The feds added a certification, called third party certification, that states the business is actually owned and controlled by a woman. Typically, women owned small businesses doing business with the federal government could fill out forms self-certifying their business as owned and controlled by them. This additional rule – while not getting rid of the self-certification process – does add another layer of verification which women small business owners should be aware of when competing for government contracts.
The feds justified this additional certification in order to clear up confusion and to make sure the process is fair for all parties. The feds found the self-certification process had issues when auditing these self-certified women-owned companies. In less severe cases, the feds found some contractors were confused by some of the requirements. In more extreme and isolated cases, the feds found outright fraud. In order to best serve the public and to protect all parties involved (federal officials, large government contractors, and sub-contractors) the feds added a process that allows third parties to issue certificates proving the woman-owned status of federal contractors.
Before getting into the third-party certification process, we should outline what it means to qualify as a woman-owned small business.
- At least 51% of the business must be unconditionally and directly owned and controlled by one or more women who are U.S. citizens.
- The woman owner must manage the day-to-day operations.
- The woman owner must hold the highest position in the business and be working full time during normal working hours
- The woman must be a key decision maker in the company.
The third-party certification process allows for third parties (who are approved by the Small Business Administration) to issue Third Party Certificates verifying these businesses as woman owned and controlled. There are currently only four organizations that can issue third party certificates, which are:
- The El Paso Hispanic Chamber of Commerce
- The National Women Business Owners Corporation
- The U.S. Women’s Chamber of Commerce
- The Women’s Business Enterprise National Council
These third parties charge a fee for the certificate (from $275 to $400 or more) and the result is an approved certificate verifying the business as woman-owned.
Why this matters?
The rules state that woman-owned small businesses do not need third party certification in order to win approval for federal government contracts, as their current self-certification paperwork is still valid. However, these certificates provide piece of mind for all parties involved from federal contracting officials and larger government contractors (called primes), to the private sector like fortune 500 companies who have a supplier diversity program which require these types of certificates for their contracts.
If you’re a woman-owned small business and would like some more clarification on these rules, or a woman-owned business interested in working with the federal government, the Wyoming PTAC offers assistance with all aspects of government procurement, including the woman-owned small business certification process. So please don’t hesitate to contact us and we will be happy to help you navigate through the process.