Bloomberg News

Women Lose More Ground in U.S. Small Business Contracts Race

January 24, 2013

U.S. government contracts to women- owned small businesses dropped for the second consecutive year, declining at a faster rate than awards to their male counterparts.

The women’s contracts slid 5.5 percent to about $16.4 billion in the fiscal year that ended Sept. 30 from $17.3 billion in fiscal 2011, according to data compiled by Bloomberg. Awards to small firms owned by men fell 4.1 percent to $80.9 billion.

The gender gap may reflect stiffer competition over a shrinking pool of contract revenue as well as the bureaucratic burdens associated with a new effort to reserve awards for women-owned firms, according to former procurement officials and small business advocates.

“Women-owned small businesses are at the very bottom of the food chain,” said Jeanne Peck, chief executive officer of Nash Locke LLC, an information technology company based in McLean, Virginia. “They often have to fight for the scraps of subcontracts.”

It may get worse for women, as they face difficulty winning a greater share of business in an era of federal spending cuts, said Robert Burton, acting administrator of the Office of Federal Procurement Policy under George W. Bush.

“I don’t think you’re going to see any of these figures rise,” Burton, now a partner at the law firm Venable LLP in Washington, said in a phone interview. “Historically, the government has never put a strong emphasis on women-owned small businesses.”

Missed Target

The government set a goal in 1994 of awarding at least 5 percent of the total value of eligible contracts to woman-owned businesses. It never has met that target. Women captured about 3.2 percent of the total, according to federal procurement data. The Small Business Administration hasn’t released official numbers using its own methodology, which excludes some contracts.

The gender disparity is particularly striking because the U.S. is in its second year of a new program aimed at boosting awards to women-owned small businesses, said Ann Sullivan, head of government relations for Women Impacting Public Policy Inc., a Washington-based nonprofit organization that promotes women in business.

The effort, which allows agencies to reserve money for women-owned businesses, started in April 2011, 11 years after Congress ordered the SBA to create the program.

V-22 Tilt-Rotor

In the first full year of the program, about $72.5 million in contracts were set aside for women-owned small firms in fiscal 2012. That’s less than 0.1 percent of what Lockheed Martin Corp. (LMT:US), the No. 1 government contractor, won in the same period. It’s also less than the price of a single V-22 tilt- rotor aircraft, made by Boeing Co. (BA:US) and Textron Inc. (TXT:US)

“We’re not going to break the champagne out yet,” said Sullivan, also president of Madison Services Group Inc., a government relations firm in Washington. Sullivan worked with Congress, the SBA and the White House to help create the set- aside program.

Agencies’ contracting officers may be reluctant to use the program because they must take on the burden of verifying that the businesses are legitimate, said Margot Dorfman, chief executive officer of the Washington-based U.S. Women’s Chamber of Commerce.

“I’m not sure I blame them,” Dorfman said in a phone interview. “There’s no incentive to encourage them to use the program.”

Contract Caps

John Shoraka, the SBA’s associate administrator for government contracting and business development, didn’t provide a comment on the decline in small business contracts to women.

“We will continue education, outreach and recruitment of women-owned small businesses to the federal procurement process,” he said in an e-mail.

The defense authorization bill signed into law this month removed caps on contracts awarded under the program, a development that Shoraka called “another win for women-owned small businesses.”

Previously, the ceilings were $4 million for services and $6.5 million for manufacturing. Last year, only one company received a contract valued at more than $3 million under the program.

Nash Locke owner Peck said federal agencies need to work harder to promote women-owned businesses in a marketplace that is dominated by men.

While Peck has been working with the government since she founded her company in 2008, she says acquisition officers still ask her if she’s in charge of her own business.

“I’m always flummoxed when I get questions like that,” said Peck, who works with the Defense Department. “I’m always the one showing up. I’m in charge. But it still remains the first question.”

To contact the reporter on this story: Danielle Ivory in Washington at divory@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net


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    (Lockheed Martin Corp)
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