Leveling the playing field for the woman entrepreneur; Steps in the right direction

 By: Bakri Fustok*

Small businesses can be challenging. Historically, even more challenging for women entrepreneurs. Today, we take a break from all the tax talk and focus on some of the less spoken areas of business, like the awarding of government contracts to firms operated by women.

In 2017 the government awarded $25.4 billion in federal contracts to women owned businesses Despite being a record high for these businesses, this only made up 5% of the $508.4 billion in federal contracts awarded that year. Although the number of women owned businesses awarded such contracts is up 44.3% in the past nine years, poor oversight still leaves a significant number of businesses to be largely dominated by men. It is important for women entrepreneurs to know that the government provides incentive programs in order to expand federal contracting opportunities to Women-Owned Small Businesses (“WOSB”). The WOSB Federal Contract Program is one of the newest Small Business Administration’s set aside programs within the government. Created in 2011, the purpose of the program is to magnify federal contracting opportunities for women entrepreneurs. Furthermore, the program includes Economically Disadvantaged WOSB’s (“EDWOSB”) for the purposes of competing for and receiving contracts and awards in industries where women are often underrepresented. The North American Industry Classification System provides a list of eligible industries.

Who Is Eligible for WOSB Federal Contract Program?

The eligibility requirements to qualify as a WOSB or an EDWOSB are defined in Title 13 Part 127 Subpart B of the Federal Regulations (CFR). Among other requirements, some of the main qualifications is that your business must be a “small business.” 51% of the ownership and control must be by women who are U.S. citizens. Women must be responsible for the management of the day-to-day operations of the business and be in charge of making the long-term decisions.

There are additional requirements to be eligible under the EDWOSB. Not only must you meet all the requirements of the women’s contracting program but you must also be owned and controlled by one or more women, each with a personal net worth of less than $750,000. The business must be owned and controlled by one or more women, each whose average adjusted gross income for three years is $350,000 or less. Also, the business must have $6 million or less in business assets.

If your small business sounds like it meets these requirements, it might be a good idea to review the CFR and consider participating. Before you can join the program however, you must either be self-certified or third party certified as a woman-owned small business on the Small Business Administration website.

A Work In Progress

Although the program sounds very hopeful and is a great way to help change the historical difficulties for women entrepreneurs, data shows that we still have a long way to go. The women led companies that are being awarded these contracts are not receiving the most expensive contracts. Of the top 50 most expensive contracts in 2016 and 2017, none were awarded to a woman-led business.

It has been argued that because of low government oversight and inadequate monitoring, many businesses that do not qualify as WOSB are sneaking through under the guise because of lax certification methods. For example, a top Women Owned Business contractor, M1 Support Services LP, was registered as a WOSB, yet only two of the six members of the executive team are female. On the company’s Texas government records show co-owners William Shelt, and Kathleen Hildreth, the managing director, are listed as the “registered agents” of the company.

Remaining Optimistic

In 2015, Congress directed the Small Business Association to get rid of the current certification standards that are allowing companies that are not eligible to reap the benefits of the Federal Contract awards. The Small Business Administration would replace these standards with their own classification procedure. Although nothing has been executed yet, the Small Business Administration is likely to make these changes in the coming year. Nevertheless, women that own small businesses should not be dissuaded from utilizing these programs. Despite the current shady loopholes that some businesses are using, women entrepreneurs should continue to apply for such programs in hopes of leveling the playing field in the long run.

——-

* This post was checked for currency on August 10, 2018 and reproduced with permission by author Bakri Fustok. Original post can be found here.

Bakri Fustok, as of the date of this post, is a third year law student at Penn State’s Dickinson Law.  Originally from California, he now seeks to practice in the areas  of business and tax law in either Pennsylvania or Washington DC.  A more complete bio can be found here:

Sources

Photo: PeopleImages / iStockphoto.com

https://www.opensecrets.org/news/2018/04/women-owned-biz-receive-fraction-of-fed-contracts/

https://www.sba.gov/federal-contracting/contracting-assistance-programs/women-owned-small-business-federal-contracting-program

https://www.sba.gov/document/support–qualifying-naics-women-owned-small-business-federal-contracting-program

https://www.business2community.com/small-business/challenges-remain-women-starting-small-business-02045935

http://about.americanexpress.com/news/docs/2017-State-of-Women-Owned-Businesses-Report.pdf