WOMEN-OWNED BUSINESSES Congress pushes 5-percent contract goal

Woman-owned businesses landed 2.1 percent of federal contracts in 2002.
CBS MARKETWATCH
SAN FRANCISCO -- Female business owners who have long felt left out of the lucrative federal contracting process have new reason to be encouraged.
Both the House and the Senate have introduced legislation to put some bite into a 3-year-old law that aims to have at least 5 percent of federal contracts go to small, female-led companies.
At stake is $235 billion in government contracts, of which female-headed companies received only 2.1 percent in 2002, said Barbara Kasoff, co-founder of the San Francisco-based advocacy group Women Impacting Public Policy.
Forced to take action
The small percentage has remained constant despite years of effort to improve it, but the latest action would force bureaucrats to implement the law and penalize agencies for falling short of the target 5 percent, Kasoff said.
"The House is making certain that this bill is going to be enacted," she said.
"If it doesn't, it's giving the Office of Federal Contracting the right to designate contracts to women-owned businesses, which they've not been able to.
"It's going to open up contracting opportunities that women-owned businesses have not been able to get before," Kasoff said. "For the first time, we are getting accountability."
Last year, there were 10.1 million companies at least half-owned by women, which employed 18.2 million workers and took in revenue of $2.3 trillion, according to the Center for Women's Business Research (http://www.womensbusinessresearch.org/).
Big barriers
One of the major barriers women face is that federal contracts often stipulate that companies provide a certain number of services, granting favor to "prime" bidders such as Halliburton and Bechtel, which recently landed deals to rebuild Iraq, said Erin Fuller, executive director of the National Association of Women Business Owners (http://www.nawbo. org/), or NAWBO.
The practice is known as bundling, Fuller said. "Contract bundling is certainly one of the most significant factors affecting women entrepreneurs not getting their fair piece of the pie."
The use of purchasing cards allows many larger companies to circumvent the traditional bidding process, she said.
"The intent behind contract bundling was to reduce paperwork, but unfortunately no one thought out the impact on small businesses."
Contract bundling caused small businesses to miss out on $13 billion in funding in 2001, according to estimates from NAWBO, which has 8,000 dues-paying members.
In 1991, the federal government awarded 86,243 contracts; 26,506 went to small businesses, Fuller said.
In 2000, Uncle Sam offered 34,261 contracts of which 11,651 went to small companies, she said. "We attribute that to contract bundling."
Losing out
The government may prefer to work with larger companies with which it has a history, but such a choice comes at the expense of women-owned and small businesses, Fuller said.
"There's growing awareness that women-owned [and small] businesses are the engine fueling the economy in this country," she said.
"To ignore those groups and not give equal opportunity for [contracts] isn't doing the economy any good."
Another obstacle to winning more contracts is a misconception that women-owned businesses are exclusively services companies, said Sharon Hadary, executive director of the Center for Women's Business Research.
In fact, the number of women-led companies in the broad category, which includes business, engineering and information technology services, has been on the decline, she said.
Fifty-three percent of all women-owned small businesses are in services, down from 55 percent in 1997, Hadary said.
Retail trade comes in a distant second at 16 percent, while 9 percent of women-led companies are in finance, insurance and real estate, she said.
Growing quickly
The fastest growth is in nontraditional fields such as agribusiness, manufacturing, engineering and telecommunications, with 3.4 percent in construction and 2.6 percent of female companies in the transportation, communications and public-utilities sectors, Hadary said. Wholesale trade makes up 2.1 percent.
Such data makes it harder for agencies to say they can't find qualified women-led companies to perform the jobs, Kasoff said.
Historically, weak enforcement of the 5-percent goal has been the main problem with securing government contracts, said Sheila Brooks, president of SRB Productions, a video-production and communications outfit in Washington, D.C.
Brooks has been in business for 13 years. Though her company has won some federal contracts, one worth several million dollars was taken away from her five years ago when a larger company claimed reverse discrimination, she said.
"That contract sat on the table for eight or nine months and then was canceled," Brooks said, noting that the outcome likely would have been different with tougher laws. "It could have been different because then you have agency officials supporting you."
The fact that both the House and Senate are getting serious about awarding more federal contracts to women-owned businesses is cause for celebration, Kasoff said.
"I'm real optimistic for the first time in a long time because the spotlight's on them. It's election year and people have to perform."
The House bill is H.R. 2802. The Senate bill is S. 1375.