SBA finalizes women’s small business contracting program

The Small Business Administration finally has started to implement a contracting program for women who own small firms, one decade after Congress first authorized it.

On Monday, SBA filed a final rule creating the long-awaited procurement program, which focuses on 83 industries in which women are underrepresented in the federal contracting marketplace. Program participants will be eligible for set-aside deals of less than $3 million for most contracts and $5 million for manufacturing. The rule will appear in the Federal Register on Thursday.

"Despite their growth and the fact that women lead some of the strongest and most innovative companies, women-owned firms continue to be underrepresented in the federal contracting marketplace," SBA Administrator Karen Mills said. "This rule will be a platform for changing that by providing greater opportunities for women-owned small businesses to compete for and win federal contracts."

The final rule closely mirrors a proposal the Obama administration first floated in March. SBA received more than 1,000 comments on the proposed rule, but ultimately made mostly minor changes.

To be eligible for the program, a firm must be 51 percent owned, controlled and primarily managed by one or more women who are U.S. citizens. The firm also must qualify as "small" in its primary industry.

SBA officials identified the 83 eligible industries based on a combination of the share of contracting dollars awarded to women-owned firms and the share of contracts awarded. This is a departure from the previous rule by the George W. Bush administration, which identified only four industries in which women-owned small businesses were underrepresented, based solely on the share of contracting dollars.

Women-owned small businesses will be allowed to self-certify for the program, or be certified by a third party, such as an industry association. Companies will be required to submit proof of eligibility to an online document repository that SBA will maintain.

To avoid the fraud that has plagued many of the other small business socioeconomic programs, the agency will examine firms' documentation and seek punitive actions against ineligible businesses that improperly attempt to participate.

Advocates expect the program will help the government reach, for the first time, the federal statutory goal of awarding 5 percent of all contract dollars to women-owned small businesses.

"The shortfall between the contracting dollars awarded to women and the paltry 5 percent goal has been in the range of $5 [billion] to $8 billion annually," said Margot Dorfman, chief executive officer of the U.S. Women's Chamber of Commerce. "We are confident that, with this program, the federal government will finally have the tool necessary to bring fair access to contracts for women-owned firms. We look forward to reviewing the final rule -- and hopefully, to seeing an end to our legal claim against the SBA."

The women-owned small business program has gone through a host of delays, rewrites and litigation during the past 10 years.

In 2000, President Clinton signed the Equity in Contracting for Women Act, allowing the government to reserve contracts for women-owned small businesses in industries where females historically were underrepresented.

The program sputtered, however, during the Bush administration. A 2004 Women's Chamber of Commerce lawsuit forced Bush officials to draft a proposal. But the 2008 plan set off a firestorm of complaints from lawmakers and women's advocates, who accused SBA of choosing the narrowest methodology for determining underrepresentation. The Obama administration decided last year to scrap existing proposals and draft a new, comprehensive rule.

SBA now has 120 days to implement the program. The agency plans to use that time to educate and train federal contracting officers on the new requirements and to finalize a database of eligible companies. The program should be officially up and running by early February 2011, according to SBA spokeswoman Hayley Matz.