3.  What is the description and estimate of the number of small entities to which the rule will apply?

This rule may positively affect EDWOSB concerns that participate in Federal procurement in industries where SBA determines that WOSB concerns are underrepresented and may positively affect WOSB concerns eligible under the WOSB Program that participate in Federal procurement in industries where SBA determines that WOSB concerns are substantially underrepresented. In addition, the rule may negatively affect other small business concerns, as described below, to the extent that small business concerns not owned and controlled by women or non-eligible WOSB concerns may be excluded from competing for certain Federal contracting opportunities.

The 2002 Survey of Business Owners published by the U.S. Bureau of the Census reported 6,489,493 women-owned business concerns in the United States. More than 900,000 of these business concerns have one or more paid employees. Most women-owned business concerns, however, do not participate in the Federal contracting market.

In February 2006, SBA awarded a contract to the Kauffman-RAND Institute for Entrepreneurship Public Policy (RAND) to complete a study of the underrepresentation of WOSB concerns in Federal prime contracts by industry code. The resulting study, "the RAND Report," was published in April 2007 and is available to the public at http://www.RAND.org/pubs/technical_reports/TR442.

The Survey of Business Owners database used in the RAND Report represents all women-owned business (large and small) and only WOSB concerns are eligible under the regulations. As of January 21, 2007, approximately 93,000 business concerns represented themselves as WOSB concerns in the Federal Government's Central Contractor Registration (CCR) database as actual or potential Federal contractors. The study conducted by the RAND Corporation narrowed the pool of WOSB concerns in the CCR to approximately 56,000 to more closely approximate the universe of firms who are ready, willing, and able to do business with the Government. However, far fewer than 56,000 WOSB concerns are likely to be affected by this interim rule because only those eligible WOSB concerns competing for contracts in the eligible industries could possibly receive contracts under the program. Utilizing the Federal Procurement Data System data set for the total number of WOSB concerns (identified by Dun and Bradstreet DUNS number) that received obligated funds from awards, contracts, orders, and modifications to existing contracts for FY 2005, it was identified that approximately 12,000 WOSB concerns were recipients of Federal contracts in the 83 NAICS codes that would be eligible under the WOSB Program. Thus, this rule may affect approximately 12,000 WOSB concerns.

In addition, WOSB concerns that are not economically disadvantaged could be affected only to the extent that they compete for Federal contracts in industries in which WOSB concerns are determined to be substantially underrepresented. For industries in which WOSB concerns are determined to be substantially underrepresented, the potential number of WOSB concerns that could be direct beneficiaries of these procedures restricting certain Federal contracts to WOSB concerns is also likely to be much fewer than the number of WOSB concerns registered in CCR, since not all WOSB concerns will satisfy the eligibility requirements for EDWOSB status. The CCR currently lists only approximately 3,800 small disadvantaged business (SDB) concerns owned and controlled by one or more women. This is a useful statistic because the $750,000 net worth requirement is the same for SDB concerns and for EDWOSB concerns. While DoD, GSA, and NASA acknowledge that there may be other WOSB concerns in existence besides those listed in the CCR as being certified by SBA as SDB concerns, it is difficult to envision more than 6,000 WOSB concerns that could meet SBA's eligibility criteria and that are also ready, willing, and able to bid on Government contracts.

Moreover, the anticipated benefits of these procedures may be less attractive to many WOSB concerns than a number of other preferences designed to assist small business concerns, such as the HUBZone, 8(a), and other programs. Not all areas of Federal procurement have been designated as underrepresented or substantially underrepresented, and opportunities in some of the qualified industries may be limited. Consequently, many otherwise-qualified EDWOSB and WOSB concerns may not find it advantageous to pursue contract opportunities under these procedures.

DoD, GSA, and NASA determined that this rule will also negatively affect non-WOSB concerns (small business concerns not 51 percent owned and controlled by women) or women-owned small business concerns that are not eligible under the WOSB Program that are seeking Federal contracts for which competition has been restricted to participants in these procedures. This could affect the number of future contracts for those business concerns that derive a significant portion of their business from Federal contracting. To the extent that contracting officers use these procedures, non-WOSB concerns or non-eligible WOSB concerns may be excluded from competing for certain Federal contracting opportunities. However, this would occur only in industries in which WOSB concerns have been found to be underrepresented or substantially underrepresented, thus receiving fewer contracts than would be expected absent discrimination in the marketplace, and where the anticipated dollar value of the procurement does not exceed $4 million or $6.5 million, in the case of manufacturing contracts. In addition, we note that industries in which WOSB concerns are underrepresented are ones in which they have gotten less than their fair share of contracts and this suggests, at least implicitly, that non-WOSB concerns have therefore been getting more than the share they would receive in the absence of discrimination, and the ongoing effects of past discrimination. The number of small business concerns that would be excluded from eligibility for competing for contracts designated for the program under these procurements or from future such determinations is not known at this time.

Contracting opportunities identified by Federal agencies as candidates to be set aside for WOSB concerns will come from new contracting requirements and contracts currently performed by small and large business concerns. At this time, DoD, GSA, and NASA cannot accurately predict how the existing distribution of contracts by business type may change with this rule. However, DoD, GSA, and NASA do not expect a great many of the contracts awarded through the 8(a), HUBZone, or SDVOSB programs ($22.6 billion in FY 2006) to be re-competed as WOSB or EDWOSB set-aside contracts because those programs also support other statutory goals that agencies strive to achieve through their contracting activities. It is acknowledged, however, that some redistribution of contracts among the various programs may occur as a result of these procedures.