This is the accessible text file for GAO report number GAO-12-896R 
entitled 'Ownership by Minority, Female, and Disadvantaged Firms in 
the Pipeline Industry' which was released on August 2, 2012. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

GAO-12-896R: 

United States Government Accountability Office: 
Washington, DC 20548: 

August 2, 2012: 

The Honorable John D. Rockefeller IV: 
Chairman:
The Honorable Kay Bailey Hutchison: 
Ranking Member:
Committee on Commerce, Science, & Transportation: 
United States Senate: 

The Honorable Fred Upton:
Chairman:
The Honorable Henry Waxman:
Ranking Member:
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable John L. Mica:
Chairman:
The Honorable Nick J. Rahall:
Ranking Member:
Committee on Transportation and Infrastructure: 
House of Representatives: 

Subject: Ownership by Minority, Female, and Disadvantaged Firms in the 
Pipeline Industry: 

The U.S. pipeline industry is large and dynamic. In 2007, the most 
recent year for which industry-wide data are available, approximately 
2,500 firms operated and constructed natural gas and hazardous liquid 
pipelines in the United States. These firms generated almost $200 
billion in receipts[Footnote 1] and employed approximately 275,000 
workers. There are currently more than 2.5 million miles of pipeline 
across the country, and recent shale oil and gas exploration has 
spurred construction of new pipeline infrastructure, as some firms 
take advantage of improved drilling technologies to access large 
volumes of oil and gas found in fine-grain sedimentary rocks. 

The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 
2011 mandated that GAO assess--based on available information--the 
levels and types of participation of minority-owned, woman-owned, and 
disadvantaged firms in the construction and operation of pipeline 
facilities in the United States. Accordingly, this report presents 
available data on (1) the representation of these firms in the 
pipeline industry and (2) federal funding obligated to firms in these 
categories. 

To perform our work, we searched federal government and privately held 
data sets that could include information about the ownership of firms 
in the pipeline industry and federal obligations to them. For the 
purposes of this report, we considered the following firms to 
constitute the pipeline industry: pipeline construction firms and 
pipeline firms that transport crude oil, natural gas, and other 
refined petroleum products.[Footnote 2] As part of our search, we 
discussed potential data sets with officials from the United States 
Census Bureau (Census), the Department of Energy, the Department of 
Transportation (DOT) and the Office of Advocacy of the Small Business 
Administration (SBA). In addition, we interviewed pipeline industry 
associations to determine if they collected or were aware of privately 
held data on pipeline ownership. 

Based on our search for relevant data sets, we identified Census' 2007 
Survey of Business Owners (SBO)[Footnote 3] and the Federal 
Procurement Data System-Next Generation (FPDS-NG), which is 
administered by the General Services Administration, as the best 
available data on pipeline firms that are minority-owned,[Footnote 4] 
female-owned, or disadvantaged.[Footnote 5] The SBO provides data on 
the extent of minority-and female-owned[Footnote 6] pipeline firms and 
receipts, while the FPDS-NG database provides data on federal contract 
obligations to the pipeline industry, including federal construction 
and operations contracts. To assess the reliability of these 
databases, we reviewed documentation about the databases and spoke 
with knowledgeable agency officials. We determined that SBO and FPDS-
NG data were sufficiently reliable for describing the ownership of 
firms in the pipeline industry. However, both of these data sets have 
limitations. For example, SBO does not contain data elements that 
specifically address disadvantaged firms, and because the SBO captures 
firms that conducted the majority of their business in a given 
industry during 2007, the SBO may under represent the actual number of 
firms operating in an industry in any given year. In addition, the 
FPDS-NG provides information on federal contracts, not the entire 
pipeline industry. Furthermore, the FPDS-NG includes information on 
prime contractors, not subcontractors. For additional information 
about our scope and methodology, and a complete list of data 
limitations, see enclosure I. 

We conducted this performance audit from March 2012 through July 2012 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Results in Brief: 

Minority- or female-owned, minority-owned, and female-owned firms 
represented 15 percent, 6 percent and 10 percent, respectively, of 
firms in the U.S. pipeline industry in 2007.[Footnote 7],[Footnote 8] 
In terms of market share, minority-or female-owned firms are estimated 
to have accounted for a total of 13 percent of industry receipts, with 
minority-owned firms having accounted for 3 percent and female-owned 
firms having accounted for 11 percent of receipts. 

