Growth of small business programs may hurt women-owned firms

The vast number of federal programs designed to help small businesses may actually hurt small firms owned by women, according to a new General Accounting Office report. The report, "Federal Procurement: Trends and Challenges in Contracting with Women-Owned Small Businesses," (GAO-01-346) examines the federal government's record of contracting with small businesses owned by women. Since 1996, agencies have consistently failed to meet the governmentwide goal of awarding 5 percent of all contracts to female-owned small businesses. GAO surveyed procurement officers and representatives of small business owned by women to find the causes of this repeated shortfall. "Government contracting officials at all levels told us that they were generally overwhelmed by the number and complexity of the requirements of small business contracting programs and their related goals," the report concluded. "These officials believe that the programs tend to crowd out woman-owned small businesses." The report found that none of the 20 agencies that account for nearly all federal procurement purchases met their goals for contracting with women-owned small businesses in each of the last four years. Although NASA and the departments of State and Veterans Affairs met their contracting goals in three of the last four years, their success is potentially misleading, since agencies can negotiate their individual goals with the Small Business Administration. For example, in fiscal 1999, NASA's target for contracting with female-owned small businesses was 1.4 percent of all agency procurement--a significantly lower goal than for many other agencies. Congress created a targeted program to assist female-owned small businesses in the Small Business Reauthorization Act of 2000. Under the law, agencies may restrict competition on certain contracts worth less than $3 million to women-owned small businesses. While this program should help contracting officers reach out to women-owned small businesses, the audit notes that the sheer number of small business programs saps the resources of acquisition officials. "[Contracting] officials noted that the situation has been exacerbated by reductions in the acquisition workforce and the addition of new small business contracting programs and requirements," the audit said. Representatives of women-owned small businesses also identified contract bundling--a practice in which several contracts are lumped together into a big package before they are put out for bidding--as an obstacle to winning government contracts. Rep. Donald Manzullo, R-Ill., new chair of the House Small Business Committee, has promised to revisit the issue of contract bundling as part of a larger review of how federal agencies affect small firms.
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