On Wednesday, March 2, the Small Business Administration (SBA) announced that for the first time, the goal of ensuring that women-owned businesses are awarded at least five percent of the federal government contracts for which they are eligible has been reached.1 SBA celebrated the news but noted that it plans to build on this achievement, as women-owned businesses are still under-represented when it comes to winning government contracts.
This finding of under-representation is supported by a new report which reveals that women-owned businesses are less likely to win contracts than otherwise similar businesses in more than one out of three industries. The report was produced for the Small Business Administration's Women-Owned Small Business (WOSB) Federal Contract Program by the Commerce Department's Office of the Chief Economist. The purpose of SBA's WOSB program is to level the playing field for WOSBs in competing for federal contracts in industries where they are underrepresented.
The report by the Office of the Chief Economist shows that, overall, women-owned businesses (WOBs) are about 21 percent less likely to win a contract than otherwise similar non-WOBs. The report uses data covering fiscal years 2013-2014 and updates a report published nearly a decade ago. In the 304 separate industry-specific analyses described in the report, Commerce Department economists controlled for the size and age of the firm; its membership in various categories of firms for which the Federal government has government-wide prime contracting goals; its legal form of organization; its level of government security clearance; and its Federal prime contracting past performance ratings.
The industry-specific results on contract awards vary considerably, according to the report. In 109 industries (36 percent of the 304 industries studied), WOBs have statistically significant lower odds of winning contracts, covering 62 percent of contracts and nearly two-thirds of dollars obligated under contracts awarded in FY 2013 and 2014.
In conclusion, the authors find that women-owned businesses are less likely to win contracts than their counterparts. Furthermore, winners of contracts are generally larger and older businesses than non-winners. And finally women-owned businesses are smaller and younger than other businesses – characteristics that are associated with the likelihood of winning contracts. It is hoped that the important new findings laid out in this report will enable informed policymaking aimed at leveling the playing field for all businesses.
- 1 Small Business Administration, "Federal Government Breaks Contracting Record for Women-Owned Small Businesses," Press Release, March 2, 2016.