Additionally, minority-or female-owned firms accounted for about $484 
million out of $3 billion--or 16 percent--of federal contract 
obligations to the pipeline industry from 2007 to 2011. The majority 
of these obligations went to minority-owned firms for pipeline 
construction contracts. About $246 million--or 8 percent--of federal 
contract obligations went to disadvantaged pipeline firms, which may 
be minority-owned or female-owned firms, from 2007 to 2011. These 
obligations were also primarily for construction contracts. 

Background: 

In 2010, minorities represented 36 percent of the nation's population, 
while women represented approximately 51 percent. In 2007, the most 
recent year for which relevant data are available, minority-owned 
firms represented about 22 percent of all U.S. firms classifiable by 
race and gender, and generated about 9 percent of all receipts. Also 
in 2007, female-owned firms represented about 30 percent of all U.S. 
firms classifiable by race and gender, and generated about 11 percent 
of all receipts. 

Federal agencies periodically award contracts to pipeline firms to 
purchase propane gas and gas pipeline inspection services, among other 
goods and services. However, the federal investment in the pipeline 
industry is relatively small compared to overall revenues generated by 
the industry. In 2007, federal obligations equaled $434 million, or 
less than one percent of the estimated $193.4 billion in receipts 
generated by the pipeline industry. 

DOT develops and enforces safety regulations for the transportation of 
hazardous materials through pipelines. DOT does not administer any 
programs aimed specifically at encouraging the participation of 
minority-owned, female-owned, or disadvantaged firms in the pipeline 
industry. DOT also does not provide federal assistance to pipeline 
firms on a recurring basis. Federal statute has established a goal 
that at least 10 percent of DOT-assisted contracts are expended on 
socially and economically disadvantaged firms, which include minority-
and female-owned firms.[Footnote 9] In addition, DOT administers a 
program aimed at helping disadvantaged firms participate in contract 
opportunities created by DOT financial assistance programs in some 
sectors of the economy, such as public transportation. Other federal 
agencies also have programs aimed at encouraging the participation of 
disadvantaged firms, but these programs differ in several significant 
ways. For example, DOT's program presumes that women and certain 
racial and ethnic groups are socially disadvantaged, and requires that 
program applicants prove their personal net worth is less than $1.32 
million. In contrast, the SBA's Minority and Small Business and 
Capital Ownership Development Program--commonly known as the 8(a) 
Program--does not presume that women are socially disadvantaged. In 
addition, 8(a) applicants must have a personal net worth of less than 
$250,000 at the time of application.[Footnote 10] 

Minority-Owned and Female-Owned Firms Represented an Estimated 15 
Percent or Less of the U.S. Pipeline Industry in 2007: 

Minority- or Female-Owned Pipeline Firms and Receipts: 

As shown in figure 1, minority-or female-owned firms represented an 
estimated 15 percent of firms in the U.S. pipeline industry 
classifiable by gender and race in 2007.[Footnote 11] In comparison, 
nonminority- and male-owned firms represented an estimated 67 percent 
of such firms. In addition, minority-or female-owned firms generated 
an estimated 13 percent of industry receipts. Nonminority- and male-
owned firms are estimated to have accounted for 80 percent of all 
receipts. 

Figure 1: Estimated Minority-or Female-Owned Shares of Pipeline Firms 
and Receipts (2007): 

[Refer to PDF for image: illustrated table] 

Estimated share of firms (95% confidence interval)[A]: 
Total firms: 2,028 (1,829 to 2,227); 
15% Minority- or female-owned (8% to 21%); 
67% Nonminority- and male-owned (53% to 80%); 
19% Other[B] (12% to 26%). 

Estimated share of receipts (95% confidence interval): 
Total receipts: $34.23 billion ($32.22 billion to $36.25 billion); 
13% Minority- or female-owned (11% to 15%); 
80% Nonminority- and male-owned (73% to 87%); 
7% Other[B] (6% to 8%). 

Source: GAO analysis of data from U.S. Census Bureau 2007 Survey of 
Business Owners. 

Notes: figure represents firms classifiable by gender and race. Figure 
does not include publicly-owned firms. 

Due to rounding, percents may not add to 100. 

