Businesses Owned by Women Less Likely to Win U.S. Contracts, Study Shows

 

"These are sobering statistics that show a real, unfair disadvantage for women entrepreneurs," said Senator Jeanne Shaheen, Democrat of New Hampshire. CreditAlex Brandon/Associated Press

WASHINGTON - The odds of businesses owned by women winning a federal contract are about 21 percent lower than for otherwise similar companies, and years of effort to increase those chances have barely made an impact, according to a new report from the Commerce Department.

The report is being released as the federal government is beginning to change a Small Business Administration program that is five years old this week, yet has never met a goal of helping companies owned by women win at least 5 percent of federal contract dollars.

The changes, which were required by a 2014 law that also mandated the report, now make such businesses eligible for no-bid contracts so they can gain the experience needed to win other, competitive projects.

The percentage of federal contract dollars going to companies owned by women rose to 4.7 percent in the 2014 fiscal year, the most recent year that the report examined, from 4 percent in 2011, when the Small Business Administration program to help such companies began, according to the report. Businesses owned by women, which are defined as companies that are at least 51 percent owned by one woman or more, account for about 30 percent of American companies.

"These are sobering statistics that show a real, unfair disadvantage for women entrepreneurs," said Senator Jeanne Shaheen, Democrat of New Hampshire, who sponsored the 2014 law, with Senator Maria Cantwell, Democrat of Washington, and Senator Kirsten E. Gillibrand, Democrat of New York.

"We've made good progress with the recent expansion of the women-owned small business contracting program, but this data clearly shows that this program should be expanded to more industries," Mrs. Shaheen said.

Economists at the Commerce Department examined recent years' data for 304 categories of industries and more than 600,000 companies, about 20 percent of which identified themselves as owned by women. Winners of federal contracts tended to be the older and larger companies, the report said.

Businesses owned by women generally are "smaller and younger than other businesses," the report said. Yet that accounts "for only part of the disparity in the likelihood of winning contracts," it added. "Even when controlling for firm characteristics, including firm size and age, women-owned businesses are less likely to win contracts than otherwise similar businesses not owned by women."

The report did not suggest other explanations for the disparity or ways to alleviate it. The changes mandated in December 2014 are too recent to show in the data.

The 2014 law allowed companies owned by women to qualify for no-bid "sole source" contracts, like those long available to minority-owned businesses and to those companies designated as economically disadvantaged. Federal officials have discretion to award such contracts to a single qualified small business after negotiating terms, thus avoiding prolonged bidding with multiple companies.

In sponsoring the law, Mrs. Shaheen drew on the experience of women like Sue Sylvester, the majority owner of Absolute Resources Associates, an environmental service company in Portsmouth, N.H., who struggled to get government contracts.

"I think what my experience shows is that if the sole-source option is available for women-owned firms, it’s going to change the odds," Ms. Sylvester said. That option - which she first qualified for as an economically disadvantaged business because of her company’s small size — "allowed us to get our foot in the door and show what we can do compared to the big boys."

Four years ago, her company won its first contract with the United States Military Academy at West Point to provide air monitoring and protection against lead, asbestos and mold contamination as West Point renovates old buildings, she said. Since then it has received others for handling hazardous wastes, monitoring water quality and cleaning lead from a firing range at West Point, and for monitoring drinking water at the Portsmouth Naval Shipyard.

Extending sole-source contracts to companies owned by women should give them "an opportunity to get that experience and get ready to compete" for the more numerous and larger contracts bid competitively, she said.

"It’s just difficult to get your experience shown," she said. "That’s the hard part."