The Small Business Administration hails women-owned businesses as important entities for the American economy, yet women continue to face unique obstacles to success in the business world. Efforts by the SBA and Office of Women’s Business Ownership attempts to change this paradigm through programs and services to help these businesses succeed.
In addition, the Women-Owned Small Business Federal Contract Program provides access to contracting opportunities with the federal government. The program targets economically disadvantaged women-owned small businesses and women-owned small businesses. Contracting officers are permitted to set aside contracts for businesses that are certified according to program standards. This helps federal government agencies achieve the five percent goal of contracting dollars for these businesses.
A new initiative for women-owned businesses was announced in the spring of 2013. In partnership with American Express OPEN and Women Impacting Public Policy, a nonpartisan advocate for women in business, the SBA has launched a program aimed at boosting the number of opportunities for government contracts.
The program, called ChallengeHER, is expected to help women business owners compete in the contracting marketplace. Business owners will receive an online curriculum, various resources, access to prime contractors and mentorship from experienced women contractors. This initiative is a follow-up to the National Defense Authorization Act signed by President Obama, The law removed $4 million and $6.5 million caps on federal contract awards for the WOSB Federal Contracting program.
Removing the caps is good news for women business owners and government agencies that want to boost their procurement for these businesses. Combined with improvements to the WOSB program and ChallengeHER, many women contractors can expect to have a positive year.
One of the top priorities of the SBA is to make sure that not only women-owned businesses, but also minority-owned and veteran-owned businesses that qualify have greater access to opportunities through the government and commercial supply chain companies. As one of the fastest growing segments of entrepreneurs and new business creation, ChallengeHER promises to connect them with tools and contracts that will drive innovation, create more jobs and allow their businesses to grow.
In a sense, the agency is playing matchmaker at events taking place throughout the country to foster these connections between women-owned businesses and the decision makers of contracting opportunities. This includes national and local level federal partners that give contracting officers a broader base of businesses when making purchasing decisions.
Training will include showing business owners how to register with the System for Award Management. Commonly known as SAM, this is the federal government contracting portal for small businesses interested in doing business with the government. Information on WOSB contracts is included in the portal for women to learn about eligibility requirements for the contract set asides.
Federal contracting offers a lucrative opportunity for women who participate in the program. Many see this as a revenue booster that enables women entrepreneurs to create high-growth businesses. According to research by American Express OPEN, women-owned small businesses with federal contracts can generate more than $1 million in annual revenues. With ChallengeHER, program administrators want even more women entrepreneurs to begin participating with innovative ideas and products for government agencies. Doing so will help to push annual revenues of more businesses past the million dollar mark.
Already, ChallengeHER has hosted events in Phoenix, Seattle, Atlanta, New Orleans and Denver. More events are planned for other major U.S. cities such as New York, San Diego, San Francisco, Boise, Milwaukee and Chicago.
Targeted programs to reach more women-owned businesses may raise questions about preferential treatment from the federal government. Some may wonder if carving contract opportunities for women-owned small businesses only is fair to the competition principle in a capitalistic society. However, the WOSB and similar programs do not require favor for women over men.
Rather, the goal is to even the playing field. Contracting officers are given permission to use their discretion for restricted competition in order to increase contracting prospects for women-owned small businesses. Further, a survey report by the Government Accountability Office found that guidelines and restrictions for most small business programs divert attention from the goals for increased women-owned contractors.
There are prime contracting and subcontracting goals for small businesses under the federal government. Typically, this requires that 23 percent of prime contracting dollars be awarded to small businesses. Specific identified small business groups have individual prime and subcontracting goals.
Women-owned businesses must receive five percent in prime and subcontract dollars from the federal government. Additionally, there are annual small business goals that every federal agency negotiates with the SBA to represent a practical maximum amount. Goals by each agency are used to calculate the small business goal throughout the federal government. Included in those goals are prime and subcontracting opportunities for women-owned small businesses and other groups within the category.
In essence, this gives contracting officers the ability to level playing field in the competition for federal contracting opportunities. Women-owned small businesses and economically disadvantaged women-owned small businesses may compete among themselves for certain contracts.
Eligibility requirements for women-owned small businesses and economically disadvantaged women-owned small businesses include at least 51 percent ownership and control by one woman or more than one woman. Management responsibilities should also belong to at least one woman – or more than one woman – before businesses are considered for federal contract set asides. Business owners must be U.S. citizens and the company should meet the definition of a small business according to size standards in its primary industry.
Economically disadvantaged women-owned small businesses are identified by demonstration of an economic disadvantage that is set forth in the final government contracting rule.
Women-owned small businesses may self-certify or have the option of using a third party entity to certify their status and eligibility for federal contracting opportunities. Even with a third party certification, WOSBs are still subject to program eligibility requirements. Third party certification is only accepted from approved entities. The SBA added four additional organizations to act as third party certifiers:
For fiscal year 2012, women-owned small businesses received four percent of all federal contracts awarded to small businesses. The amount, $16.2 billion, was slightly higher than the $15.7 billion amount awarded during fiscal year 2009 for WOSB contracts. During that year, WOSB contracts represented just 3.5 percent of total awards. A modest increase is good news for women small business owners who are interested in expanding their business to federal contracts.
Advocates for women-owned business and program administrators believe that the federal procurement program targeting WOSBs is the reason for the increase. With additional efforts such as ChallengeHER, more dollars may begin trending towards qualified women-owned businesses. Since 2011, the program continues its effort to reach more businesses owned by economically disadvantaged women who can benefit from federal contracts. Certification has proven useful to many certified women-owned small businesses trying to land government contracts.
Surveys follow procurement trends associated with women-owned small businesses. During the initial stages of the federal contracting program targeting these businesses, few women businesses were helped by the program. Now, more than 50 percent find the program useful. The change could be, in part, due to improvements and partnerships like ChallengeHER to increase awareness.
In addition, a report by American Express OPEN found that women business owners have been more successful than their male counterparts in winning government contracts. This is the case despite the fact that WOSBs invest less money and time towards pursing the contracts. On average, a small business owned by a man takes 25 months on the federal procurement marketplace – and five unsuccessful bids – before landing the first contract.
In contrast, women business owners receive their first federal contract within 20 months and 4.3 unsuccessful bids. Still, the overall percentage of women-owned businesses with federal contracts is miniscule compared to businesses owned by men.
These reports and surveys show that with more awareness and effort, more women-owned businesses can be successful in winning federal contracts. As more women-owned businesses from different industries such as health services, construction, manufacturing and technology get involved in the process, they can grow their businesses by selling to the government. While it takes time and financial resources to get into the federal procurement market, the payoff is substantial for those who find success.