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Government Allocation Goals Not Met for Women-Owned Small Businesses

Women-owned businesses constitute nearly 50 percent of all US businesses. While the federal government aims to allocate 23 percent of contracting dollars to small business, and 5 percent of that allocation to women-owned small businesses and economically disadvantaged women-owned small businesses, the goal has been met once in the 23 years it has been in place. In 1994 the government implemented these goals for women-owned small businesses in in fields like construction or IT where women are underrepresented. The goal was met in for the first time 2015. Although failing to reach the goal for women in 2016 by 0.21 percent, the government exceeded the percentage of small businesses receiving government contracts by over 1 percent.

Women take action to obtain government contracts

In 2008, women began to take action to help themselves and one another to increase their chances of visibility in government contracting. The non-partisan advocacy group, Women Impacting Public Policy, and American Express OPEN, created a program to provide women with the education, training, and resources to enable them to land government contracts. Then the two groups, along with the Small Business Association (SBA), launched ChallengeHER, which gave women the ability to attend free workshops, receive a mentor, and have direct access to government buyers.

Through workshops, mentoring partnerships, and information sharing women can learn a lot from those who have succeeded. For example, it is encouraged that women team up together to have the funds or resources to support a larger government contract, or even sub-contract to learn the business and have their business name in the world. In addition, a company is more likely to receive a government contract if they are reliable and ensuring that they are low-risk investment.

requirements for women-owned small business

Requirements for Women-Owned Small Businesses

In order to qualify as a women-owned small business, in addition to meeting all of the small business requirements, the business must:

  • 51 percent of the business must be unconditionally and directly owned by a woman who holds US citizenship.
  • Women must operate the day-to-day operations and make any long-term decisions regarding the business.
  • The highest officer position must be held by a woman who works full-time during normal working hours.
  • There is no minimum amount of time for the business to be operational

In order to qualify as economically disadvantaged women-owned small business, in addition to the above listed, the business must:

  • Must have a personal net worth of $750,000
  • An adjusted gross income over three years of $350,000
  • All assets must be less than $6 million

Growth in industries is not being represented

Even though the number of women-owned small businesses continue to grow every year, the government has not been able to meet their contracting goal. Women-owned small business are more likely to be outbid by 21 percent, their bids are not high enough to be competitive.

In order to reduce the problem federal acquisition officials finalized the National Defense Authorization Act of 2013 that would allow contracting officers to award sole-source contracts to women-owned small businesses. This took the maximum cap off contracts. Not only is a win for women-owned small businesses but for the government in obtaining their goal of 5 percent. This allows more funds to be set aside for women-owned businesses through the influence of Women Impacting Public Policy.

Currently, SBA chief Linda McMahon is reviewing the programs implemented to make them more effective and efficient. She wants to ensure that small-business owners know that the SBA is there for more than helping them with loan, but also provide free resources for helping them along the way.