[A] All estimates from the Census Survey of Business Owners are 
subject to sampling error. The 95 percent confidence interval is 
presented parenthetically after individual estimates. Because Census 
followed a probability procedure based on random selections, the 
sample is only one of a large number of samples that might have been 
drawn. Since each sample could have provided different estimates, we 
express our confidence in the precision of our particular sample's 
results as a 95 percent confidence interval. This is the interval that 
would contain the actual population value for 95 percent of the 
samples that could have been drawn. See enclosure II for more 
information on sampling errors for the survey estimates. 

[B] The "Other" category includes firms owned by nonminorities with 
equal male/female ownership and firms owned by males with equal 
minority/nonminority ownership. 

[End of figure] 

Minority-Owned Pipeline Firms and Receipts: 

As shown in figure 2, minority-owned firms represented an estimated 6 
percent[Footnote 12] of pipeline firms in 2007. In contrast, 
nonminority-owned firms represented an estimated 92 percent of all 
firms. In addition, minority-owned firms generated an estimated 3 
percent of pipeline industry receipts and nonminority-owned firms 
accounted for an estimated 96 percent. 

Figure 2: Estimated Minority Shares of Pipeline Firms and Receipts 
(2007): 

[Refer to PDF for image: illustrated table] 

Estimated share of firms (95% confidence interval)[A]: 
Total firms: 2,028 (1,829 to 2,227); 
6% Minority-owned (1% to 11%); 
92% Nonminority-owned (78% to 100%); 
2% Equally minority/nonminority-owned (0% to 5%). 

Estimated share of receipts (95% confidence interval): 
Total receipts: $34.23 billion ($32.22 billion to $36.25 billion); 
3% Minority-owned (1% to 5%); 
96% Nonminority-owned (88% to 100%); 
1% Equally minority/nonminority-owned (1% to 2%). 

Source: GAO analysis of data from U.S. Census Bureau 2007 Survey of 
Business Owners. 

Note: figure represents firms classifiable by gender and race. Figure 
does not include publicly-owned firms. 

[A] All estimates from the Census Survey of Business Owners are 
subject to sampling error. The 95 percent confidence interval is 
presented parenthetically after individual estimates. Because Census 
followed a probability procedure based on random selections, the 
sample is only one of a large number of samples that might have been 
drawn. Since each sample could have provided different estimates, we 
express our confidence in the precision of our particular sample's 
results as a 95 percent confidence interval. This is the interval that 
would contain the actual population value for 95 percent of the 
samples that could have been drawn. See enclosure II for more 
information on sampling errors for the survey estimates. 

[End of figure] 

Female-Owned Pipeline Firms and Receipts: 

As shown in figure 3, female-owned firms represented an estimated 10 
percent[Footnote 13] of pipeline firms in 2007.[Footnote 14] Male-
owned firms represented an estimated 70 percent of all pipeline firms. 
In addition, female-owned firms generated an estimated 11 percent of 
pipeline industry receipts and male-owned firms generated 83 percent 
of receipts. 

Figure 3: Estimated Female-Owned Shares of Pipeline Firms and Receipts 
(2007): 

[Refer to PDF for image: illustrated table] 

Estimated share of firms (95% confidence interval)[A]: 
Total firms: 2,028 (1,829 to 2,227); 
10% Female-owned (6% to 15%); 
70% Male-owned (59% to 82%); 
19% Equally female/male-owned (13% to 26%). 

Estimated share of receipts (95% confidence interval): 
Total receipts: $34.23 billion ($32.22 billion to $36.25 billion); 
11% Female-owned (10% to 12%); 
83% Male-owned (76% to 90%); 
6% Equally female/male-owned (5% to 7%). 

Source: GAO analysis of data from U.S. Census Bureau 2007 Survey of 
Business Owners. 

Notes: figure represents firms classifiable by gender and race. Figure 
does not include publicly-owned firms. 

Due to rounding, percents may not add to 100. 

[A] All estimates from the Census Survey of Business Owners are 
subject to sampling error. The 95 percent confidence interval is 
presented parenthetically after individual estimates. Because Census 
followed a probability procedure based on random selections, the 
sample is only one of a large number of samples that might have been 
drawn. Since each sample could have provided different estimates, we 
express our confidence in the precision of our particular sample's 
results as a 95 percent confidence interval. This is the interval that 
would contain the actual population value for 95 percent of the 
samples that could have been drawn. See enclosure II for more 
information on sampling errors for the survey estimates. 

