Legislators want new SBA rule thrown out

The Small Business Administration's attempt to give women who own small businesses better odds of getting a government contract may not help after all, lawmakers say.

On Dec. 27, SBA issued a proposed rule for setting aside contracts for women-owned small businesses. The rule would limit the contract set-asides to four industry areas: national security and international affairs; coating, engraving, heat treating and allied activities; household and institutional furniture and kitchen cabinet manufacturing; and motor vehicle dealers.

Congressional leaders want the rule thrown out.

It "is a slap in the face to women business owners," said John Kerry (D-Mass.), chairman of the Senate Small Business and Entrepreneurship Committee.

"To suggest that the only women who deserve support are in industries as small as kitchen cabinet manufacturing is downright insulting," said Nydia Velázquez (D-N.Y.), chairwoman of the House Small Business Committee.

SBA said it based those four areas on a methodology recommended by Rand, which studied the issue for the agency. The company identified numerous ways to measure underrepresentation, and SBA decided to measure it by the dollar value of contracts awarded to women-owned small businesses. SBA said it chose this approach because dollar amounts can easily be compared across agencies, programs and industries. SBA based the figures on fiscal 2004 and 2005 procurement data.

The methodology revealed that women-owned small businesses were underrepresented in those four industries.

"It is a sad day for the female entrepreneurs of this country when the administration will use whatever means necessary to hinder their participation in the federal marketplace," Velázquez said.

SBA Administrator Steve Preston will hear lawmakers' opinions on the rule this month when the Senate and House small business committees hold hearings on the rule.

Kerry plans to tell SBA to throw out the proposed rule and come up with a more inclusive and workable proposal, he said.

Despite the rule's limited scope, SBA said it would reach out to women business owners through other programs, such as small-business development centers and women's business centers nationwide.

SBA said when it proposed the rule that agencies may have to deal with increased costs for work and less selection for quality when they set aside a contract for women-owned businesses.

"Taxpayers ultimately bear the cost of small businesses inexperienced in federal contracting learning through limited competition set-asides," SBA said in a Dec. 27 Federal Register notice.

Still, the set-aside would help agencies meet their annual small-business goals, SBA said.

Matthew Weigelt writes for Federal Computer Week, an 1105 Government Information Group publication.