A proposed rule to drastically reduce and limit the number of federal agencies where women-owned small businesses (WOSBs) can bid on government contracts has riled thousands of women entrepreneurs across the country, including many in the New York tri-state area. The proposal, announced in January by the U.S. Small Business Administration, effectively would reduce the number of industry categories and federal agencies from a potential of 2,000 to four.
“The ruling is disappointing since for years the SBA has recognized women-owned businesses as a leading engine of the economy,” says Geri Swift, president of the East Coast regional affiliate chapter of Women’s Business Enterprise National Council, an advocacy group. The SBA also proposed that in order for an agency to set aside a new contract under the new guidelines, the procuring agency would have to conduct an appropriate analysis of its own procurement history to demonstrate past discrimination against women-owned small businesses. “The proposed ruling will create a barrier for women’s businesses that are a source of economic growth,” Swift says. “Women-owned firms have grown two times the rate of all firms.”
The Equity in Contracting for Women Act of 2000 mandates that federal agencies award up to 5 percent of their contracts to women-owned enterprises. SBA Administrator Steven Preston says the proposed rule follows a recent comprehensive review of current federal contracting guidelines by the National Academy of Sciences, a court case, an independent study by the Rand Corp. and another study by the SBA itself. “The studies showed that women-owned businesses were [significantly] underrepresented in defense-related contracting categories. Our responsibility is to implement the [2000] statute in a constitutional manner and that is what we’ve done,” he says.
The most current statistics put the number of businesses owned and operated by women at about 10.4 million in 2006. Of these, 2.4 million are owned by women of color, employing 1.6 million people and generating about $230 billion in revenue annually. WBENC officials argue that women-owned firms account for 41 percent of all privately held firms, but receive only 3.3 percent of federal contracts. The difference between 5 percent and 3.3 percent in federal spending amounted to roughly $7.5 billion in 2006, they say. “The government can take a lesson from America’s corporations that are leveling the playing field for women’s business enterprises setting goals and implementing best practice processes,” says Linda Denny, WBENC’s national president. “Those corporations have been rewarded with greater quality products and services.”
Preston insists that federal contracting dollars with WBEs has increased and likely will continue to do so, despite the proposed legislation. SBA figures show that prime-contract dollars to WBEs rose to almost $12 billion in 2006 from $4.6 billion in 2000 and that WBE procurements in 2007 stood at 7 percent, exceeding the agency’s 5 percent goal. “The better way to increase women-owned businesses’ share of federal contracts is to get such firms ready to perform federal contracts and ensure they are registered firms,” Preston says.
More information about the proposed rule can be found at www.sba.gov [4], www.wipp.org/news [5] and www.wbenc.org/.
By Glenn Townes