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Government Study Shows Women-Owned Businesses Less Likely to Win Federal Contracts

By | 02.12.16

Government Study Shows Women-Owned Businesses Less Likely to Win Federal Contracts

According to a new report released by the US Commerce Department, the odds of women-owned businesses winning a federal contract are approximately 21 percent lower than for similar companies owned by men. This is despite recent efforts to reduce this trend (including a 2014 law that made such businesses eligible for no-bid contracts), which according to the report barely made an impact.

The Small Business Administration (SBA) program turned five years old in early February 2016 and has never met the goal of helping companies owned by women secure at least 5 percent of federal contract dollars. Here are some other important insights uncovered by the report:

  • The percentage of federal contract dollars going to women-owned businesses rose to 4.7 in 2014, up from 4 percent in 2011 when the SBA was founded.
  • Currently businesses owned by women account for around 30 percent of all companies in the United States.
  • Businesses owned by women tend to be smaller and younger than competitors, and the majority of federal contracts go to older and larger companies.
  • However, when controls are put into play (including firm size and age), women-owned businesses are still less likely to win contracts than those businesses not owned by women.

As stated above, the changes mandated in the December 2014 law were too recent to have much impact on the data. It’s believed that allowing women to qualify for no-bid contracts (long available to minority-owned businesses) will give women-owned companies the experience they need to get their foot in the door and, in the long run, will significantly open up the playing field.

To compile this report economists from the Commerce Department analyzed data from 304 categories of industries and over 600,000 companies, 20 percent of which identified themselves as women owned. Businesses owned by women are defined as companies that are at least 51 percent owned by one women or more.

References

Calmes, Jackie. “Businesses Owned by Women Less Likely to Win U.S. Contracts, Study Shows.” New York Times. 2/2/16. (2/11/16.)

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