Senators push to scrap limits on women's procurement program

Several senators sharply criticized the Small Business Administration Wednesday for a proposed rule for the women's procurement program, saying it is excessively narrow and makes thousands of firms ineligible for set-aside contracts.

SBA has come under almost constant fire since issuing a proposed rule several weeks ago. It would allow contracting officers to award sole-source contracts of $3 million or less ($5 million in the manufacturing sector) to women-owned small businesses in underrepresented industries. The controversy stems from the SBA's decision to declare women underrepresented in only four of 2,300 possible industries.

SBA based its decision on a RAND Corp. study, which offered several possible methodologies for determining underrepresentation that would yield a variety of results. Depending on the method used, RAND found that women-owned small businesses are underrepresented in anywhere from 87 percent of industries to no industries at all.

Sens. John Kerry, D-Mass., Olympia Snowe, R-Maine, and Carl Levin, D-Mich., said at Wednesday's Small Business and Entrepreneurship Committee hearing that while SBA officials had the discretion to chose among a number of methodologies, they chose the one that most restricted the congressionally mandated program.

"Oct. 17 of last year, Sen. Snowe joined me, and we urged you to implement the broadest possible program," Kerry said. "[SBA] chose the narrowest possible program…. Why would you not at least want to fall midway or as close as possible to meeting what we feel was the intent of Congress?"

SBA Administrator Steven Preston said the agency chose what it deems the most legally defensible model, basing its choice not only on the RAND study but on recommendations from the National Academy of Sciences. SBA and the Justice Department's efforts to ensure that the program would withstand a constitutional challenge was the subject of a heated House hearing earlier this month.

The senators avoided parsing the levels of constitutional scrutiny required for race- or gender-based preference programs, but Levin did say the risk of legal challenges must be weighed against the potential benefits of a program.

"If the fourth or fifth most bulletproof [method] is the best in terms of policy, and you have a darn good chance of defending it legally, from a policy perspective it's worth doing," Levin said. "That's the mistake I think you've made."

Snowe said that according to her staff's calculations, at the current pace it would take the government until 2019 to meet the goal of awarding 5 percent of all contracting dollars to women-owned small firms. Preston said SBA is focusing on initiatives other than the set-aside program to help those businesses compete for opportunities and reach the goal. These initiatives include signing up more women-owned small businesses as potential contractors in the Central Contracting Registration system, offering online training and organizing contractor-agency matchmaking events.

As House lawmakers and women's advocates have done since the proposed regulation was issued, the senators called on SBA to scrap the rule and issue a new, less restrictive way to implement the 7-year-old program.