[End of figure] 

Minority-Owned, Female-Owned, and Disadvantaged Firms Received an 
Estimated 16 Percent or Less of Federal Contract Obligations to the 
Pipeline Industry from 2007 to 2011: 

As shown in table 1, about 16 percent (approximately $484 million out 
of $3 billion) of federal prime contract obligations to firms in the 
U.S. pipeline industry went to minority-or female-owned pipeline 
firms[Footnote 15] from 2007 to 2011. Nonminority male-owned 
firms[Footnote 16] received about 84 percent (approximately $2.5 
billion out of $3 billion) of federal obligations to the industry. 
More specifically, from 2007 to 2011, about 12 percent of federal 
obligations to the industry went to minority-owned firms and about 5 
percent went to female-owned firms. Obligations to minority firms were 
primarily for pipeline construction contracts, while obligations to 
female-owned firms mostly went to pipeline operators.[Footnote 17] 
Additionally, about $246 million--or 8 percent--of federal obligations 
went to small disadvantaged firms,[Footnote 18] including a relatively 
high percentage of obligations to small disadvantaged construction 
firms (about 19 percent). 

Table 1: Share of Federal Prime Contract Obligations to Ownership 
Groups within the Pipeline Industry (2007 to 2011): 

Ownership Group[A]: Minority or female; 
Share of obligations: 16%. 

Ownership Group[A]: Minority; 
Share of obligations: 12%. 

Ownership Group[A]: Female; 
Share of obligations: 5%. 

Ownership Group[A]: Small disadvantaged; 
Share of obligations: 8%. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data. 

[A] The ownership groups for "Minority," "Female," and "Small 
disadvantaged" may include some of the same firms. Therefore, the 
percentages provided add up to more than the total included in the 
"Minority or female" group. 

[End of table] 

We are sending copies of this report to the appropriate congressional 
committees and the Secretary of Transportation. The report also is 
available at no charge on the GAO web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staff members have any questions about this report, 
please contact me at (202) 512-2834 or flemings@gao.gov. Additionally, 
Sara Vermillion, Assistant Director; Matt Cook; Colin Fallon; David 
Hooper; Julia Kennon; Mary Koenen; SaraAnn Moessbauer; and Josh Ormond 
made key contributions to this report. 

Signed by: 

Susan Fleming:
Director:
Physical Infrastructure Issues: 

[End of section] 

Enclosure I: 

Objectives, Scope, and Methodology: 

This report examines available data on the extent to which 1) 
minority- and female-owned firms are represented in the pipeline 
industry and 2) the federal government obligated funding to firms in 
these categories. 

To address these objectives, we searched federal government and 
privately held data sets that could include information about the 
ownership of firms in the pipeline industry. For the purposes of this 
report, we considered the following firms to constitute the pipeline 
industry: pipeline construction firms and pipeline firms that 
transport crude oil, natural gas, and other refined petroleum 
products.[Footnote 19] As part of our search, we discussed potential 
data sets with the United States Census Bureau (Census), the 
Department of Energy, the Department of Transportation and the Office 
of Advocacy of the Small Business Administration (SBA). In addition, 
we interviewed pipeline industry associations to determine if they 
collected or were aware of privately held data on pipeline ownership. 

We determined that Census' 2007 Survey of Business Owners (SBO) and 
the General Services Administration's (GSA) Federal Procurement Data 
System-Next Generation (FPDS-NG) provided the best available data 
about pipeline firms that are minority-owned,[Footnote 20] female-
owned, or disadvantaged.[Footnote 21] Census has collected data 
through the SBO every 5 years since 1972 as part of the economic 
census. The SBO is designed to provide comprehensive, regularly 
collected information on selected economic and demographic 
characteristics for businesses and business owners by gender and race, 
among other variables. The 2007 survey was the most recent survey 
available when we conducted this review. 

Figures in the SBO dataset are estimated from a sample and will differ 
from the figures that would have been obtained from a complete census. 
To design the SBO sample, Census starts with a listing of all nonfarm 
businesses both with and without paid employees that file Internal 
Revenue Service tax forms with receipts of $1,000 or more. Census uses 
a variety of information sources to estimate the probability that each 
of these businesses is minority-or female-owned, such as word strings 
in the company name indicating possible minority ownership. These 
probabilities are then used to place each firm in one of nine sampling 
frames that include race and gender categories, such as American 
Indian and women. Firms selected into the sample are mailed 
questionnaires requesting information about characteristics of the 
businesses and their owners. Approximately 62 percent of the 2.3 
million businesses in the SBO's 2007 sample responded to the survey. 
[Footnote 22] See enclosure II for additional information about 
sampling errors for survey estimates. 

