Washington, DC -- The Center for Women’s Business Research, the premier non-profit research institute dedicated to producing data-driven knowledge exclusively on women business owners and their enterprises, has submitted testimony to the House Small Business Committee strongly opposing the recent U.S. Small Business Administration proposed rule regarding federal contract opportunities for women-owned businesses.

Even a cursory review of 2002 data suggests a much broader incidence of under-representation within almost every industry than the SBA report, The Utilization of Women-Owned Small Businesses in Federal Contracting, has selected.  The result of this proposed ruling would be to hold contracting with women-owned businesses to a more stringent standard than any other segment of the small business community that has federal contracting goals.

“As researchers ourselves, we know that turning research into actionable knowledge is as much about knowing what data will answer the real-world questions as it is about methodology,” said Margaret A. Smith, chair, Center for Women’s Business Research.  “We strongly urge the SBA to go back to the drawing board and with greater participation from women business owners and the organizations that represent them, to develop a plan that ensures the full participation of women-owned businesses in our nation’s economic future.”

Using the findings from a study conducted by the Rand Corporation, the SBA selected from among the many options presented the MOST restrictive definition of industries in which women business owners are under-represented.  The proposed ruling restricts the industries where women-owned businesses are considered under-represented to four very narrowly defined industries:

• cabinet making;
• coating and engraving;
• national security and international affairs; and,
• other motor vehicle dealers (all terrain vehicles).

The result is that out of the 6.5 million (2002 U.S. Census Bureau data) majority (51%) or more women-owned businesses, only 1,247 could potentially benefit from the program.

Looking only at the 6.5 million businesses cited in the 2002 Census that are majority (51% or more) women-owned, we find such large discrepancies between the incidence of women-owned businesses in each major industry category and the percent of contracting dollars that go to women-owned businesses that it is apparent that women business owners are under-represented in Federal contracting across the board.

For example, while women-owned businesses represent more than half of the businesses in Health Care and in Educational Services, they receive only 7% of the Federal contracting dollars in Health Care and about 2% of the Federal contracting dollars in Educational Services.

In industries that are considered less traditional for women-owned businesses we see the same differences, such as:

• Utilities (14% of the businesses are women-owned but women-owned businesses receive only 1% of Federal contract dollars);
• Manufacturing (7% of the businesses vs. less than 2% of Federal contract dollars); and,
• Transportation (12% of the businesses vs. less than 1% of Federal contract dollars).

The size of the women-owned businesses or their readiness for Federal contracting cannot account for the magnitude of these differences.

Women are starting businesses at twice the rate of all businesses.  The Center for Women’s Business Research estimates that as of 2006, there are 7.7 million businesses majority (51%) owned by women, which generate more than $1 trillion in revenues and provide employment for 7.1 million people.

“The growth of these businesses is essential to this nation’s economic vitality and competitiveness,” added Margaret Smith.  “Federal contracting is critical to the sustainable growth of these economic contributors.”

As early as 1994, a study by the SBA’s Office of Advocacy showed that women-owned businesses that received Federal contracts were more likely than other women-owned businesses to show consistent growth.  More recent research by the Center for Women’s Business Research shows that having government contracts continues to be one of the key factors differentiating the larger, faster growing women-owned businesses from the smaller businesses.

The Center’s research also documents that fully 20% of women who own businesses in “non-traditional” industries report that being a woman is detrimental in accessing markets.

Center for Women’s Business Research

The Center for Women’s Business Research provides data-driven knowledge that advances the economic, social and political impact of women business owners and their enterprises. We do this by setting the national agenda; creating insight on the status and achievements of women business owners; altering perceptions about the economic viability and progress of women-owned enterprises; and driving awareness of the economic and social impact of this vital business sector. Find out more online at www.womensbusinessresearch.org.