New York Times, January
17, 2008
Female
Business Owners Fault New Rules on U.S. Contracts
By ELIZABETH OLSON
Women who
own small businesses — about a third of all small businesses
in the United States, in fact — have been pushing for years
for a bigger piece of government contracts, which now total $400
billion a year.
But few were
happy when the Small Business Administration finally announced
new rules in December to ensure that 5 percent of the contracts
would go to female-owned businesses.
First, the
critics noted, it took seven years for the S.B.A. to develop the
rules after Congress ordered the agency to create them in 2000.
But perhaps more important to the critics, among them Congressional
Democrats and some business groups, the agency listed only four
industries — out of 140 — where female-owned businesses
could be preferred for contracts.
The best known
of those was national security and international affairs; in addition,
the list included coating and engraving, furniture and cabinet
manufacturing and a motor-vehicles category.
Such a narrow
list of industries was contrary to findings that women were underrepresented
in 87 percent of all the industries where the government awards
contracts, the United States Women’s Chamber of Commerce
has argued. The chamber sued in 2004 to force the S.B.A. to follow
the Congressional mandate.
“The
government says it champions women, but it continues to lock us
out,” said Margot Dorfman, chief executive officer of the
chamber, who said the S.B.A. had stalled compliance.
The S.B.A.,
in response, said that writing the rules was a “complex and
controversial responsibility” to establish guidelines to
set-aside contracts based on gender. “The legislation requires
us to establish that women-owned small businesses are underrepresented
in an industry in which a set-aside would be created,” said
Christine Mangi, the agency’s spokeswoman.
As to the
criticism that the S.B.A.’s new rules include too few industries,
Ms. Mangi said that the agency planned to revisit the issue “approximately
every five years” and “update the affected industry
sectors.”
Female-owned
businesses, defined as at least 51 percent controlled or owned
by females, were awarded 3.4 percent, or about $11 billion, in
government contracts in 2006. The failure to hit the 5 percent
mark, according to Congressional figures, deprived female owners
of roughly $5 billion annually.
Last May,
frustrated by the S.B.A.’s inaction, the House of Representatives
passed a bill to raise the percentage for contracts for female-owned
business owners to 8 percent from 5 percent, and to direct that
30 percent of annual government contracts, not 23 percent as now,
be set aside for all small business.
The Senate
has yet to act on the bill, which would wipe out the agency’s
proposed rules from 2007, which are available in the Federal Register
for public comment until the end of February. In the meantime,
both the Senate and House small business committees plan hearings
— the first will be in the House on Wednesday — to question
the S.B.A. about its the rules.
“To suggest
that the only women who deserve support are in industries as small
as kitchen cabinet manufacturing is downright insulting,”
said Nydia M. Vel?zquez, the New York Democrat who heads the House
Small Business Committee.
She introduced
the original women’s contracting bill, which was attached
to the S.B.A. appropriations legislation and approved in December
2000. It was intended to carry out the goal Congress established
in a 1994 law that women receive 5 percent of government contracts.
The 2000 legislation
required the S.B.A. to conduct a study to identify industries
where businesses owned by women were underrepresented and to set
up procedures to verify eligibility for female-owned companies
to receive preference.
The agency’s
initial study of industries was derailed after a review by the
National Academy of Sciences found it flawed. A federal district
court judge, ruling in 2005 in the Women’s Chamber of Commerce
suit, said the S.B.A. had “sabotaged” the start of the
program and asked for a timetable for carrying it out; a hearing
in the case is Jan. 28.
Last year,
an S.B.A. study found that women received a disproportionately
low number of federal contracts in three-quarters or more of the
140 industries, including manufacturing, real estate, health care
and waste-management services. The study was conducted by the
Kauffman-Rand Institute for Entrepreneurship Public Policy.
Ms. Vel?zquez
also criticized the S.B.A.’s proposal that would limit each
contract for businesses owned by women to $3 million (except for
$5 million for manufacturing contracts), saying it would benefit
“only a tiny fraction of the business women this country.”
The S.B.A. said it was simply following dollar limits set by Congress.
Elizabeth
Novak, chief executive officer of Environmental Waste Specialists,
a three-person company in Chantilly, Va., that packages, transports
and disposes of contaminated waste, counts herself among the critics
of the proposed rules.
“I get
almost no contracts now,” Ms. Novak said. “I’m
pulling in $1 million in revenues a year now, but if I just had
the opportunity to compete, I could triple that — and give
the government a better deal for its dollar.”
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