For SBO data, we estimated the number of firms in different categories 
based on owners' gender and race. Additionally, as a measure of firm 
size, we analyzed data on firm receipts,[Footnote 23] number of 
employees, and annual payroll. However, based on a preliminary 
analysis, we found that the number of employees and annual payroll 
data did not differ significantly from receipts data as indicators of 
relative market share. See enclosure II for additional estimates 
related to employee and payroll data. Data aggregates are presented 
for the United States and for various categories, including gender and 
race, by 2007 North American Industry Classification System (NAICS) 
codes. 

The GSA administers the FPDS-NG. FPDS-NG data may be used to: measure 
and assess the impact of federal procurement on the nation's economy; 
learn how awards are made in various socioeconomic categories; 
understand the impact of full and open competition on the acquisition 
process; and address changes to procurement policy. Federal agencies 
are responsible for collecting and reporting data to the FPDS-NG. They 
are expected to report contract actions valued at $3,000 or more, as 
well as contract modifications. To ensure the reliability of FPDS-NG 
data, GSA requires that all federal agencies receive an annual 
certification stating the completeness and accuracy percentages of 
their data in the FPDS-NG. 

Our analysis of FPDS-NG data included calculations of federal 
obligations to pipeline industry firms from fiscal years 2007 to 2011. 
We then determined the share of those obligations that went to 
different business types (e.g., minority-owned, female-owned, small 
disadvantaged firms[Footnote 24]). Some firms in both the FPDS-NG and 
SBO data sets may be identified in more than one category. For 
example, some business owners are both minorities and women. 

We assessed the reliability of all data elements presented in this 
report by reviewing related documentation, such as methodology 
descriptions, and interviewing knowledgeable agency officials. We 
found that SBO and FPDS-NG data are sufficiently reliable for our 
purposes. However, both of these data sets have limitations. SBO data 
contain the following limitations: 

* The industry codes used to identify pipeline firms only capture 
firms that conducted 50 percent or more of their business in that 
industry sector during the reporting year. Therefore, the SBO may 
under represent the actual number of firms operating in an industry. 

* Data are self-reported by survey respondents and numbers of firms 
involved in the pipeline industry are estimated. 

* Standard errors associated with certain data points relevant to this 
review are large enough to preclude certain analyses, such as a 
comparison of the percents of minority-or female-owned pipeline firms 
that are construction or transportation firms. 

FPDS-NG data contain the following limitations: 

* Data reflect federal contracts, which represent a small percent of 
total revenues for the pipeline industry. 

* Data reflect federal contracts with prime contractors--not 
subcontractors. 

* Contracts in the FPDS-NG have only one industry code. Therefore, 
FPDS-NG contracts may not reflect all the work conducted under 
specific contracts. 

* Female-owned, minority-owned and self-certified small disadvantaged 
business data are self-reported. 

* The number of data points for some segments of the pipeline industry 
is limited. 

[End of section] 

Enclosure II: 

Additional Estimates and Sampling Errors: 

All survey estimates presented in this report have margins of error at 
the 95 percent confidence interval. The term "95 percent confidence 
interval" refers to the interval that would contain the actual value 
for 95 percent of the samples that could have been drawn during a 
complete census of all businesses in the United States. Because the 
Census followed a probability procedure based on random selections, 
the SBO sample is one of a large number of samples that might have 
been drawn. Since each sample could have provided different estimates, 
we express our confidence in the precision of this sample's results as 
a 95 percent confidence interval. See tables 2 and 3 for additional 
SBO survey estimates and their associated sampling errors. 

Table 2: Estimated Industry-Wide Firms and Receipts with Associated 
Sampling Errors: 

SBO category: All firms; 
All firms (number): 2,519; 
Sampling error of firms at 95 percent confidence interval: 197; 
Receipts ($1,000): $193,381,228; 
Sampling error of receipts at 95 percent confidence level ($1,000): 
$7,580,544. 

