Proposed SBA Ruling Angers Women Business Owners

By Susan Kim, STAFF WRITER

Women business owners are angry about a proposed Small Business Administration (SBA) rule that reduces federal contract protected status for women-owned businesses to four of approximately 2,300 business categories.
Women Impacting Public Policy (WIPP), the nation's largest bipartisan women's business group, spoke out against the proposed rule.
WIPP leaders believe that the rule, if enacted, would require women-owned businesses to show under-representation in thousands of industries and to show direct discrimination by a government agency to qualify for protected status.
The new rule would extend protected status only to women-owned businesses in four categories listed by the North American Industry Classification System: kitchen cabinet manufacturing, engraving, other motor vehicles and intelligence.
"Our members are very upset about this," said WIPP President Barbara Kasoff. "With more than 10.6 million women business owners, and only 56,000 registered on the federal government's contracting database, there are an awful lot of them that are left out of the process. Access to government contracts is imperative for the survival of women-owned businesses."
SBA statements said that the proposed ruling is the direct result of a statutory study commissioned from the RAND Corp. A RAND analysis found that women-owned small businesses participating in federal contracting were under-represented in certain industries.

'Embarrassed to Be a Republican'
Gloria Berthold, president of TargetGov at Marketing Outsource Associates in Elkridge, said the rule would drastically limit the number of government contracts awarded to women entrepreneurs.
"This represents a change of burden of proof from classic affirmative action programs, where the government shoulders the burden of proof that its program is justified by evidence of availability and preclusion from contracting opportunities," said Berthold, who is WIPP's Maryland team leader.
"Under this new standard, applicable only to women-owned businesses, the individual owner or collectively women business owners within an industry are required to undertake costly discovery into availability numbers versus cumulative annual contracting activities of each federal agency," she said. "It is highly unlikely that a woman business challenger would be given access to the confidential and detailed information needed from each governmental agency to ever meet this burden of proof."
Berthold said the SBA is saying one thing and doing another. "This development makes me embarrassed to be a Republican," she said. "We are going to be heard on this issue in this election."

'A Whitewash Job'
Norma Byron is president and founder of the Ashlawn Group in Alexandria, Va., the nation's only woman-owned business in the munitions field.
Byron said she believes the RAND study was skewed from the beginning to help shape the SBA's proposed ruling.
The RAND study considered two methodologies: one based on the number of contracts to women-owned small businesses and another based on the dollar amount of contacts to women-owned small businesses.
According to SBA statements, the SBA selected the dollar amount to align with the federal government's goal of increasing the dollar amount of contracts to women-owned small businesses.
"No honest study could have come out with those findings," said Byron. "This is just a whitewash job. I think that's what's really upsetting about it. Women business owners deserve better than that."
Byron said she is often questioned about whether women business owners face bias in this day and age. "I have people who think this is my husband's business, and I'm just a figurehead," she said. "Well, my husband is a photographer. He couldn't run this business. I spent 22-and-a-half years learning the field and I've been running this myself since the first day."

'Under-Represented Industries'
Cecelia McCloy, president and CEO of Integrated Science Solutions, said the ruling angers her as well. "I am angry that the SBA is trivializing the issue of under-representation of women-owned businesses in the federal marketplace with this ruling," she said. "The SBA clearly does not take women business owners seriously as contributors to the economic growth and stability of this country."
Under the proposed SBA rule, a contracting officer in any federal agency could set aside contracts or work, but only within an industry in which women-owned small businesses have been identified as under-represented or substantially under-represented. Only small businesses owned or controlled by economically disadvantaged women would then be eligible for these contracts.
Contracts or work under this rule may not exceed $3 million ($5 million for manufacturing). Prior to reserving a procurement exclusively for women-owned small businesses, each agency is required to conduct an appropriate analysis of its procurement history to determine whether there is sufficient evidence of relevant discrimination in that industry by the procuring agency.
The proposed rule will remain open to public comment until the end of February.