In Business / August 2007
Fair Share for Women
The US Senate Small Business and Entrepreneurship Committee met in July to hear testimony regarding “Increasing Government Accountability and Ensuring Fairness in Small Business Contracting.” Some women entrepreneurs believe women owned businesses may not be getting all they should from federal contracts. Legislation is expected to be drafted after all the procurement hearings have been completed.
In 2000, Congress created and passed Public Law 106-554, to allow federal contracting officers to restrict competition on five percent of all contracts to women-owned businesses. However, according to the most recent government report, that goal continues to fall short, with women entrepreneurs receiving only 3.3 percent of contracts in 2005, a number affecting growth for the 10.4 million women-owned businesses that help drive the economy.
One obstacle women-owned small businesses face is the negative effects of contract bundling, which is the practice of combining two or more contracts into a large single agreement. Although a 2002 Presidential Initiative called for unbundling federal contracts, for the past several years, women business owners have felt the negative effects of contract bundling. A 2004 Government Accounting Office (GAO) report showed that federal agencies are confused over what constitutes contract bundling. A 2002 report by the Office of Management and Budget (OMB) stated that for every $100 awarded on a bundled contract, there is a $33 decrease to small businesses, nearly half of which are owned by women.
In addition to the negative effects of contract bundling, women business owners may be losing government contracts due to subcontracting integrity. This can include a lack of follow-through by prime contractors who list small businesses as subcontractors on the original bid but do not ultimately give the work, or the revenue, to these small businesses.
Another potential problem facing women-owned small businesses is the current size standards administered by the SBA that could potentially hinder small business growth in industries such as architecture and construction. Size standards determine whether or not a business can bid on a project as a “small business.” If its revenues exceed the size standard, it cannot bid as a “small.” Many women entrepreneurs believe the standards need to be adjusted since they have been in place for years. If the standards do not keep pace with today’s dollars, it makes it impossible for small businesses to bid on projects of any size. In industries like construction and architecture, where the size standard is considered by many to be too low, it makes it impossible for larger small companies to bid on federal projects.
Women entrepreneurs are also concerned about the new SBA recertification rule, which they believe, if not monitored closely, could unintentionally affect the ability of entrepreneurs to grow their small businesses for fear of losing a federal contract. Many have expressed a worry that it will devalue a small business since it cannot count on a long term contract staying small if the company is acquired. Many worry that a contracting officer will not keep a long term contract as small, if the small company has grown through the life of the contract to exceed the size standard. In a Catch-22, small businesses would be discouraged from growing as a result of being awarded a long term contract.
Access to government contracts is a high priority for business owners who supply to federal agencies. The Senate heard testimony from women represented as Coalition Partners from nine groups, including Boardroom Bound, Center for Women’s Business Research, Kansas City Council of Women Business Owners, National Association of Female Executives (NAFE), National Association of Small Disadvantaged Businesses (NASDB), National Women Business Owners Corporation (NWBOC), Women Impacting Public Policy (WIPP) Florida and Women Construction Owners and Executives (WCOE).
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