SBO category: Female-owned; 
All firms (number): 207; 
Sampling error of firms at 95 percent confidence interval: 89; 
Receipts ($1,000): $3,707,916; 
Sampling error of receipts at 95 percent confidence level ($1,000): 
$218,025. 

SBO category: Male-owned; 
All firms (number): 1,428; 
Sampling error of firms at 95 percent confidence interval: 196; 
Receipts ($1,000): $28,374,282; 
Sampling error of receipts at 95 percent confidence level ($1,000): 
$1,668,408. 

SBO category: Equally male-/female-owned; 
All firms (number): 393; 
Sampling error of firms at 95 percent confidence interval: 131; 
Receipts ($1,000): $2,150,242; 
Sampling error of receipts at 95 percent confidence level ($1,000): 
$379,303. 

SBO category: Minority; 
All firms (number): 117; 
Sampling error of firms at 95 percent confidence interval: 96; 
Receipts ($1,000): $1,039,219; 
733,273. 

SBO category: Equally minority/nonminority; 
All firms (number): 41; 
Sampling error of firms at 95 percent confidence interval: 60; 
Receipts ($1,000): $350,175; 
Sampling error of receipts at 95 percent confidence level ($1,000): 
$171,586. 

SBO category: Nonminority; 
All firms (number): 1,871; 
Sampling error of firms at 95 percent confidence interval: 220; 
Receipts ($1,000): $32,843,046; 
Sampling error of receipts at 95 percent confidence level ($1,000): 
$1,931,171. 

SBO category: Minority- or female-owned; 
All firms (number): 298; 
Sampling error of firms at 95 percent confidence interval: 128; 
Receipts ($1,000): $4,504,176; 
Sampling error of receipts at 95 percent confidence level ($1,000): 
$706,255. 

SBO category: Nonminority- and men-owned; 
All firms (number): 1,349; 
Sampling error of firms at 95 percent confidence interval: 238; 
Receipts ($1,000): $27,346,489; 
Sampling error of receipts at 95 percent confidence level ($1,000): 
$1,607,974. 

SBO category: Remainder of firms classifiable by gender, ethnicity, 
race, and veteran status; 
All firms (number): 381; 
Sampling error of firms at 95 percent confidence interval: 134; 
Receipts ($1,000): $2,381,775; 
Sampling error of receipts at 95 percent confidence level ($1,000): 
$373,462. 

SBO category: All firms classifiable by gender, ethnicity, race, and 
veteran status; 
All firms (number): 2,028; 
Sampling error of firms at 95 percent confidence interval: 199; 
Receipts ($1,000): $34,232,440; 
Sampling error of receipts at 95 percent confidence level ($1,000): 
$2,012,867. 

SBO category: Publicly held and other firms not classifiable by 
gender, ethnicity, race, and veteran status; 
All firms (number): 491; 
Sampling error of firms at 95 percent confidence interval: 115; 
Receipts ($1,000): $159,148,788; 
Sampling error of receipts at 95 percent confidence level ($1,000): 
$9,357,949. 

Source: GAO analysis of SBO data. 

[End of table] 

Table 3: Estimated Industry-Wide Employee and Annual Payroll Data with 
Associated Sampling Errors: 

SBO category: All firms; 
Employees (number): 274,042; 
Sampling error of employees at 95 percent confidence interval: 5,371; 
Annual payroll ($1,000): $18,442,496; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $361,473. 

SBO category: Female-owned; 
Employees (number): 7,072; 
Sampling error of employees at 95 percent confidence interval: 1,386; 
Annual payroll ($1,000): $433,798; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $68,020. 

SBO category: Male-owned; 
Employees (number): 88,454; 
Sampling error of employees at 95 percent confidence interval: 5,201; 
Annual payroll ($1,000): $5,097,366; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $299,725. 

SBO category: Equally male-/female-owned; 
Employees (number): 8,651; 
Sampling error of employees at 95 percent confidence interval: 2,713; 
Annual payroll ($1,000): $431,530; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $118,412. 

SBO category: Minority; 
Employees (number): 3,636; 
Sampling error of employees at 95 percent confidence interval: 2,779; 
Annual payroll ($1,000): $199,456; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $164,192. 

SBO category: Equally minority/nonminority; 
Employees (number): 692; 
Sampling error of employees at 95 percent confidence interval: 977; 
Annual payroll ($1,000): $35,625; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $49,576. 

