Women are a driving force in the nation’s economy. However, women business owners are significantly underrepresented—just 21% of employer businesses are majority-owned by women:
Source: U.S. Small Business Administration Office of Advocacy
To encourage greater business ownership by women, the U.S. Small Business Administration (SBA) established the Women-Owned Small Business (WOSB) Program, which seeks to award at least 5% of federal contracting dollars to WOSBs each year. Competition for some contracts is restricted to WOSBs, and in other instances, a prime contractor can earn extra incentive payments for subcontracting to a WOSB.
Qualifying for the WOSB Program
A business must meet three criteria to be certified as a WOSB:
- The company must be a small business.
- The company must be at least 51 percent owned and controlled by women who are U.S. citizens.
- The women owners of the company must manage day-to-day operations and make long-term decisions.
WOSB Program Fraud
Fraud within the WOSB program appears to be rampant. A recent SBA audit of the WOSB program evaluated the eligibility of 56 contracts awarded on a sole-source basis. Of the 56 contracts reviewed, 50 were not in compliance with the program requirements. This sampling represented approximately $52.2 million dollars awarded to businesses that did not meet the WOSB Program requirements.
The SBA and Department of Justice (DOJ) have focused increasingly on rooting out fraud within small business programs, including the WOSB program. For example, in 2015, a government contractor and its president paid over $20 million to resolve allegations that the company lied about being a WOSB to secure a competitive advantage in obtaining government contracts.
Identifying WOSB Program Fraud
Whistleblowers are essential in identifying, reporting, and stopping fraud in the WOSB Program. The Government Accountability Office (GAO) has concluded that the federal government lacks “procedures that provide reasonable assurance that only eligible businesses obtain WOSB set-aside contracts.” Because certification of a WOSB or other small-business status depends on the honor system, unscrupulous contractors often get away with fraud. The government needs the help of whistleblowers to catch these fraudsters and keep taxpayer dollars from going to ineligible businesses.
Whistleblowers are often employees (or former employees) of a WOSB or other government contractor, with inside information about fraud being committed. Sometimes, employees of legitimate WOSBs learn their competitors are cheating the system—this type of information can be equally valuable in detecting and stopping fraud.
WOSBs are often approached with proposals to commit fraud—for example, by serving as a financial “pass-through” for an ineligible business while performing very little or none of the work actually required under the contract. Other times, a company might fraudulently obtain certification as a WOSB to take advantage of special contracting opportunities. Whistleblowers should be on the lookout for situations in which a woman doesn’t actually appear to own or manage a WOSB, or where a WOSB serves as a government contractor but doesn’t actually perform work on the contract.
Whistleblowers with knowledge of schemes to defraud the WOSB Program should come forward and speak to a whistleblower attorney. A whistleblower who files a successful complaint under the False Claims Act is entitled to between 15% and 30% of the amount the government recovers.
With more than 30 years of experience, the attorneys on Baron & Budd’s whistleblower representation team have represented dozens of clients in government fraud cases returning over $5.4 billion to federal and state agencies, with whistleblower recovery shares as high as 49%. They are ready to help if you have evidence of fraud involving the WOSB Program.
Please call (866) 401-5971 or complete our contact form if you would like more information. For more information, see What You Need to Know About Becoming a Whistleblower. Please understand that contacting us does not mean that you have established an attorney-client relationship with Baron & Budd, P.C.