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WOSB Self-Certification: Risky Business.

shutterstock_137277782Congress and the SBA have a difference of opinion over the status of self-certifying Woman Owned Small Businesses (WOSBs). Congress thought it eliminated self-certification, while the SBA maintains the program is being phased-out. Siding with the SBA in this tussle is risky business.

The 2015 National Defense Authorization Act (NDAA) eliminated the ability of WOSB companies to self-certify. See generally, 15 U.S.C. § 637(m)(2)(eliminating self-certification by removing the authorizing language). And by eliminating self-certification, the NDAA now requires a small business to have an approved, independent certification before it can represent itself to be a WOSB.

That’s how most lawyers read it. But the lawyers who work at the SBA see it differently.

In its proposed rule enacting the changes, the SBA recognized that the NDAA “created a requirement that a firm be certified as a WOSB or EDWOSB by a Federal Agency, a State government, SBA, or a national certifying entity approved by SBA,” but found “no evidence […] that Congress intended to halt the existing WOSB Program until such time as SBA establishes the infrastructure and issues regulations implementing the statutory certification requirement.”

The False Statements Statute, 18 U.S.C. § 1001, prohibits knowingly and willfully making a false statement to the government. Is there any risk that the government would seek to prosecute a self-certification under these circumstances? When Russian tycoon Yuri Milner was asked why he teamed up with Physicist Stephen Hawking to search for intelligent extraterrestrial life, he responded: “It’s a low-probability but high-impact event.”

The good news is that you can lower the risk to zero. Woman Owned Small Businesses that are currently self-certified can seek independent certification from an SBA-approved Third Party Certifier.

© 2015 c2LegalSolutions, PLLC.

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