According to the SBA, women currently own about 40 percent of U.S. firms but only receive 2 percent of federal government contracts.
While these are irrefutable facts, solutions to the problem aren't clear-cut. Some believe preferences, set asides and special programs can help. Others argue the best remedy is a fair, open and competitive marketplace.
Entrepreneur recently discussed the issue with proponents of both positions. Gen Xer Naomi Lopez Bauman is director of the Center for Enterprise and Opportunity at the San Francisco-based nonprofit Pacific Research Institute, and author of Free Markets, Free Choices: Smashing the Wage Gap and Glass Ceiling Myths (Pacific Research Institute). Susan Phillips Bari, 54, is the president of Women's Business Enterprise National Council, whose mission includes certifying firms as women-owned.
Cynthia Griffin: Define set asides, preferences and goals.
Naomi Lopez Bauman: The government operates many programs that have either a direct or indirect financial benefit on business enterprises. Special preferences created or promoted by the government aren't effective in truly creating opportunities for women. The best way to promote women businesses is to reduce the tax and regulatory burden.
Susan Phillips Bari: [That there are special government programs for women in terms of set asides and preferences is a misconception.] The only set aside program is 8(a), which is primarily for minorities. Until recently, Caucasian women [couldn't] participate [in 8(a)]. And even today, there are fewer than 100 nonminority women-owned businesses in the program.
In the private sector, most supplier diversity programs operate with goals. They make sure a certain number of women are included in the mix of businesses from whom procurement officials seek bids.
Bauman: I agree that the private sector has made great advances in promoting women-owned businesses, and that's the appropriate place where [this] should take place. But I don't believe preparing small businesses for private contracting is a legitimate government function. I don't see society [or taxpayers] benefiting by having small businesses obtain government contracts. And talking about things like the 8(a) program and pointing to statistical disparities that show women may not be participating in the same numbers as white males is [merely] scratching the surface.
A statistical disparity doesn't [necessarily] mean women-owned businesses are being discriminated against. While [the number of] women business owners has grown at a rapid rate, they certainly don't represent the majority of companies in terms of sales, employment and size.
Bari: I'm a shareholder to the public sector. I'm a taxpayer who pays for all contracts, and I want to make sure contracts aren't awarded merely as part of some old boy network.
In terms of your statement that statistics don't show women have been discriminated against, I suggest you look at studies by the Center for Advanced Purchasing Studies at Arizona State University. [They indicate that] while it's clear [women are making progress] and discrimination is becoming less of a factor, it's still a major factor.
One of the things that really makes me believe the old boy network is still here is that in the newer industries like telecommunications and the Internet, women are doing better in terms of employment and as suppliers.
Bauman: I've taken a look at the issue behind the ASU study, too. It's very important to recognize a couple of things-younger men in business today went to school with women and have competed with women all along.
Griffin: Do you think women have had adequate opportunities to compete?
Bari: I don't think it's a question of adequately competing. If they have the opportunity to compete, women can adequately show quality, performance and price. The question is how you put their faces and capability statements in front of purchasing officials?
Bauman: There's plenty of evidence that shows women don't have a long history with government contracting, and they don't have the opportunity to compete on equal footing. But I don't think it's limited to women-owned business. Very few people have the opportunity to compete for government contracts due to the set-up of the system.
Bari: My organization focuses on how to give women-owned businesses greater opportunity to grow. And because of the way [the federal government] operates, women don't have an equal opportunity to compete. That's what we're looking for--creative ways for women to get their feet in the door. We don't want them to be given anything; and we're not in favor of sole source contracting. But we are in favor of making sure women are part of the process, and that has not happened.
Bauman: I think it sets a dangerous precedent. Whenever you establish goals or a basic number you want to achieve, that's [basically] what you're going to get. In some ways you create a ceiling on potential. I think policies that are blind to age, gender, sex, ethnic origin, etc. are much better.
Establishing guidelines that focus on delivery time and cost and are open to public scrutiny will go a long way [toward reaching that goal].
Griffin: Do you think your respective ages impact how you view this issue, and could that be endemic in the rest of society?
Bari: Age has something to do with it. I've heard the arguments. I've considered myself a conservative Republican and believed in those things that Lopez is talking about. But I'm discouraged because I haven't seen the market operate in what I consider to be a fair, open and competitive manner.
I've always felt regulation was bad, but have come to the conclusion that sometimes it's necessary.
Bauman: I think age has a lot to do with it. Opportunities are absolutely better today. I also think the younger generation is a lot more independent. They're big risk takers and, quite frankly, a lot of us didn't grow up surrounded by the notion of victimization. We don't feel constrained to think about things the way people expect us to. It makes us more resilient in terms of setting our own paths and being more aggressive about reaching our goals.
Just The Facts
- An estimated 42 percent of the nation's nearly 8 million women-owned businesses sell products or services to government agencies or corporations. About 61 percent of men-owned firms consider the government a client.
- Almost half of men-owned firms sell products or services to large corporations, compared to 30 percent of women-owned firms.
- Federal government set-aside programs have resulted in 23 percent of firms owned by women of color selling to the federal government, compared to 13 percent among firms owned by white women.
- In 1994, the federal government implemented a rule requiring all agencies to give up to 5 percent of prime contracts to women-owned businesses.
- In 1999, women got less than 2 percent of federal prime contracts.
- Just 22 percent of women-owned businesses have subcontracted under a larger contract to a government agency or large corporation, compared to 31 percent of men-owned firms.
Women's Business Enterprise National Council, (202) 872-5515, www.wbenc.org.