Monday, January 11, 2010

Federal Government Not Hitting Contracting Targets for Women-Owned Businesses

The U.S. Women's Chamber of Commerce (USWCC) recently released a report on the state of Federal contracting with women-owned small businesses. This report, relying on data from 2008, is at odds with the U.S. Government's success claims of meeting its goals (5 percent of Federal spending) primarily because in the current Federal contracting system, any business may simply proclaim their women-owned status when posting their company's information online without facing any scrutiny.

According to USWCC, total Federal spending in 2008 was about $537 billion. Five percent of that is $27 billion. Actual awards to women-owned business were only $15 billion leaving a shortfall of $12 billion. To make matters worse (again, according to the USWCC), the shortfall is getting worse. In 2007, the shortfall was only $10 billion.

We don't really know whose data is better, the Federal Government, or the USWCC. We are well aware of USWCC's concerns that the Government does not verify company self-certifications in its databases. That's an old story, and yet a valid concern. No one, to our knowledge, has ever tried to quantify the error rate. On the other hand  we are also aware of the problems that individual contractors have in meeting their small business targets. Although there are 75 thousand women-owned business registered with the Federal Government, it is hard to find small-businesses, much less women-owned small-businesses that can provide, say, engineering services to major aerospace firms. As a result, many Government contractors have a difficult time finding qualified women-owned business that can satisfy the technical requirements of the work to be performed. Many of these contractors frequently miss their small-business subcontracting targets. To read more of the USWCC report, click here.

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