Article 8(m): Women-Owned Small Businesses

Builders and Contractors Exchange
Weekly Bulletin: 6 july 2010

Article 8(m): Women-Owned Small Businesses
By: Katharina Brekke Powers*

Many advocates of women-owned small businesses (“WOSB”) have been dissatisfied by the practical effects of § 811(m) of the Small Business Reauthorization Act of 2000 (“Act”). The Act was intended to assist WOSB who were one of the fastest growing segments of the United States economy but were not seeing a correlative increase in their share of the Federal procurement market. To meet this aim the Act permitted the Federal government to restrict competition for Federal contracts to WOSB when those contracts involved industries in which WOSB were underrepresented.

In December of 2007, the SBA unofficially proposed a narrow list of industries containing: (1) National Security and International Affairs; (2) Coating, Engraving, Heat Treating, and Allied Activities; (3) Household and Institutional Furniture and Kitchen Cabinet Manufacturing; and (4) Other Motor Vehicle Dealers.

The proposal was criticized on the grounds that the list included too few categories of industries and that the list did not provide sufficient clarity on which industries qualified under each category.

Nevertheless, on October, 1 2008, the SBA published an official rule that detailed the protocol for seeking a market advantage under the Act, but failed to make an official statement on the industries in which WOSB were underrepresented in the Federal contract market. SBA’s failure to officially state the industries in which WOSB were underrepresented in the Federal contract market had a chilling effect on applications for qualification as a WOSB on account of the fact that potentially qualifying businesses were unlikely to expend resources on applying for such qualification due to the uncertainty that they operated in an industry in which WOSB were underrepresented in the Federal contract market. Data on the percentage of Federal contracts awarded to WOSB supports this claim.

As a response, President Obama, through the Omnibus Appropriation Act of 2009, made sure no funds would be made available for the program until the SBA clearly defines and increases the industries in which WOSB are underrepresented in the Federal contract market.

In March of 2010 the SBA unofficially proposed eighty-three industries in which WOSB were underrepresented in the Federal contract market, and solicited comments from the list of all interested parties. In May of 2010, President Obama praised the SBA’s general efforts to increase opportunities for small business owners in Federal contracts in May 2010. It is unclear whether-and if so, when-the SBA will release an official statement on the industries in which WOSB are underrepresented. However, given the SBA’s unofficial proposal and the current freeze on funding for the program, it seems likely that the SBA will do so in the near future.

* The author wishes to acknowledge the reserach and assistance of Shaun Bockert, a law clerk with Vandeventer Black, Summer of 2010.

Questions?
If you have any questions about this article or any other related matters, please contact: Katharina K. Brekke Powers

This article is meant to bring awareness to this topic and is not intended to be used as legal advice.