Let's get serious

As woman-owned small businesses make inroads in federal market, some question whether special set asides are needed<@VM>Resources for women<@VM>From the beginning: The woman-owned contracting preference<@VM>Subcontracting to be eval factor<@VM>Rule change a boon to some<@VM>Size standards work continues

By the numbers

Federal agencies collectively are supposed to meet several goals for awarding contracts to small businesses. The goals, mandated by the Small Business Act, are:


  • 23% of prime contracts awarded to small businesses

  • 5% of prime and subcontracts awarded to small disadvantaged businesses, including 8(a)s
  • 5% of prime and subcontracts awarded to women-owned small businesses

  • 3% of prime contracts awarded to HUBZone small businesses

  • 3% of prime and subcontracts awarded to service-disabled, veteran-owned small businesses.

Contracts may be counted toward the goals in more than one category. For example, if a contract is awarded to a small business that is an 8(a) and woman-owned, the contract is counted in both categories.

The women's strong showing belies the difficulties they've had along the way, competing in what Irma Tuder of Analytical Services Inc. said is "still a good-old-boy network."

Julie Bennett

"Contracting officers have to stay clean, so they aren't going to go outside the regulations," ? Angela Drummond, president and chief executive officer of SiloSmashers Inc.

Rick Steele

"I don't put a lot of credence into whether I'm a woman or a man. I just work toward success," said Alba Alemán of Cairo Corp.

Rick Steele

Cairo Corp. of Chantilly, Va., has grown nearly 200 percent annually during the past five years and now tops Washington Technology's annual list of the 50 fastest-growing federal IT contractors. Owner and president Alba Alemán said she doesn't want any special treatment from the government because of her gender.

"I don't put a lot of credence into whether I'm a woman or a man. I just work toward success," said Alemán, whose 80-person 8(a) small business moved to Chantilly, Va., in January.

Others said that, Alemán's success notwithstanding, more needs to be done to give women a shot at competing in the federal market.

In fiscal 2003, 2.98 percent of government contract dollars went to woman-owned small businesses, according to the Small Business Administration, an amount far short of the federal 5 percent goal.

If the goal were to be met, up to $5.5 billion in federal contracts would go to woman-owned small businesses annually, according to Rep. Nydia Velazquez, D-N.Y., ranking minority member on the House Small Business Committee.

"It's a huge amount of money," said Sharon Hadary, executive director of the Center for Women's Business Research in Washington. Hadary said women aren't getting fair consideration for federal contracts.

"Woman-owned small businesses account for 2 percent to 3 percent of federal contract dollars, yet they are 30 percent of privately held firms," Hadary said. "We really do need to create a level playing field."

Under current regulations, woman-owned small companies that don't fall into any other small-business category, such as 8(a), can only pursue contracts set aside for all small businesses or full-and-open competition contracts. Many women said that if contracting officers were allowed to set aside contracts for woman-owned businesses, federal agencies would have no problem meeting their collective 5 percent goal. Other types of small businesses -- 8(a), HUBZone and service-disabled veteran-owned -- have set-aside programs.

"By not having that set-aside, woman-owned businesses are getting pushed out of set-aside opportunities," said Valerie Perlowitz, owner of Reliable Integration Services Inc. in Vienna, Va. "Everyone is getting a piece of the pie except woman-owned."

As a group, women who own small businesses in the federal IT market are ambivalent about the set-aside program. They want to be taken seriously and don't want to appear helpless or weak. But they also want equal treatment from the government. For many, this means getting the set-aside status that was promised them in law four years ago.

"We'd just like to have fair play," said Catherine Giordano, president and chief executive officer of Knowledge Information Solutions Inc. in Virginia Beach, Va.



ON THEIR OWN

More than twice as many woman-owned firms are on Washington Technology's 2004 Fast 50 list this year as were on last year. Fifteen of the companies, or 30 percent, are woman-owned. Only seven woman-owned firms made the list last year. Two woman-owned companies are on Washington Technology's list of the Top 25 8(a) firms.

The women's strong showing belies the difficulties they've had along the way, competing in what Irma Tuder said is "still a good-old-boy network." Tuder is president and CEO of Analytical Services Inc. in Huntsville, Ala., which graduated from the 8(a) program in April.

For example, when Alemán started Cairo Corp. in 1999, she used a business model that was similar to a business run by men. She had great credit and money to put into the business. Yet she had difficulty securing financing.

