Federal Procurement: Trends and Challenges in Contracting With Women-Owned Small Businesses

GAO-01-346 Published: Feb 16, 2001. Publicly Released: Feb 16, 2001.
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Procurement regulations implemented in 1996 mandated that women-owned small businesses (WOSB) receive five percent of governmentwide contracts. Although the number of contracts awarded to WOSBs has risen more than four times as fast as other federal contracting efforts since 1996, the goal of awarding five percent of federal contracts to WOSBs has not been met. More agencies succeeded in meeting the WOSB subcontracting goal than their prime contracting goal. GAO found that three federal agencies--the Department of Veterans Affairs, the Department of State, and the National Aeronautics and Space Administration--met or exceeded both goals in three of the four years it studied. Because the Department of Defense, which accounted for 64 percent of federal procurement in 1999, did not come close to achieving its five-percent goal, the governmentwide goal for prime contracting with WOSBs could not have been met even if all other federal agencies reached their prime contracting goals. Government officials cited many obstacles to increasing federal contracting with WOSBs, including a reduced contracting personnel force and the absense of a targeted WOSB government program. These contracting officers offered suggestions for increasing WOSB participation in federal contracting, including a strengthened outreach program and expanded excess to contract financing.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Small Business Administration The Administrator, Small Business Administration (SBA), should direct the new Office of Federal Contracting Assistance for Women Business Owners to evaluate the benefits and effects of the suggestions for increasing federal contracting with WOSBs that surfaced in this review. These include the implementation of agency mentor-protege programs that include WOSBs, of measures to facilitate teaming arrangements and expand contract financing, as well as the exploration of initiatives to consolidate and improve the efficiency and effectiveness of outreach efforts. Another issue worthy of further study is the extent to which pressures on the acquisition workforce may be contributing to contracting practices that reduce opportunities for small businesses. These actions are consistent with the broad authority as well as specific direction given to SBA under the recent executive order. Any of the suggestions deemed feasible should be considered for implementation.
Closed – Implemented
SBA considers the recommendation implemented and closed through the issuance of two SBA Information Notices (8000-586 and 8000-587), both effective February 10, 2003. Both notices provide information on ways WOSBs may market to the federal government and its prime contractors. The information in the notices is designed to aid WOSBs in winning federal contracts and subcontracts.
Small Business Administration The Administrator, SBA, should include in SBA's mandated study of industries in which WOSBs are underrepresented sufficient analysis to establish more realistic agency-specific annual goals for prime and subcontracts with WOSBs. Given the Department of Defense's (DOD) predominance in government contracting, SBA could benefit from the active collaboration and support of DOD in performing the study. SBA should also keep Congress informed as it develops a strategy for implementing the new provisions designed to expand federal contracting with WOSBs. In particular, SBA should notify its authorizing and appropriations committees if it determines that its capacity to implement the key provisions of the legislation will be impaired by insurmountable resource constraints.
Closed – Not Implemented
The GAO SBA liaison said that SBA contracted with the National Academy of Sciences (NAS) to conduct a technical review of SBA's draft study to address methodological issues. The technical review was scheduled for completion within 9 months. NAS subsequently requested and received two extensions for completing the technical review. The results were delivered to SBA in March 2005. SBA is in the process of reviewing the NAS report, but has not established a methodology or timetable for proceeding on GAO's recommendation. On March 2, 2006, Tiffani Cooper, liaison, provided the following update: Since the last update the following actions have occurred re: The Study March 11, 2005 - NAS released its independent report finding that the SBA draft study prepared for purposes of implementing a preferential federal contracting program for women-owned small businesses was seriously flawed and should be revised in accordance with the report's recommendations. October 14, 2005 - A Request for Proposals accompanied by a Statement of Work was issued by SBA seeking a contractor to perform a revised study in accordance with the report of the National Academy of Sciences. February 21, 2006 - a contract was awarded to a qualified contractor to complete the study consistent with NAS recommendations. The contractor has already begun its work, with the study due in 9 months. SBA will make the study available on line once it is completed. Implementing Regulations: The proposed rule was prepared by SBA and submitted to OMB for review on February 27, 2006, with a 90 day review period under Executive Order 12866. PI management decided to close out this recommendation as not implemented. As a result, all recommendations related to this report are now closed.

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