Taken as a whole, the Government-wide performance metrics for small business utilization are encouraging. The Small Business Administration’s FY2015 report card shows that the Government exceeded its prime contracting goals across four of the five socioeconomic categories measured. Moreover, the amount of federal spend going to small businesses reached an all-time high of over 25%.
|Business Type||Goal Percentage||Actual Percentage|
|Small Business (SB)||23%||25.75%|
|Woman-Owned Small Business (WOSB)||5%||5.05%|
|Small Disadvantaged Business (SDB)||5%||10.06%|
|Service Disabled Veteran Owned Small Business (SDVOSB)||3%||3.93%|
|Historical Underutilized Business Zones (HUBZone)||3%||1.82%|
These numbers do not tell the whole story, however. The 5% goal for WOSBs has been in place since 1994, and since at least 2008, major campaigns have aimed to bridge the gap. In 2014, WOSBs became eligible for sole-source awards, an important means of gaining a foothold in the federal marketplace.
Nonetheless, FY2015 marks the first time ever that the 5% goal has been met.
While the milestone is certainly a victory, significant disparities remain. A January 2016 report by the Department of Commerce found that woman-owned firms are 21% less likely to win federal work than comparable businesses owned by men—even when controlling for potentially confounding variables such as business size, age, and past performance.
Such disparities are especially glaring on the Government’s most lucrative contracts. An October 2016 report from Women Impacting Public Policy (WIPP) analyzes WOSB wins on major Multiple Award Contracts (MACs), and the results are troubling.
MACs go by many names—GWACs, MATOCs, IDIQs, etc.—but the idea is the same. Firms compete to win a spot on the MAC and the Government chooses multiple winners. The Government subsequently issues Task Orders, and the firms who won a spot on the MAC then compete exclusively with one another to win actual Task Order work. Winning a MAC doesn’t necessarily mean you’ll go on to win any work, but you can’t win any work without first winning the MAC.
To say that MACs are important is an understatement: they have grown to represent 21% of federal spend, and 17 of FY2017’s 20 biggest opportunities are MACs. The WIPP report finds that on the most important MACs, the percentage of WOSBs winning a spot on the contract tends to be significantly lower than the percentage of WOSBs winning federal work overall.
In other words, although WOSBs are winning more federal contracts than they used to, they are still largely shut out of the most lucrative contract vehicles.
Once a WOSB does get a spot on a MAC, however, the results are very different. On the MACs analyzed, WOSBs won roughly 20% of Task Order dollars—compared to only 5% of federal spend overall. This suggests that MACs have the potential to be a powerful equalizing force—if the initial disparity in onboarding can be overcome.
To that end, WIPP recommends that the Government: 1) Ensure parity when adding socioeconomic tracks to contract vehicles (e.g., if SDBs get a set-aside under a particular contract, so should WOSBs, SDVOSBs, etc.); 2) Create a WOSB Government-Wide Acquisition Contract for IT Services, such as those already in place for 8(a) and SDVOSB firms; 3) Add/enforce onboarding processes for major contracts (providing firms with a way onto the contract now rather than waiting many years for its eventual re-compete); and 4) Report the socioeconomic statuses of contract holders for greater transparency.
Additional information about the Government’s socioeconomic goals is available here. To learn more about WIPP, visit www.wipp.org.