"That was one of the most frustrating aspects of starting the business," she said. "I didn't need a loan. I needed a line of credit to finance my payroll, and getting that was extremely challenging."

Alemán's experience wasn't unusual, said Ann Sullivan, federal legislative consultant for Women Impacting Public Policy, a Washington advocacy group. "Not all that long ago, you had to take your husband to the bank," she said. "It has loosened up some, but the banking industry has not seen the same potential for woman-owned businesses as did their male counterparts."

Many women said they also have difficulty making business connections because of stereotypical notions about them.

"I've met clients for dinner, and if they are male and somebody sees us together, they may get the wrong impression. My male colleagues have told me it gets questioned," said Angela Drummond, owner of SiloSmashers Inc. in Vienna, Va., No. 43 on the Fast 50 list.

Alemán has been asked out on dates at business functions. She always says no. Men definitely don't get the same kind of attention, she said.

"The experience has taught me to be very serious, so that the only thing that projects is 'I'm here to do business,' " she said. "As long as you don't blur those lines, people will always respect you for that. No dates, no lunch."

[IMGCAP(2)]Both women say they try not to focus on the pitfalls of being a woman in a male-dominated industry.

"If you focus on those hurdles, you are never going to get to the other side," Drummond said.

So the women focus on growing their businesses. SiloSmashers made its first acquisition this year, and now employs 86 people. The company has had 58 percent compound annual growth over the last five years. Drummond has fueled that growth by partnering with another small firm to compete

with large businesses such as Accenture Ltd. and Booz Allen Hamilton Inc.

Drummond, a Native American, said SiloSmashers probably will graduate from the 8(a) program in 2006, four years early, because of its rapid growth.



THE CASE FOR SET-ASIDES

Despite their successes, many women said they still want a set aside for their companies. Some said that without a set aside, the federal government will never meet its annual goal of awarding 5 percent of prime contracting and subcontracting dollars to woman-owned small businesses.

"It's only a goaling program now," Perlowitz said. "The problem now is that if I talk to a contracting officer, say we are woman-owned and the customer wants to buy something quickly, there is nothing that allows them to set aside this piece of work because it is woman-owned."

A 1994 federal law set the 5 percent goal, and a 2000 law allowed a set-aside program for women, but the program has never been written into regulation.

[IMGCAP(3)]The 2000 law required a disparity study before the procurement regulations were written. The study would identify industries in which woman-owned businesses were under-represented in federal contracting. It has never been completed.

"There has been no sense of urgency around this," Sullivan said. "It's inconceivable to us that it would take so long to complete a relatively simple study."

The Senate Small Business Reauthorization Act of 2003 includes a provision that would transfer the study to the Government Accountability Office, but that bill has not been voted on by the full Congress.

The Senate Small Business Committee is "aware of the desire to establish a set aside, but our hands are tied until we have reliable data to determine there is a need," said committee spokesman Craig Orfield.

According to SBA spokeswoman Tiffani Clements, the agency conducted a study but decided it did not conform to legal requirements because SBA included firms that were not "ready, willing and able" to bid on government contracts.

The study was turned over to the National Academy of Sciences for review, and a committee of experts will make recommendations on proper study methodology, Clements said. Constance Citro, director of the Academy's Committee on National Statistics, said the recommendations would not be made until late November.

Even as SBA officials pursue completion of the study, they seem to question whether women really need a set aside.

"A number of factors would seem to mitigate against much of an adverse effect on woman-owned small businesses," Clements said. "Chief among these factors is that the SBA 8(a) program and related small disadvantaged business programs afford minority women and eligible white women the advantages of federal procurement set asides. In addition, there are many other programs and policies designed to assist woman-owned small businesses offered by SBA."

SOMEONE ELSE'S SLICE

For some, the issue is still in doubt.

"Most agencies are meeting their woman-owned small-business goals without setting aside contracts for woman-owned businesses, which speaks highly of woman-owned businesses," said Leslie Butler, president of Zen Technology Inc. The Bethesda, Md., company is No. 33 on the Fast 50 list.

Indeed, agencies such as the Commerce, Education and Interior departments surpassed 5 percent in contracting to woman-owned businesses last year. But many more -- such as the Energy Department, which awarded less than 1 percent of its work to woman-owned businesses -- didn't come close.

