Struggling for U.S. contracts
Architect Rita Kalwani is frustrated by a years-long delay in the launch of a federal program that would help small businesses owned by women earn a share of the $412-billion federal marketplace.
Since it graduated from another contract-assistance program three years ago, Kalwani’s company, Irvine-based Kal Architects Inc., has seen revenue drop by more than half from its peak of $3.8 million. The employee count is down by a third to 15.
“It has been a struggle,” said Kalwani, who believes the new program would help boost her business. “It’s wrong. The program could be a real source of growth.”
Kalwani and other women who own small companies are awaiting guidelines from the Small Business Administration that would implement the program as called for in legislation passed in December 2000.
The law was to pave the way for federal agencies to meet the goal set by law in 1994 of awarding 5% of federal small-business contracts to female small-business owners.
Women-owned small businesses capture only about 3% of federal small-business contracting dollars. The gap costs them about $5 billion a year, according to the House Small Business Committee.
“It has been seven years since this initiative was enacted into law and the SBA has yet to implement it, costing women business owners billions of dollars in lost contracting opportunities,” said Rep. Nydia M. Velazquez (D-N.Y.), chairwoman of the committee. “The administration’s lack of action on this is unacceptable.”
The topic will be the subject of a hearing scheduled for today by the committee, which also will look at other federal contracting programs.
Many female entrepreneurs have seen a drop in the number of federal contracts they have been able to land in recent years. Larger competitors, contract bundling and other changes in how the government buys products and services have made a cumbersome process even more difficult, they say.
“Our federal business has just about completely disappeared,” said Rae Walker, president and owner of Axiom Medical Inc. in Torrance.
“The women’s procurement program could help us fight that battle.”
Her medical device manufacturing firm has 30 employees, down from about 50 when it did more business with the Veterans Administration several years ago, she said.
Small Business Administration chief Steve Preston is slated to testify at the House committee hearing.
The agency said in April that final regulations to implement the women’s procurement program would be published by the end of the third quarter this year. But the rules are still being reviewed by some of the federal agencies that would be subject to them, SBA officials said recently. The proposed regulations were published last year.
Backers of the program, including the Senate Small Business Committee, have expressed concern over the delay in implementing the program.
The agency has said the delay has been caused in part by its complex duty to find constitutional justification for the gender-based program that it said was required under recent Supreme Court decisions and congressional mandate.
The legislation called for a disparity study and procedures to verify eligibility to participate in the program.
The SBA’s initial study in 2001 was rejected as inadequate by a review group at the National Academy of Sciences. The SBA then contracted with Santa Monica-based Rand Corp. for a new analysis. That study, released in April of this year, showed women-owned businesses underrepresented in as many as 87% of all industries in the federal procurement marketplace, depending on the measurements used.
The final study came about three years after the U.S. Women’s Chamber of Commerce filed suit against the SBA for the lack of progress in implementing the law.
Women own one-third of U.S. businesses, noted chamber Chief Executive Margot Dorfman, yet they typically have fewer employees and less revenue than businesses owned by men. If women-owned businesses aren’t growing, neither are their communities, she said.
“We are looking at bringing economic growth to communities where women-owned small businesses are accessing these contracts; that’s what this is really all about,” Dorfman said.
For contracting purposes, a woman-owned business is defined as one in which a woman owns 51% or more.
California does not have a state procurement program specifically for women-owned businesses. That makes federal contract opportunities even more important for small businesses owned by women.
Without the support of a formal program, female business owners are distanced from federal buyers, said Susana Turbitt, founder and president of InterSol Inc., a translation and Web design firm in Brea that helps companies and government agencies localize their websites for international and non-English-speaking users.
“How can this bridge be established so small women-owned businesses can get contracts?” she said.
To be successful, the women’s procurement program will have to go beyond simply posting bids online, she said.
Advocacy will be an important component, said Axiom’s Walker, who said finding and qualifying for federal work is taking four times as long and has become much more expensive for her company than in previous years.
It’s a common concern.
“I think a lot of women got turned off from even attempting to do government contracts,” said Hannah Kain, founder and president of Fremont, Calif.-based Alom Technologies Corp., which does contract packaging and helps companies fill orders. “If this program could pull more women in and they see there is a chance to actually get something, women will participate.”
Turbitt, for example, is listed in the federal government’s contractor database and has bid on several federal contracts but has had no luck. The pending SBA rules will help small firms like hers, she said.
“It’s a good thing to promote women-owned businesses and small businesses in general,” Turbitt said, “because small businesses grow into big businesses if they have the proper support and encouragement.”