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Senate Committee Seeks Answers on Women’s Procurement Program

On January 30, the Senate Small Business and Entrepreneurship Committee held a hearing on the Small Business Administration’s (SBA) recently proposed rule on the Women’s Procurement Program. The House Small Business Committee held a similar hearing on January 16 (see The Source, 1/18/08).

“Unfortunately, the main topic of this hearing is about a promise that was broken the newly proposed rule for the Women’s Procurement Program,” said Chair John Kerry (D-MA). Addressing his comments to SBA Administrator Steven Preston, Sen. Kerry said, “It is beyond inadequate. It is an affront to anyone who believes that women ought to have an equal opportunity to sell their goods and services to the federal government. It took seven years of Congress hitting you over the head in a bipartisan manner asking for a rule to implement the program, and this is what you’ve come up with? Out of 140 industries and more than 2,300 contracting categories, you claim that only four are underrepresented by women.” Sen. Kerry continued, “Women-owned firms account for over 30 percent of all firms, yet they get only 3.4 percent of all federal contracting dollars, far short of the five percent goal. That’s plain unacceptable, and I call on you to go back to the drawing board and put forward a realistic, workable rule this Congress can get behind. I have written a letter to the administration outlining my objections to this proposed rule in a more formal way. I will make that letter available to the entire committee and I hope that they will join me in sending a message that this rule is unacceptable.”

Ranking Member Olympia Snowe (R-ME) also expressed her concerns about the proposed SBA rule, saying that there would be no benefit to 55,000 women-owned small businesses across the country from the rule as it is structured currently. She noted that only an estimated 1,238 women-owned small businesses nationwide, and just two in Maine, would potentially benefit from the rule, calling it a “gross disparity.” Sen. Snowe said, “The SBA had an opportunity to hit a home run in implementing an effective women’s contracting program, but I am deeply concerned that the agency’s proposed rule to implement this initiative falls far short of what is required,” and that she would “continue to look at all options to ensure that a final rule will truly help women receive their fair share of federal contracting opportunities.”

Of the RAND Corporation study used by the SBA to help determine the categories in which women-owned small businesses (WOSBs) are underrepresented, Mr. Preston said, “RAND examined 28 different approaches that looked at a wide range of data collected by the federal government…Relying on the guidance offered by the NAS [National Academy of Sciences] and the actual results of parsing the data, RAND then began to zero-in on those methods that most accurately measured underrepresentation and substantial underrepresentation. After careful analysis of the four remaining approaches, SBA adopted the approach that best captured the most appropriate measures.”

Mr. Preston continued, “In analyzing the data found in the RAND study, we recognized that the real issue is that there are not enough WOSBs registered in the CCR [Central Contractor Registration]. As a result, we are analyzing what we have done in the past and what additional steps we can take to increase the number of WOSBs able to pursue federal contracts…SBA is taking a forward-looking approach. First, our programs are tasked with growing the universe of WOSBs and encouraging these businesses to register in the CCR, thus making these businesses eligible to contract with the federal government. Second, the role of the SBA is to help those businesses become ready, willing, and able to undertake and build a successful track record working with the federal government…We must remember that there is no single magical approach that will expand the participation of women-owned small businesses in federal procurement; rather, a combination of initiatives that take into account the individual needs of businesses is the best approach to provide opportunities for women small business owners to do business with the federal government.”

Noting that the SBA chose a methodology that yielded four industries in which WOSBs are underrepresented, Sen. Snowe said the SBA eliminated measurements that would have shown that 50 percent or more industries are underrepresented by women-owned small businesses. “This de minimis standard is affecting women,” she said.

In response, Mr. Preston indicated there were other methods the SBA could have chosen in determining the industries. However, he said that the SBA chose the methodology that was “most defensible” in establishing a preference-based program. Sen. Carl Levin (D-MI) countered, “That’s where it seems you failed. You chose one [methodology] that may be the most defensible from a legal standpoint, but from a policy standpoint, it doesn’t achieve the policy goal. The methodology is much too narrow and needlessly so.”

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