SBO category: Nonminority; 
Employees (number): 99,848; 
Sampling error of employees at 95 percent confidence interval: 5,871; 
Annual payroll ($1,000): $5,727,613; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $224,522. 

SBO category: Minority- or female-owned; 
Employees (number): 10,348; 
Sampling error of employees at 95 percent confidence interval: 2,839; 
Annual payroll ($1,000): $607,856; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $166,796. 

SBO category: Nonminority- and men-owned; 
Employees (number): 85,255; 
Sampling error of employees at 95 percent confidence interval: 5,013; 
Annual payroll ($1,000): $4,917,879; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $192,781. 

SBO category: Remainder of firms classifiable by gender, ethnicity, 
race, and veteran status; 
Employees (number): 8,575; 
Sampling error of employees at 95 percent confidence interval: 2,689; 
Annual payroll ($1,000): $436,959; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $119,902. 

SBO category: All firms classifiable by gender, ethnicity, race, and 
veteran status; 
Employees (number): 104,177; 
Sampling error of employees at 95 percent confidence interval: 6,126; 
Annual payroll ($1,000): $5,962,694; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $233,738. 

SBO category: Publicly held and other firms not classifiable by 
gender, ethnicity, race, and veteran status; 
Employees (number): 169,865; 
Sampling error of employees at 95 percent confidence interval: 3,329; 
Annual payroll ($1,000): $12,479,802; 
Sampling error of annual payroll at 95 percent confidence level 
($1,000): $489,208. 

Source: GAO analysis of SBO data. 

[End of table] 

[End of section] 

Footnotes: 

[1] According to the U.S. Census Bureau, the term "receipts" reflects 
dollars received by firms after merchandise refunds and other 
deductions. Receipts do not include sales and other taxes collected 
directly from customers and paid directly to a local, state, or 
federal tax agency. 

[2] When selecting firms to analyze, we used North American Industry 
Classification System (NAICS) codes relevant to the pipeline industry. 
The NAICS is the standard used by federal statistical agencies in 
classifying business establishments for the purpose of collecting, 
analyzing, and publishing statistical data related to the U.S. 
business economy. NAICS was developed under the auspices of the Office 
of Management and Budget and in coordination with Mexico and Canada in 
1997 and was designed to allow for a high level of comparability in 
business statistics among North American countries. 

[3] Census conducts the SBO every 5 years. The 2007 survey was the 
most recent survey available when we conducted this review. 

[4] Because we analyzed Census data, we are using the Census 
definition of minority-owned firms. According to this definition, 
minority-owned firms refer to firms owned by Blacks or African 
Americans, American Indians and Alaska Natives, Asians, Native 
Hawaiians and Other Pacific Islanders, and/or Hispanics who own 51 
percent or more of the equity, interest, or stock of the firm. 

[5] For the purposes of federal and federally funded contracting 
programs, "disadvantaged" firms are characterized as such because they 
are at least 51 percent unconditionally owned and controlled by 
socially and economically disadvantaged individuals or groups. 

[6] Although the Pipeline Safety, Regulatory Certainty, and Job 
Creation Act of 2011 mandated that we assess levels and types of 
participation of woman-owned firms, we are using the term "female-
owned" because the data sets we analyzed use the term "female-owned," 
and we consider these terms to be equivalent. 

[7] The category "minority-or female-owned firms" includes firms owned 
by nonminority women, minority men, and minority women. As such, 
minority women are counted in our individual estimates for both 
minority-owned and female-owned firms and these estimates may add up 
to more than the total estimate for minority-or female-owned firms. 

[8] Without data about the number of individuals or firms that are 
willing and able to enter the pipeline industry, it is not possible to 
evaluate whether this level of participation is higher or lower than 
would be expected of firms entering the industry or broader economy 
without barriers to entry. In addition, these data include firms 
classifiable by gender and race. These data do not include publicly 
owned firms. 

[9] DOT uses this 10 percent goal as a tool in evaluating and 
monitoring Disadvantaged Business Enterprises' opportunities to 
participate in DOT-assisted contracts. This goal does not authorize or 
require recipients to set overall or contract goals at the 10 percent 
level, or any other particular level, or to take any special 
administrative steps if their goals are above or below 10 percent. See 
49 CFR §§ 26.41 (b)-(c). 

