Report: Women-Owned Businesses Less Likely To Land Federal Contracts

Date: February 03, 2016

Study Casts Light On Challenges Facing Female Entrepreneurs

A Commerce Department report finds women-owned businesses are 21 percent less likely to win federal government contracts than comparable male-owned businesses. The New York Times says the report is “being released as the federal government is beginning to change a Small Business Administration program that is five years old this week, yet has never met a goal of helping companies owned by women win at least 5 percent of federal contract dollars.” The study found “years of effort to increase those chances have barely made an impact.” Women-owned businesses won 4.7 percent of federal contract dollars in FY2014, an increase from 4 percent in FY2011. Economists from the agency “examined recent years’ data for 304 categories of industries and more than 600,000 companies, about 20 percent of which identified themselves as owned by women,” and found that federal contract winners “tended to be the older and larger companies,” although women-owned businesses “generally are ‘smaller and younger than other businesses.’” The Commerce Department added, “Even when controlling for firm characteristics, including firm size and age, women-owned businesses are less likely to win contracts than otherwise similar businesses not owned by women.”

What This Means For Small Business

Previous research has shown that women-owned businesses face unique challenges. The report does not cover the period after the passage of a law in 2014 that allows women owned business to “qualify for no-bid ‘sole source’ contracts, like those long available to minority-owned businesses and to those companies designated as economically disadvantaged.” Under the law, federal officials can award contracts to qualifying small businesses after negotiating terms rather than putting them out to bid. The sole source contracting rule should increase the percentage of contracts that go to women-owned businesses.

Additional Reading

The NFIB has previously reported on the qualities of successful women entrepreneurs and separately, the NFIB has cited research on what set apart women-owned small businesses that survived the 2007 recession.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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