Women's Business Booms, but Federal Contract Growth is Slow

Citizen Business Owners Band Together

Female business owners are making huge gains but there is still a lot of headway to be made in the area of winning federal contracts.

By Bruce Westbrook

Business is booming for American women. They hold majority ownership of 7.7 million small businesses and, including co-ownerships with men, own 10.4 million, or nearly half of all businesses, according to the Center for Women's Business Research. Employing almost 13 million and producing $1.9 trillion in sales, these businesses have grown almost twice as fast as all firms in the past decade, according to the U.S. Small Business Administration.

"Women business owners are prospering," says Barbara Kasoff, president and CEO of Women Impacting Public Policy, a Washington, D.C.-based nonprofit advocacy group with more than half-a-million members. "We are the engine that drives this economy."

Yet that engine could use a vital fuel additive: lucrative federal contracts. Getting them almost ensures a firm's growth and longevity. But winning them hasn't been easy for women, despite a boom in federal spending and Congressional attempts to address a dramatic disparity.

By the Numbers
In 2000, businesses majority-owned by women received 2.3 percent of the $200 billion in federal contracts. The same year, Congress passed the Equity in Contracting for Women Act, directing the SBA to reach a goal of 5 percent of such dollars going to women via "set-asides." By this means, bids for some products and services would be accepted only from women-owned firms competing among one another.

Similar set-asides already have helped minorities and disabled veterans, via previous legislation. But more than seven years since Congress' directive, they haven't started for women. In fact, the SBA didn't rule until last December on which women's businesses could qualify, as published in the Federal Register.

The SBA ruled that women-owned firms are underrepresented in four out of 2,300 business categories: cabinet making; coating and engraving; national security and international affairs; and all-terrain vehicle sales. Those represent 1,247 of the 7.7 million women-owned businesses, and only those are eligible to compete for set-asides for federal contract spending.

"Women are under-represented in federal contracting across the board, instead of in just the four extremely limited industries identified by the SBA," says Sharon Hadary, executive director of the nonprofit Center for Women's Business Research.

For instance, women own at least half of health care and education-services businesses, but get only 7 percent of contracts for health care and 2 percent for education services, the Center reports. "No matter how you slice this, that's wrong," Hadary says.

Even the four business types marked for set-asides get no guarantee. For any government agency to set aside contracts for those women's businesses, that agency would first have to research and prove it had discriminated against women in the past. The U.S. Women's Chamber of Commerce calls this an unlikely occurrence and a "poison pill," with CEO Margot Dorfman saying women-owned businesses "are being blocked from fair access to federal contracts," according to the U.S. Women's Chamber of Commerce Web site.

Women Are Making Headway
The SBA points to exceptions, such as the fact that Lani Hay, the 2007 SBA National Minority Small Business Person of the Year, won Department of Defense contracts for her firm LMT of Fairfax, Va.

"Women-owned firms, in terms of receiving federal contracts, have been increasingly successful," says Arthur Collins, director of government contracting for the SBA. Although Congress' 5 percent goal has not been reached, 3.4 percent of federal contract dollars are now claimed by women, representing a total of $11.6 billion, the SBA reports.

The SBA also provides training and counseling for women business owners, via its network of 95 Women's Business Centers in 44 states and three territories. The SBA provides loans to women's small businesses, which totaled $3.5 million in 2007.

While women's share of federal contracts has inched up, federal spending has more than doubled during President Bush's administration. More than $200 billion in new contracts have been "awarded without full and open competition," reports the U.S. House of Representatives Committee on Oversight and Government Reform.

Even without set-asides, women can compete for any of these federal contracts. Collins says women "are having more success across the board."

"While we haven't reached the 5 percent goal, women's share of federal procurements has gone up dramatically," Collins says. He also suggests alternative strategies for businesswomen wishing to enter the federal arena: Start small, via municipal or state governments, or by subcontracting to a large federal contractor.

"Smaller firms are beginning to provide the goods and services government needs, even though it's through an intermediary," Collins says. "As they develop experience, volume and technical savvy, they can move out of subcontracting and into prime contracting. Then it's up to the women to find the contracts, but that's true of every opportunity."

"Women should look for solid, second-tier contracting opportunities," Hadary says. "There are a lot of hurdles to getting government business, but it's worth the effort."