SBA WOSB/EDWOSB Rule Updates Outside Employment Requirements & Status Protest Rules

Applicable to all solicitations issued on or after January 3, 2025, a Small Business Administration (SBA) final rule published earlier this month updates a number of regulations within the SBA Women-Owned Small Business (WOSB) and Economically Disadvantaged Women-Owned Small Business (EDWOSB) programs related to program certification¹, outside employment, and status protests.  

This final rule aims to provide consistency within the WOSB/EDWOSB regulations and across other programs, namely the Veteran-Owned Small Business Concern (VOSB) and Service-Disabled Veteran-Owned Small Business Concern (SDVOSB), by clarifying definitions (i.e., “outside employment”) and other requirements.

Most significantly, the final rule updates the limitation on outside employment language at 13 C.F.R. 127.202(c) for the purposes of establishing requisite control over WOSB/EDWOSB applicants and certified companies. While limitations on employment are not new, the rule’s language pertaining to aspiring and certified WOSB/EDWOSB companies has been clarified and includes a new affirmative requirement to notify SBA about the details of outside employment sought.  

The rule sets forth the outside employment requirements and prohibitions at subsections (1) through (3) of 13 C.F.R. 127.202(c). For ease of reference, we have noted the new part of the rule. As revised, the qualifying individual must:

• Be devoted full-time to the business concern during its normal hours of operations. 
• Not engage in outside employment that prevents the qualifying individual from devoting sufficient time and attention to the business concern in order to control its management and daily operations.
• New: If outside employment is sought, the qualifying individual of the certified entity must notify SBA of the nature and anticipated duration of the outside employment and demonstrate to SBA that the outside employment will not prevent the qualifying individual from controlling the business concern.

The rule also sets forth the assumption that the qualifying individual does not control the business concern if she does not work for the company during its normal business hours, unless the concern demonstrates that she has ultimate managerial and supervisory control over both the long-term decision making and day-to-day management and administration of the business.

The final rule also adds a new section at 13 C.F.R. § 127.604(f)(5), requiring a company to notify contracting officers and update SAM registration within two business days if a company’s WOSB/EDWOSB status is protested and the company is subsequently decertified. The final rule adds language making clear that a company that self-certifies as a WOSB/EDWOSB following a negative final determination in a status protest “may be in violation of criminal laws, including section 16(d) of the Small Business Act, 15 U.S.C. 645(d).”

The Morris, Manning & Martin, LLP Government Contracts team continues to closely track SBA rule updates, including developments to the WOSB/EDWOSB certification and compliance requirements.

¹ The final rule also covers nominal and clarifying changes to certification documentation, the application process including the SBA’s review process, guidelines on using third-party certifiers, and to the rules relating to submitting proposals while a certification application is pending.  Such rules are not discussed in this bulletin which is focused on the changes to outside employment and certification status communications.