[10] SBA's 8(a) program helps disadvantaged firms, called 8(a) firms, 
obtain federal contracts because federal agencies "set aside" certain 
contracts for 8(a) firms by conducting procurements in which only 8(a) 
firms may compete. 

[11] See enclosure II for additional estimates and associated sampling 
errors. 

[12] See footnote 8. 

[13] See footnote 8. 

[14] Because of sampling errors in the SBO data, we are unable to 
determine whether there are more female-owned firms than minority-
owned firms. However, even accounting for sampling errors, we can 
determine that female-owned firms generated more receipts than 
minority-owned firms. 

[15] As previously noted, data from the FPDS-NG, which we used to 
conduct this analysis, are limited to information about prime 
contracts. 

[17] The category for nonminority male-owned firms includes firms that 
are equally owned by males and females or minorities and nonminorities. 

[18] For the purposes of this report, pipeline operators are those 
firms that have NAICS codes related to pipeline transportation. We 
included these NAICS codes in this category because firms that provide 
pipeline transportation control the movement of pipeline commodities. 
See footnote 2 for an explanation of NAICS codes. 

[18] We included small disadvantaged businesses (SDBs) in our analysis 
of FPDS-NG data because SDB data were the best available data we 
identified on disadvantaged firms. An SDB is a specific type of 
business that may be eligible for federal small business programs. In 
the cases where SDB certification is required, participants in the 
Small Business Administration's 8(a) program are deemed to be 
certified, and other firms may be certified by the agency conducting 
the procurement, private certifying entities or state or local 
governments. SDBs may include minority-and female-owned firms. 

[19] See footnote 2. 

[20] See footnote 4. 

[21] See footnote 5. 

[22] For the 2007 survey, 72 percent of the companies in the SBO 
sample returned a questionnaire, but 10 percent of the returns did not 
contain enough information to be considered a response for the 
estimates by race, gender, ethnicity, and veteran status. About 4 
percent of the 2007 non respondents were selected for and responded to 
the 2002 SBO. For these firms, data from the 2002 survey were used in 
place of the missing 2007 responses. For the remaining non-
respondents, gender, ethnicity, race and veteran status were imputed 
from donor respondents in the same sampling frame with similar 
characteristics (state, industry, employment status, size). Estimates 
of sampling variability are adjusted to account for non response. 
Estimates with high error (relative standard error for sales or 
receipts of 50 percent or more) are suppressed. Overall, imputed data 
accounted for approximately 47 percent of the firm count estimates by 
gender, ethnicity, race, and veteran status, and approximately 20 
percent of the estimates of sales. Because the assignment of 
businesses to sampling frames relies heavily on administrative data, 
and there is a high level of agreement between sampling frame 
assignment and tabulated race or ethnicity for responding firms, the 
donor imputations are considered to be reliable. 

[23] See footnote 1. 

[24] See footnote 18. 

[End of section] 

GAO’s Mission: 

The Government Accountability Office, the audit, evaluation, and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the 
performance and accountability of the federal government for the 
American people. GAO examines the use of public funds; evaluates 
federal programs and policies; and provides analyses, recommendations, 
and other assistance to help Congress make informed oversight, policy, 
and funding decisions. GAO’s commitment to good government is 
reflected in its core values of accountability, integrity, and 
reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO’s website [hyperlink, http://www.gao.gov]. Each 
weekday afternoon, GAO posts on its website newly released reports, 
testimony, and correspondence. To have GAO e-mail you a list of newly 
posted products, go to [hyperlink, http://www.gao.gov] and select 
“E-mail Updates.” 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of 
production and distribution and depends on the number of pages in the 
publication and whether the publication is printed in color or black 
and white. Pricing and ordering information is posted on GAO’s 
website, [hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 
MasterCard, Visa, check, or money order. Call for additional 
information. 

Connect with GAO: 

Connect with GAO on facebook, flickr, twitter, and YouTube.
Subscribe to our RSS Feeds or E mail Updates. Listen to our Podcasts.
Visit GAO on the web at [hyperlink, http://www.gao.gov]. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 
Website: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]; 
E-mail: fraudnet@gao.gov; 
Automated answering system: (800) 424-5454 or (202) 512-7470. 

Congressional Relations: 

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-4400
U.S. Government Accountability Office, 441 G Street NW, Room 7125
Washington, DC 20548. 

Public Affairs: 
Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149 
Washington, DC 20548.