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The Future of Work

Why Are Women-Owned Small Businesses Only Getting 5% Of Government Contracts?

It's a good news/bad news situation, but the future may be more hopeful.

[Photo:Thanasis Zovoilis/Getty Images]

In a quintessential case of good news/bad news, the U.S. Small Business Administration (SBA) announced on March 2, 2016, that, for the first time, it met its goal in the amount of federal contracts awarded to women-owned small businesses (WOSB)—a goal that was set roughly 20 years ago.

But for a goal that took nearly two decades to reach, the total amount awarded may not sound very impressive. It was just 5.05%.

Why did it take 20 years to hit that mark—and why does it seem so low? The answers need some context, says John Shoraka, SBA associate administrator. First, the SBA’s overall small business set-aside goal is 23%—a number it also bested by nearly 3% last year, for an all-time high of 25.75%. That’s $90.7 billion in business going to small businesses. The 5.05% in contracts that went to WOSBs represent $17.8 billion, Shoraka says.

"It means that women-owned small businesses are the first tier of the supply chain to the federal government. They're not subcontractors to other primes. They're not a couple of tiers down in the supply chain. They are actually the direct contractor with the federal government, which has a lot of benefits, and certainly can create a lot of traction for future successes," he says.

Photo: Flickr user Tinou Bao

Addressing The Issues

But that still leaves WOSBs significantly underrepresented. A March 14, 2015, report by law firm Jackson Kelly, which has a specialization in government contracts, stated, "While there are now more industry groups overall in which WOSBs can be awarded federal set-aside contracts, special set-aside opportunities for economically disadvantaged WOSBs have actually decreased."

But there are moves to support more WOSBs. In 2011, the formal Women-Owned Small Business (WOSB) Federal Contract Program was launched and awarded its first contracts to help move towards the 5% goal. The program provides greater access to federal contracting opportunities for WOSBs and economically disadvantaged women-owned small businesses (EDWOSBs). The program allowed contracting officers, for the first time, to set aside specific contracts for certified WOSBs and EDWOSBs. Shoraka says the program had problems, including restricting the sectors and capping contract amounts for set-asides.

"We worked over the past three years to remove some of those warts," he says.

Also, in October 2015, a new rule allowed the Federal Acquisition Regulation (FAR) to allow sole source awards to WOSBs and EDWOSBs in some circumstances. One example is when a contracting officer (CO) is looking for providers in an industry in which WOSB or EDWOSB set-asides are authorized, but the CO cannot identify more than one appropriate provider and where the contract is $6.5 million or less.

Related: Women-Owned Businesses Aren't Getting Government Contracts

Tom Reid, chief problem solver at Certified Contracting Solutions, LLC and former federal attorney with the Department of the Navy and NASA, says that other obstacles to WOSBs lie within the system. He calls the Federal Procurement Data System's reporting system "seriously deficient."

"Even when the government said they hit or got close to the 23%, different professional associations would say, ‘Well, wait a minute. Let's go back to when all of the office-supply companies claimed they were small businesses.’ Agencies counted awards to them as awards to small businesses when in fact, they weren't. They're being awarded to large businesses," he says.

The red tape is also thick for WOSBs, Reid says. Being eligible to do business with the government requires a great deal of effort up front, he says. Once you go through the process required to be listed as a contractor in the System for Award Management (SAM), the effort might not pay off, especially if you don’t offer services in areas designated as underrepresented by women, he says.

Photo: Flickr user Maryland GovPics

Help For WOSBs

But for many WOSBs, like Miami-based consulting company Government Business Solutions, which lands more than $3 million in government contracts each year, the payoff can be big. Founder Lordes Martin-Rosa says that her certification and targeting of government contracts "changed my company dramatically."

As for resources to help WOSBs, Martin-Rosa points to ChallengeHER, a program that was launched in 2013 as a national platform to educate WOSBs on contracting and connects them directly with government buyers at events around the country, and the Give Me 5 program, which offers free government contracting resources such as webinars and insight guides.

Shoraka says the government offers its own suite of resources to help small businesses. Enter your zip code at SBA.gov and you’ll find local resources, which may include one of the 68 district offices around the country, Small Business Development Centers, and others. In addition, Procurement Technical Assistance Centers (PTACs) can actually review your proposals and give you feedback to make them stronger.

"There are so many resources available for free, and a lot of small businesses don't utilize them," Shoraka says.

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