A new set aside would bring new woman-owned businesses into the federal marketplace, benefiting the government, Tuder said. But unless the amount of money going to small businesses increases overall, a new set aside will only take work out of other small-business programs, she said.

"If you are just taking from one to the other, it doesn't help anybody," she said.

Staff Writer Gail Repsher Emery can be reached at gemery@postnewsweektech.com.
The following organizations and Web sites are some of the business development resources available to woman-owned small businesses. Much of the information they provide also can apply to other types of business as well.

  • The National Women's Business Council, www.nwbc.gov, is a bipartisan, federal advisory council that provides policy recommendations on economic issues affecting women business owners. The organization's Web site includes research about woman-owned businesses and information about council events, such as its monthly conference calls about various business issues.

  • WomenBiz.gov, www.womenbiz.gov, which is produced by the National Women's Business Council, explains the basics of federal contracting and includes links to business development resources.

  • Small Business Administration's Guide to Federal Contracts for Women, www.sba.gov/training/womentoolkit .html, provides information on government contracting, federal small-business development programs, and training and counseling opportunities.

  • SBA's Office of Women's Business Ownership, www.sba.gov/ed/wbo/index.html, provides links to resources, including the agency's women's business centers, which provide entrepreneurial counseling and training to women small-business owners.

  • SCORE, www.score.org/women.html, is a non-profit association dedicated to entrepreneur education. The group offers free mentoring and counseling, workshops and seminars developed for women entrepreneurs.

  • A list of federal agencies' Office of Small and Disadvantaged Business Utilization is at www.osdbu.gov/Listofmembers.htm. The offices work with small businesses to identify contracting opportunities in the agencies, and they often employ representatives of woman-owned businesses.

  • The Procurement Institute of the National Women's Business Center,
    http://www.wbiznet.biz/procurement, provides help for small businesses seeking to grow in the federal marketplace. The institute offers courses for learning to how sell to government and the center hosts networking events that bring together federal procurement personnel and business owners.


October 1994

The Federal Acquisition Streamlining Act sets an annual governmentwide goal of awarding 5 percent of prime contract and subcontract dollars to woman-owned businesses.

December 2000

The Consolidated Appropriations Act of 2001 allows a set-aside program for women. But the law requires that, before the program can be written into the procurement regulation, the government must conduct a "disparity study" demonstrating that woman-owned businesses are under-represented in federal contracting. The law allows contracts to be set aside if they are not worth more than $5 million for manufacturing work or $3 million for all other types of work.

September 2003

The Senate passes the Small Business Administration 50th Anniversary Reauthorization Act, which would reassign the required study to the Government Accountability Office. The full Congress has not yet passed the bill.

December 2003

SBA turns its disparity study over to the National Academy of Sciences for review, saying SBA's work would not withstand legal scrutiny.

November 2004

A National Academy committee will make recommendations on proper study methodology.
In the next two months, the Small Business Administration will publish a final rule that makes large prime contractors' efforts to meet small-business subcontracting goals part of the past-performance criteria for awarding new contracts, according to Dean Koppel, an SBA assistant administrator.

SBA proposed the rule in the Oct. 20, 2003, Federal Register. The rule authorized contracting officers to consider small-business subcontracting when placing orders with large businesses against Federal Supply Schedules, governmentwide acquisition contracts and multi-agency contracts.

Small businesses that bid as primes do not have to file small-business subcontracting plans, Koppel said.A proposed procurement rule change would help small disadvantaged businesses and HUBZone businesses by allowing contracting officers to apply a price evaluation adjustment to acquisitions subject to the Trade Agreements Act and memoranda of understanding or other international agreements.

The proposed rule change was published in the Federal Register Sept. 2. Comments on the change are due by Nov. 1. They should be identified by FAR case 2003-015 and filed at www.regu

lations.gov or e-mailed to farcase.2003-015@

gsa.gov.

Without the price evaluation adjustment, which gives the small disadvantaged and HUBZone businesses a pricing advantage over other companies, foreign companies were getting favorable treatment over U.S. businesses, according to the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council.Later this year, Small Business Administration officials will publish an advance notice of proposed rulemaking to solicit more industry comments about appropriate size standards for small businesses.

The advance notice comes in response to the flood of comments SBA received on its March 19 proposal to restructure the size standards. Most issues raised in the comments addressed areas where SBA had not proposed any changes, said SBA spokeswoman Tiffani Clements.

Clements said the agency is also planning a series of public meetings on size standards before taking further action on size standards.

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