SBA faces further delays in women-owned small business program

The Small Business Administration is still having trouble determining in which industries women-owned small businesses are underrepresented, and as a result has not yet implemented a program to help such firms win federal contracts.

In a new report, the National Academy of Sciences calls the SBA's proposed method of measuring underrepresentation inadequate. SBA's Office of Federal Contract Assistance for Women Business Owners, established in 2000, asked the academy to review its measurement technique and to determine whether or not it violated affirmative action law.

The SBA program would allow agencies to award contracts without going through the normal competition process, in some cases, if the contracts are determined to be in industries where women-owned small businesses are underrepresented. Because those industries have not yet been identified, the program cannot be used by agencies.

The report found that the proposed method of measuring underrepresentation relied on out-of-date data and counted all women-owned businesses instead of just those interested in contracting with the government. Courts examining lawsuits over preferential contracting, the report said, have made a distinction between companies that are "ready, willing, and able" to do the work and all companies that fit into the disadvantaged category.

The report also recommended that the contract assistance program encourage women-owned small businesses to subcontract, in order to gain experience. "Subcontracting is an important arena for small businesses to gain experience and a track record that could enhance their capabilities to handle larger prime contracts, or to develop a substantial subcontracting business," it stated.

While the set-aside program has yet to be implemented, SBA encourages agencies to set a voluntary goal of awarding 5 percent of their contracts to women-owned small businesses. According to the Contract Assistance for Women Business Owners' Web site, only about 2.5 percent of federal contracting dollars go to women-owned small businesses.

SBA also runs other programs to help women-owned small businesses along with other disadvantaged businesses, which are accessible through the WomenBiz.gov Web site. The Federal Procurement Data System reports that in fiscal 2003, the most recent data available, over 10,000 new women-owned small businesses contracted with the federal government.

An SBA spokesman said the agency is still looking at the report and deciding on the best course of action. He added that legal precedent requires SBA to show not only underrepresentation in an industry but also that it is caused by discrimination.