a woman must hold the company’s highest officer position, have sufficient experience to effectively manage the company, and work for the company full-time during normal working hours of companies in the same line of work.
If you decide to participate in the Women-Owned Small Business Program, you should carefully review and, if necessary, amend your business’s governing documents (such as bylaws, operating agreements, and shareholders’ agreements) to ensure that women unconditionally own and control the company. Supermajority voting requirements, for instance, might cause your business to be ineligible.
Despite the red tape, the Women-Owned Small Business program promises to provide substantial contracting benefits to woman-owned companies in the federal marketplace. If your company is woman-owned, now might be a good time to think about adding Uncle Sam to your customer list.
By: Guest blogger Steven Koprince, an attorney with Petefish, Immel, Heeb & Hird, LLP in Lawrence, KS. Mr. Koprince’s practice emphasizes government contracts and small business law.