EDWOSB Application: for a successful business process

 The current economic disadvantage qualification for EDWOSBs is $750,000, this is the same as the continuous eligibility barrier for the 8(a) BD program but higher than the $250,000 initial qualification threshold. A company that applies for EDWOSB and 8(a) BD status at the same time may be judged economically disadvantaged for EDWOSB Application reasons but not for the 8(a) BD Program. As a result, the application and certification procedures would be filled with unneeded complexity and ambiguity. To address this, the final rule ensures that economic disadvantage is uniform across programs. The Small Business Administration (SBA) commissioned research to help the Office of Corporate Development in defining or creating criteria for assessing what constitutes "economic disadvantage" for enterprises applying to the 8(a) BD program. According to the analysis, the available information supports an economic disadvantage threshold of $375,000 to $1.2 million. This range demonstrates the difficulty of creating a threshold that takes into account disadvantaged company owners' capacity to participate in the free economic system, as well as their access to credit and capital. The many economic disadvantage standards imposed by other Federal and state programs demonstrate this inherent complexity. 

The Disadvantaged Business Enterprise Program (DBE), for example, is operated by entities authorized by the United States Department of Transportation (DOT) and has an economic disadvantage threshold of $1.32 million. States with comparable initiatives for "minority and women commercial businesses" have economic disadvantage limits ranging from $1.6 million to $1.6 million. The SBA-commissioned research did not reach a decision on which criterion the Agency should employ. One idea is to apply a $1.1 million "unadjusted" (house and business equity included) personal net worth criterion, which is equivalent to a $375,000 "adjusted" (home and business equity omitted) requirement. The research, however, did not evaluate economic disadvantage disparities between applying to the 8(a) BD program and staying in the program after admission, nor did it consider economic disadvantage in the context of EDWOSB Application eligibility. To eliminate confusion and inconsistency between the programs, the SBA contemplated adopting a $375,000 net worth criterion for both the 8(a) BD and EDWOSB Application programs. The SBA solicited feedback on whether the EDWOSB and 8(a) BD and Programs should employ the $375,000 net worth requirement or the $750,000 net worth criteria. 

The SBA also received four comments outlining different techniques for determining an economic criterion. One advocated for a flexible and inflation-based standard, another for a locality-based standard, and two for a tiered structure. Three more comments were opposed to a $750,000 economic disadvantage level. One advocated for a $1 million economic disadvantage requirement, another opposed having any economic disadvantage criterion at all, while the third just believed that $750,000 was insufficient. The SBA feels that altering the economic disadvantage criterion based on volatile external variables such as inflation, or applying various criteria based on location, would add too much instability and complexity to the EDWOSB Application process, leading to program inconsistencies. Increasing the economic disadvantage level to $1 million or eliminating economic disadvantage standards was not discussed in the proposed regulation and is not currently being considered. Based on the study's conclusion that SBA may establish an economic disadvantage level between $375,000 and $1.2 million, stakeholders' unequivocal support of a $750,000 economic disadvantage barrier, and the preference for similar standards across programs, SBA is retaining the EDWOSB Application economic disadvantage threshold and revising the 8(a) BD economic disadvantage criteria appropriately.

The SBA also solicited feedback on how economic disadvantage might be measured in the future. Commenters specifically inquired whether there is any distinction between the EDWOSB and the 8(a) BD laws dictating how retirement accounts are assessed when assessing an economically disadvantaged individual's net worth, and whether the change in the economic disadvantage level will alter that calculation. In response to this input, the SBA updated sections 124.104(c)(2)(ii) and 127.203(b)(3) of the final rule to provide that retirement funds would now be omitted from assessments of an economically disadvantaged individual's net worth, regardless of age. SBA has previously considered this modification, concluding that it is consistent with the desirable public policy of rewarding, rather than penalizing, retirement savings. It also broadens the pool of prospective EDWOSB and 8(a) BD members because retirement-age small business owners are no longer excluded purely because of their retirement savings. Changing the EDWOSB and 8(a) BD net worth rules immediately, together with modifications to the economic disadvantage criteria for both programs, advances the SBA's long-term goal of maintaining regulatory consistency and continuity.

These contracts are for industries where women-owned small enterprises are underrepresented. Some contracts are also restricted to female-owned small businesses that are economically disadvantaged (EDWOSBs). The WOSB/ EDWOSB Application certification method has changed. For businesses, self-certification with the SBA is no longer an option. In the future, firms seeking WOSB/EDWOSB certification must go through the SBA's more comprehensive process. Because of the updated restrictions, more qualified small businesses can now participate in the program.