SBA Upsets Lawmakers with Contracting Plan

The Small Business Administration's new plan intended to improve contracting procedures for women-owned businesses has riled lawmakers overseeing small business issues.

The agency went through a complicated research process to deliver its outcome, which ultimately whittled down the thousands of women businesses that could be eligible for federal contracting dollars to four categories:

*National security and international affairs;

*Coating, engraving, heat treating and allied activities;

*Household and institutional furniture and kitchen cabinet manufacturing; and certain

*Motor vehicle dealers.

The agency based its proposal on a study it commissioned from the RAND Corp. to determine which women-owned small businesses participating in federal contracting were underrepresented in certain industries.

Under the SBA's plan released Wednesday, a contracting officer in any federal agency could set aside contracts or work, but only within an industry in which women-owned small businesses have been identified as underrepresented. Only small businesses owned or controlled by economically disadvantaged women would be eligible for these contracts.

The SBA said in a statement: "This proposed rule provides a constitutionally-acceptable means to address the identified underrepresentation. This is progress."

But Sen. John Kerry (D-Mass.), who chairs the Senate panel overseeing small firms and entrepreneurs, called it "a slap in the face to women business owners."

"We've been trying for seven years to get the administration to end unfair contracting practices," he said in a Thursday statement. "By cherry picking data, they've not only done nothing to level the playing field, they've actually shut women out of the process for thousands of different types of contracts."

SBA Administrator Steven Preston is scheduled to testify before the committee next month and Kerry's statement said the senator plans to "call on the administration to throw out this rule and put forward a workable, more inclusive proposal that respects women."

Kathryn Seck, a spokeswoman for Kerry and the committee added Friday, "It is super super narrow how the [SBA] chose to interpret this rule... but in a way it's not a surprise since the administration hasn't been doing anything on the issue for seven years.. It's ridiculous."

A 2000 law called the Equity in Contracting for Women Act created the Women's Procurement Program to help women more successfully compete for government work. The SBA did not implement the program while examining it for more than five years to determine how it should work. The U.S. Women's Chamber of Commerce sued the government over the SBA's lack of implementation and the court ruled that the federal government was acting unreasonably in delaying the law's enactment.

Rep. Nydia Velazquez (D-N.Y.), who chairs the House Small Business Committee, said: "This proposal would create an initiative benefiting only a tiny fraction of the businesswomen of this country. 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."

Her committee plans to hold a hearing on the matter next month to determine whether the agency ignored congressional intent in crafting its program.

The proposed rule is open to public comment until Feb. 25, 2008. Anyone interested in weighing in on issue "3245-AF40" can go to the Federal eRulemaking Portal and follow the instructions for submitting comments.

By Sharon McLoone |  December 28, 2007; 3:15 PM ET
Previous: SBA Looks at Its Year in Review | Next: Women's Groups Lambaste SBA Plan


Please email us to report offensive comments.

As President of Women Impacting Public Policy, a national bi-partisan public policy organization of more than half a million women business owners, including 45 small business organizations as members, we are outraged. Over the past few days since the study has been released, we have heard from hundreds of our members and will be responding with our partners to the rule.

The blatant disregard this issue has received from this administration is illustriative to everyone that the administration views women as silent and not relevant participants in the political process. We vote in 9 out of 10 elections and will take this to the ballot box - watch and see!

Posted by: | December 29, 2007 3:32 PM

The SBA Conclusions and the Rand Study are Flawed! WIPP posted its reaction to this on its blog,

The Rand Study, which the SBA used to issue regulations on PL106-554, the legislation passed in 2000, is flawed in several respects (and it admits it throughout the study) according to Denise Farris, Farris Law Firm out of Stilwell, KS., and WIPP National Partner. Denise is an attorney who represents several clients in the federal contracting area.

1. The study identifies an incorrect constitutional standard of review for women business programs by stating that the standard is "strict scrutiny". In fact, the correct standard for gender-based programs is a level called "intermediate scrutiny". The relevance is that under an intermediate level of scrutiny, women business owner programs are more easily justified and require less proof to sustain the program.

2. The Study utilizes two widely disparate systems of "availability" - the first element of proving discrimination. The Rand Study first analyzed availability through CCR registrations (those women business owners who have self-certified through the federal government certification system) vs. total women business owners per the U.S. Census. Many women business owners choose not to register through CCR, so the CCR measure of availability is a much more limited universe than the total number of businesses in our country.

3. The Study erroneously used old SBA size standards and is thus again excluding a larger universe of companies that would qualify as "small" under the correct standards.

4. The Study relied upon old NAICS industry codes and specifically admits that its figures may thus be unreliable.

5. The Study concludes that based on the total number of "contract dollars" awarded to the total number of women business owners registered in the CCR, there is disparity only in a limited number of industries. Therefore, the Study concludes that a large dollar volume is being awarded to very few in a large number of industries. On the other hand, the Study concluded that when you measure the total number of contracts awarded versus the total universe of women business owners, there was an 87% disparity or underutilization in federal contracting. This leads us to wonder which analytical method is more accurate? Of course, the SBA chose to accept the first analysis (no disparity) to justify limited federal assistance to women owned businesses to get a fair share of government procurement dollars.

In case your interested on the credentials of Denise Farris - among her credentials, she:

1. publishes articles readily (since 1989 on the Croson, Adarand I, II and III cases, and monitors the Supreme Court decisions and state decisions;

2. She serves as the first female representative on KC Missouri's Fairness in Construction Board;

3. Leally repreents the City of KC MO in creating contract forms to track true availability and utilization of M/WBEs on contract specific basis;

4. Regular speaker and nationally published on affirmative action in government contracts for the American Bar Association Forum on the Construction Industry.

Barbara Kasoff, President
Women Impacting Public Policy (WIPP)

Posted by: | December 29, 2007 3:41 PM

The remedy for sex discrimination is sex discrimination?

Posted by: SC | January 9, 2008 11:21 AM

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