Gender Gap Continues in Competition for Federal Contracts

In the US, women-owned businesses are one of the fastest growing sectors among small business owners. Women own 30 percent of all small businesses, up from just 5 percent 40 years ago. But despite this growth, women still find it more difficult than their male counterparts to land federal contracts.

The Small Business Administration recently hailed the passing of a new law that is said to open up more federal contracting opportunities to women-owned small businesses. The law, part of the National Defense Authorization Act of 2013 (NDAA), removes contract thresholds for women-owned small businesses and economically disadvantaged women-owned small businesses. Prior to the new law, these contracts could not exceed $6.5 million for manufacturing contracts and $4 million for all other contracts.

But will these new government measures actually make a difference for women-owned small businesses? Jeanne Peck, CEO of Nash Locke LLC, a Virginia-based information technology company, is doubtful that they will. “Women-owned small businesses are at the very bottom of the food chain,” says Peck. She adds that “women often have to fight for the scraps of subcontracts.”

According to data compiled by Bloomberg, women’s federal contracts fell 5.5 percent during the last fiscal year, from $17.3 billion to $16.4 billion. Contrasting those figures with the awards to small businesses owned by men reveals a gender gap: men’s contracts fell only 4.1 percent and their totals amounted to $80.9 billion.

In 1994, the government established that 5 percent of federal contracts were to be awarded to women-owned businesses. However, that target has never been achieved. In spite of these federal goals and other government programs aimed at helping women in business, women receive only about 3.2 percent of total available contracts.

American Express OPEN reports that in 2012 there were over 8.3 million women-owned businesses in the United States, generating nearly $1.3 trillion in revenues and employing 7,697,000 people. Additionally, between 1997 and 2012, when the number of businesses in the US increased by 37%, the number of women-owned firms increased by 54% — a rate 1 1/2 times the national average.

Sources:

Ivory, Danielle. “Women Lose More Ground in U.S. Small Business Contracts Race.” Bloomberg. January 24, 2013.

New OPEN Study Reports Growth of Women-Owned Businesses for 2012.” American Express. March 21, 2012.

Press Release. “SBA Announces Changes to Contracting Program For Women-Owned Small Businesses.” January 17, 2013.

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