STATEMENT
of the
Honorable Nydia M. Velázquez, Chair
Committee on Small Business
Hearing on SBA’s Progress in Implementing the Women’s Procurement Program
Wednesday, January 16, 2008
Today, the Committee will continue its review of SBA’s progress in implementing the Women’s Procurement Program. This initiative was created in part because of the government’s inability to meet the five percent contracting goal for women-owned small businesses. Even though this goal was set in 1994, federal agencies have yet to achieve it.
Seven years – yes, seven years – have passed since the Women’s Procurement Program was enacted. And now, after all of this time, the SBA publishes a rule that is so poorly constructed and so ill-conceived that it is insulting to the tens of thousands women business owners that have been waiting for action. This makes it apparent that the administration is not serious about carrying out the law and I don’t believe it ever will be.
In creating the program, Congress’ objectives were clear – to increase participation by women-owned firms in the federal marketplace. The very design of the legislation was meant to reverse – at a systemic level – the lack of women businesses involved in federal contracting. But the SBA’s proposed rule is just too narrow and burdensome to achieve this intent.
It is evident that few – if any – women-owned businesses will benefit from the new regulation. As a result, of the more than 10 million women-owned businesses in this country, only 1,247 businesses would qualify. Women entrepreneurs in industries like construction and manufacturing that are omitted are left scratching their heads – can this be for real?
SBA has chosen one of the most restrictive methodologies to determine which industries will qualify for the program. Out of the 28 approaches identified by RAND, the agency chose a method that designates less than 3 percent of industries as under-represented by women businesses. In doing so, it is using a “dollar amount of contracts” method for determining under-representation, which is inconsistent with the program’s intent.
The initiative was designed to be used as a contracting tool – to reverse the under-usage of women firms in the federal marketplace – not as a way to solely advance large dollar awards. A better measure would be the “number of contracts” method, which would find 77.1 percent of industries as underrepresented, or a mix of both the number and dollar approaches.
The SBA is also requiring that federal agencies make a determination of discrimination before any contract can be awarded under the program. This step creates another massive roadblock – in the long series of obstructions – to the program’s implementation. The manner in which this finding is required is vague and could add layers of unnecessary bureaucracy to the program’s administration.
Perhaps most problematic, the proposed rule appears to exceed what is constitutionally required. As a gender-based program, “intermediate scrutiny” is called for. But instead, it appears that the administration is stealthily applying a restrictive “strict scrutiny” standard. They can call it what they want, but the reality is that this is a standard that has no place in this rule.
The truth is that the SBA’s proposal does not embody the program that Congress envisioned. If this rule becomes final, the administration will be successful in “blocking by regulation” the program’s implementation. As a result, women businesses will be one step farther from gaining access to the federal marketplace.
Instead the SBA should scrap this rule and go back to the drawing board to provide a wider path for the inclusion of women. Women-owned firms are one of the fastest growing segments of the economy. They employ nearly 13 million people, and their annual payroll is almost $175 billion. These firms are driving future growth and job creation in our communities. It is long past the time that they are given greater access to the federal government as a customer.
