Small Steps

After 10 years of delays, there is new hope for the women's procurement program.

Almost a decade ago, President Bill Clinton signed the Equity in Contracting for Women Act, allowing the government to set aside contracts for women-owned small businesses in industries where females were "historically underrepresented." It's unlikely the lawmakers who chose that fateful term expected it would cause a 10-year delay in implementing the program. But that's exactly what happened.

Since 2000, the Small Business Administration has hemmed and hawed and commissioned studies to determine the industries where women fall into that nebulous category.

Women's business advocates say under the George W. Bush administration, agency officials used the narrowest possible interpretation of the term to limit the program's reach. In 2004, then-SBA Administrator Hector Barreto allegedly told leaders of the U.S. Women's Chamber of Commerce the administration had no intention of implementing the program, prompting the group to file a lawsuit. The court sided with the chamber, finding the agency "had sabotaged, whether intentional or not, the implementation of the procurement program," and recommending a deadline be established.

As the Bush administration entered its final years, however, it became clear it was punting the ball to its successors. And just days after President Obama's election, things became more complicated. On Nov. 6, 2008, a federal circuit court voided a law establishing a 5 percent goal for awarding Defense Department contracts to small businesses owned by socially and economically disadvantaged individuals, saying there was no "compelling governmental interest" to support the primarily race- based program. Some experts believe the Rothe Development Corp. v. Department of Defense ruling established a new legal standard for set-aside contracting programs.

Against this backdrop, the Obama administration took its first crack at the women's program, drafting a regulation that expanded its scope and expressed confidence it would stand up to constitutional scrutiny. In early March, SBA released a proposed rule identifying 83 industries where women-owned small businesses are underrepresented, a substantial departure from a 2008 proposal with only four such industries.

"Women-owned small businesses are one of the fastest-growing segments of our economy, yet they continue to be underrepresented when it comes to federal contracting," SBA Administrator Karen Mills said when the rule was announced. "This proposed rule is a step forward in helping ensure greater access for women-owned small businesses in the federal marketplace."

According to SBA, the Obama administration decided to scrap existing proposals and draft a comprehensive rule "based on the analysis of the prior studies and on all the questions and comments previously received."

The proposed regulation authorizes set-aside contracts under a certain dollar amount for women-owned small businesses in the industries where they are underrepresented based on their share of procurement dollars and of contracts won. Share of contracting dollars was the only factor that counted in the previous proposal, explaining why a drastically smaller number of industries qualified.

SBA also has acknowledged concerns raised by the Rothe case. "SBA believes the proposed rule addresses a compelling governmental interest, it is narrowly tailored to serve that interest, and it represents a reasonable and sensible regulatory approach based on sound and reliable research, studies, data and analysis," the agency wrote in its most recent proposal.

The new policy drops one other contentious proposal that would have required agencies that want to participate in the procurement program to certify they had engaged in discrimination against women-owned small firms. Officials had expressed concern that this provision of a previous rule could open agencies up to lawsuits.

And the latest attempt to implement the program contains a number of provisions aimed at preventing waste, fraud and abuse. While women-owned small businesses will be able to self-certify, the proposed rule requires firms that do so to submit detailed information to the Online Representations and Certifications Application Web site and to send eligibility-related documents to an online repository to be maintained by SBA. All federal contracting officers will have access to the site.

The rule warns SBA will engage in a "significant number" of program examinations to confirm that self-certified women-owned small business are, in fact, eligible, and will "vigorously pursue ineligible firms."

The Obama administration's proposal has given women's business groups reason to be optimistic. The Women's Chamber of Commerce calls it "a strong new set of regulations to bring this important set-aside program to fruition."

Margot Dorfman, the chamber's chief executive officer, says the rule shows a grasp of the issues and presents a viable process to implement and sustain a strong federal contracting program for women-owned small businesses.

"Federal contracting officers will finally have the tool they need to bring fair access to federal contracts for women-owned small businesses," Dorfman says. "I thank Administrator Mills for her strong leadership on this matter."

Sen. Mary Landrieu, D-La., chairwoman of the Senate Small Business and Entrepreneurship Committee, says the proposed change is "a step in the right direction." Her staff will work with SBA to ensure it moves ahead with its plans.

"We're going to take a look at the rule . . . but we think it's a positive step," says Greg Willis, counsel for the committee. "Sen. Landrieu has been active on this issue. She was active last Congress, she'll be active this Congress, you can be assured of that."