Bothell business woman Sallie Watson has landed various local and state contracts, but federal contracting is a different story. " a process that there's a big cloud over...

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Bothell business woman Sallie Watson has landed various local and state contracts, but federal contracting is a different story.

“[It’s] a process that there’s a big cloud over, and the attempts that we’ve made have not panned out,” Watson said.

Watson, owner and founder of the Watson Group, an information-technology consulting firm in Bothell, is like many small-business owners without the time or resources to win federal contracts. Another factor is that she is a woman.

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Statistics show that a tiny fraction of federal contracts are awarded to companies owned by women. Although polices have been drafted and laws enacted to address the problem, they have been largely ineffective. Even if they did work, regulation alone can’t solve the problem.

Last year, businesses owned by women received less than 3 percent of federal contracts. The percentage has increased over the years but still does not reach a 5 percent goal set by the Small Business Administration (SBA) in 1994.

Women win fewer contracts than the federal government says they should despite the “Equity in Contracting for Women Act of 2000,” a law allowing contracts to be reserved for female-owned companies in industries in which woman ownership historically has been underrepresented.

Women and federal contracts

Small businesses
win about 23 percent of federal contracts totaling about $65 billion.

Female-owned companies
won about 3 percent of federal contracts in 2003. The U.S. Small Business Administration’s goal since 1994 has been 5 percent.

• Women make up about 30 percent of all business owners. About 98 percent of those businesses have revenues of less than $1 million.

• The value of federal contracts won by female-owned companies was $8.3 billion in 2003, compared with $6.8 billion in 2002.

• If female-owned businesses did make up 5 percent of government contracts winners, they would have earned $5.6 billion more in contracts.

The Equity in Contracting for Women Act of 2000
proposed that contracts that would be reserved for women who own businesses in industries in which female-business owners are underrepresented.

Provisions included:

• Competing companies have to be at least 51 percent female-owned.

• The entity offering the contract can expect two or more women-owned businesses to submit bids.

Sources: U.S. Small Business Administration and the U.S. Women’s Chamber of Commerce

“When you’re comparing services and you’re comparing companies, I think it’s very important to draw attention to women running companies very productively,” Watson said. “By having a set-aside program, the government will have to look at women-owned businesses instead of just the same vendors they always go to.”

The U.S. Women’s Chamber of Commerce has enlisted the support of Business Professional Women/USA and the National Procurement Council for a lawsuit the chamber filed against the SBA in October in U.S. District Court in Washington, D.C. The suit claims the federal agency has not carried out the law.

“This suit is an over-exaggeration of a situation that’s already in process,” said SBA Deputy Director Melanie Sabelhaus, who heads women’s programs for the agency. “We are a month away from finding a conclusion. And this agency is poised and ready to act on it.”

Margot Dorfman, chief executive of the U.S. Women’s Chamber of Commerce, said female business owners are tired of waiting.

“The federal government recognized that we needed a program to assist women,” Dorfman said. “The law was passed and it has not been implemented. Our objective is to get the law implemented now, not wait another four years.”

The first step required the SBA to determine which industries should receive set-aside contracts, which has involved a study conducted by the National Academies of Science.

The study has been delayed several times, Sabelhaus said, but results are expected by the end of the year.

“We are not sitting back and waiting for this study,” Sabelhaus said. “We have been proactive. It does take a long time, not only to prove underrepresentation, but also to prove discrimination.

“But the bottom line is that when you look at the way this agency is working for women to help them win more contracts, the trend is up.”

Either way, it is surprising for the law to take so long to be implemented, said Don Featherstun, a lawyer with Seyfarth Shaw based in San Francisco who worked with contracting businesses and agencies for more than 20 years.

“It’s sad that they’ve had to go through the lawsuit route,” Featherstun said. “It looks like some people have tried the political route, and the political route’s not working.

“I can understand their frustration, and whether the lawsuit is successful or not, at least they’ve made their point.”

The law could help some business owners, but in the long run, it is not a solution to the overall problem. The law allows set-aside programs for women but doesn’t set any requirements for them.

“It seemed like a toothless piece of legislation,” said Beth Newsom, a lawyer with Crowell and Moring, based in Washington, D.C. “Even if this law were implemented, I don’t think it would help women-owned businesses that much. It would be a step in that direction, but it’s a small step — it’s better than nothing.”

Women own about 30 percent of businesses in the U.S., but only about 2 percent have annual revenues over $1 million, making the majority small businesses, Dorfman said.

Small businesses make up 80 percent of companies nationwide; they won 23 percent of government contracts in 2003, according to the SBA.

“Women-owned business are lagging behind getting federal contracts,” Newsom said. “I don’t think that is because of discrimination against women or bias against women. I think it’s a confluence of many trends.”

Most female-owned companies are small businesses that compete with major companies for contracts along with other small businesses that can go after “set-aside” contracts.

Liz Lasater doesn’t want a handout. She started her company, Red Arrow Consulting in Sammamish, 18 months ago, thinking that opportunities abounded for small businesses to win federal contracts.

The opportunities exist, but Lasater says women who own businesses do not have the same access to them as male business owners do.

“My industry is historically underrepresented by women-owned businesses,” said Lasater, who handles supply-chain logistics for companies. “In order for me to be competitive with big companies, it would be very helpful for me to go after contracts specifically earmarked for women.”

Applying for federal contracts is time-consuming, Watson says.

“If you’re small, it takes away from your other selling time,” she says. “Business owners are juggling so many balls. It could be a lot more productive.”

The process also is hard to understand, Watson says.

“There aren’t any tools until you get educated — you don’t know how to break in,” Watson said. “It’s a tremendous learning curve.”

Another factor is that agencies tend to bundle contracts, meaning they look for a contractor that can provide a wide range of services. The government encourages large contractors to subcontract with small companies, but Watson said it creates another system small companies have trouble breaking into.

“I’ve tried many times to contact prime vendors,” Watson said. “The lawsuit would bring attention to make prime vendors more responsible about subcontracting.”

While some business owners say the issue isn’t being properly addressed, SBA officials say they are making progress.

Hector Barreto, director of the SBA, touts how much President Bush’s initiatives have helped female-and minority-owned companies land government contracts.

“Women and minorities are doing great,” he said.

At the end of September, Barreto said the president approved about $4 million in grants for women’s business centers and gave $2.5 billion in loans to female-owned businesses in 2003.

The SBA also has encouraged agencies to award individual contracts, rather than bundling them, to make it easier for small businesses to compete.

Sabelhaus said the SBA’s Business Matchmaking Program has helped thousands of female business owners meet with government agencies that award contracts.

Lasater, nonetheless, feels restricted by the barriers she and other small business owners face: The problem goes beyond being “outside the network.”

She says she is confident she will win contracts but believes there should be fewer roadblocks for female-owned companies.

“I thought it would be quicker,” Lasater said.

“The procurement programs that have come out boost federal contract opportunities for veterans, the disabled and other groups.

“I want to say, ‘Hello, don’t forget me. I have the same challenges and the same issues.’ ”

Blanca Torres: 206-515-5066 or