Study complicates debate on women’s procurement set-aside

An independent study gauging whether women-owned businesses are neglected in federal contracting found a wide variation in levels of representation, depending on the measure used.

The study, completed by the nonprofit RAND Corp. for the Small Business Administration, was commissioned to help in the long-delayed implementation of a women's procurement program as required under the 2000 Small Business Reauthorization Act.

But the results could further complicate the matter, potentially giving SBA considerable leeway in how to implement a program on which critics say the agency has dragged its heels.

In its examination of federal contracting data and U.S. businesses, RAND found that when looking at firms registered as potential federal contractors, women-owned small businesses are underrepresented in 83 percent to 87 percent of industries when measured by the number of contracts awarded. When the measurement is based on total contract dollars -- the metric used in federal procurement preferences -- RAND found that women-owned firms are not underutilized.

Looking at a different group of businesses, representing all U.S. employers, the study obtained much less dramatic results, with the disparities in 56 percent to 72 percent of industries based on the number of federal contracts, and 28 percent to 56 percent of industries based on contract dollars.

The study was designed to meet a standard that the Supreme Court has required of other government programs to show the need to single out minority groups for special treatment. The results indicating a lack of underutilization could be used to argue that the women's procurement program is not necessary.

Advocates for a women-owned business set-aside were quick to point to RAND's findings of underrepresentation.

"After waiting 2,322 days, this report finally certifies what was already plainly evident -- women-owned businesses are grossly underrepresented in government contracting," said the U.S. Women's Chamber of Commerce, which in 2005 won a lawsuit in which it accused the government of dragging its heels in implementing the procurement set-aside. The group cited the study finding that women-owned firms are underrepresented in 87 percent of federal industry segments.

Women's Chamber of Commerce founder Terry Williams said that since publication of the report, the group has urged SBA to consider women-owned businesses as underrepresented in any industry cited using any of the data sets. She argued that RAND's inclusion of multiple interpretations validates the importance of each of them.

In a statement, SBA officials did not reveal which figures they might use. "The SBA looks forward to reviewing the findings so that we can identify how to improve government contracting opportunities for [women-owned small businesses]," said Paul Hsu, SBA's associate administrator for government contracting and business development. But officials said rules for implementation would be published by the end of June.

SBA Deputy Administrator Jovita Carranza recently told lawmakers that the agency would use the study results to put the program in place by the end of the year.

Sen. John Kerry, D-Mass., who chairs the Senate Small Business and Entrepreneurship Committee, has called on SBA to implement the program with no further delays.

"It is critical that the program is structured to address the worst disparities revealed by the RAND study," Kerry wrote in a letter to SBA Administrator Steven Preston. Citing the figure that disparities exist in 87 percent of industries, Kerry said, "That analysis properly lays the required constitutional foundation to implement the set-aside program for women-owned businesses in a way that best embodies the spirit of [the law]."