http://www.businessweek.com/news/2013-07-16/women-owned-small-businesses-snubbed-by-u-dot-s-dot-energy-department

Bloomberg News

Women-Owned Small Businesses Snubbed by U.S. Energy Department

July 16, 2013

Women-Owned Small Businesses Attract 1% of U.S. Energy Awards

The U.S. Energy Department's biggest vendor was Bethesda, Maryland-based Lockheed Martin Corp., which received $2.6 billion in awards from the department last year. Photographer: Chris Ratcliffe/Bloomberg

The U.S. Energy Department is almost a blackout for women-owned small businesses.

Those companies attracted about 1 percent, or $305 million, of direct contracts in the fiscal year ended Sept. 30 -- making the department the worst performer in that area among the top 10 federal contracting agencies, according to data from the U.S. Small Business Administration.

Most of the Energy Department’s $25 billion in direct awards last year went to top vendors such as Lockheed Martin Corp. (LMT:US), Bechtel Group Inc., URS Corp. (URS:US) and Babcock & Wilcox Co.

“We’re out there. We’re waving our arms,” said Jennifer Dickerson, owner of EnRep Inc., an Orlando, Florida-based company that provides environmental and safety consulting services. “We’re ready, but the department isn’t ready.”

The Obama administration stepped in two years ago to help boost women by allowing agencies to set aside contracts for their small businesses. The effort hasn’t gone far at the Energy Department, which reserved six of more than 13,000 awards for such companies last year. The National Aeronautics and Space Administration has also struggled, setting aside just one.

The set-aside program is still going through a “ramp-up period,” Michele Chang, deputy chief of staff for the U.S. Small Business Administration, said in a phone interview.

Some agency contracting officers have embraced it, while others need more education on how to use the tool, Chang said. The SBA is reaching out to agencies and women-owned companies to improve awareness of the program and its rules, she said.

Uneven Performance

The program’s uneven performance is making it harder for women-owned companies to get a significant share of a federal contracting market valued at more than $500 billion annually. That’s frustrating because woman own about a third of the nation’s small businesses, said Margot Dorfman, chief executive officer of the Washington-based U.S. Women’s Chamber of Commerce.

“We’re sorely disappointed,” Dorfman said in a phone interview. “The number-one challenge in meeting those goals is that the contracting officers aren’t using these set-asides.”

One of the Energy Department’s biggest barriers is that a lot of its contract spending occurs through national labs that are typically run by consortia that include large companies and universities.

“Due to the nature of that work, it is difficult for the Department to utilize small businesses as often as other industries,” Aoife McCarthy, an agency spokeswoman, said in an e-mail.

Nuclear Weapons

The labs include the Lawrence Livermore National Laboratory, managed by a group including San Francisco-based Bechtel, the University of California, Charlotte, North Carolina-based Babcock & Wilcox, San Francisco-based URS and Columbus, Ohio-based Battelle. The Livermore, California, lab is responsible for the security of the nation’s nuclear weapons stockpile.

The top 50 contractors in the Energy Department attracted more than 90 percent of the agency’s awards in fiscal 2012, according to data compiled by Bloomberg.

The agency’s biggest vendor was Bethesda, Maryland-based Lockheed, which received $2.6 billion in awards from the department last year. No. 2 was Los Alamos National Security LLC, which includes the University of California, Babcock & Wilcox (BWC:US), Bechtel and URS.

The contractor manages the Los Alamos National Laboratory in New Mexico and received $2.1 billion in awards last year, according to a Bloomberg study.

Target Missed

Across federal agencies, women-owned small companies attracted about 4 percent of eligible contracts dollars in fiscal 2012, according to an SBA review. The government missed its goal of 5 percent.

Not all agencies underperformed. The Department of Housing and Urban Development awarded 14.7 percent of eligible contracts to women-owned firms, and the Treasury Department, 13.2 percent.

The Energy Department had the worst performance of the 10 biggest agencies by contract spending, with 1.24 percent. It was followed by NASA, with 2.94 percent. On its SBA report card, the Energy Department scored an F, the lowest possible score, for its contracting with all small businesses.

“There’s no meat behind these reviews,” Dickerson said. “Look at the Department of Energy, they’ve received an F for the last two years on meeting small business contracting goals. Where is the accountability?”

NASA Contracts

EnRep is a subcontractor working under a unit of Englewood, Colorado-based CH2M Hill Companies Ltd. CH2M is overseeing the cleanup of a plutonium plant used to make nuclear weapons in Benton County, Washington.

Dickerson, who wants to serve as a lead contractor, suggested that the Energy Department break up big awards and distribute more of the smaller-sized contracts likely to attract small businesses.

NASA is also struggling to meet its spending targets with women. It awarded their small businesses less than 3 percent of its $13.7 billion in eligible contracting dollars last year, according to the SBA review. The agency has set aside two contracts for woman-owned companies in the past two fiscal years.

Some of NASA’s difficulties stem from the amount of work it does with contractors in areas such as research and development, space-vehicle manufacturing and engineering services, Sonja Alexander, a spokeswoman for the agency, said in an e-mail.

“These are industries that woman-owned small businesses are currently underrepresented in,” she said.

Size Limits

It was also hurt by limits on the size of contracts that could be reserved for woman-owned companies, she said. When the preference program began in April 2011, manufacturing work could only be set-aside for women-owned vendors if the contracts were valued at less than $5 million. For other work, the cap was $3 million.

Companies like Victory Solutions Inc., a Huntsville, Alabama-based engineering-support company with about 50 employees, didn’t apply for set-aside contracts with NASA because it didn’t make sense to spend time and money competing for small amounts, said Kris McGuire, the supplier’s chief executive officer.

The SBA increased the cap last year, and President Barack Obama signed defense spending legislation this year that removed the limit altogether so agencies can set aside work for women-owned firms regardless of the value of the contract.

“This gets me excited,” McGuire said in a phone interview. “Now we can go after the big contracts with NASA.”

To contact the reporter on this story: Kathleen Miller in Washington at kmiller01@bloomberg.net

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


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