MINDING YOUR BUSINESS

Women shorted on federal contracts

Government favoring bigger firms, failing to meet annual 5% goal

By Ann Meyer
Special to the Tribune
Published April 17, 2006

Nabbing a federal government contract helped put Carolyne Turner's financial software company on the map 25 years ago, but today the federal procurement process has led the $2 million firm to more dead ends than new deals.

Turner's Chicago-based Information Development Consultants Inc. (iDC) rings up about $400,000 each year from its accounting software developed for the federal government, but the bulk of the company's revenue comes from state and local governments, said Turner, the company's founder and president.

It's harder than ever for small businesses to win federal contracts, she said.

"The perception just is not there that a small business can do the job like a big business can," she said. "The federal government is still looking for the big name, because the big name is the safe solution."

Turner isn't the only one who has noticed that large corporations continue to win the lion's share of federal government contracts. It's been a bone of contention, particularly among business groups with a large number of women or minority business owners.

In fact, despite the federal government's pledge to award 5 percent of federal contracts to women-owned small businesses, it routinely falls short of that goal, said U.S. Rep. Nydia Velazquez of New York, the ranking Democratic member of the House Small Business Committee.

It's not a new problem. Six years ago, Congress recognized it, enacting legislation that set aside contracts in certain male-dominated industries for competition by women-owned businesses, said Margot Dorfman, chief executive of the U.S. Women's Chamber of Commerce. But the Small Business Administration has yet to implement the law, Dorfman said.

When the women's chamber filed a complaint in U.S. District Court last fall to get the Women's Procurement Program up and running, the judge found the Small Business Administration's delay in getting the program going "unreasonable" and ordered it to get moving.

"Now they have to do it. The courts are watching," Dorfman said.

Every year that goes by, women-owned firms miss out on as much as $5 billion in set-aside contracting, she said.

Improvement is sorely need, said Velazquez, who gave the government a grade of "D" on contracting with small businesses in her most recent scorecard.

"When it comes to women business owners, the federal government is getting worse," she said. "Women-owned businesses are the fastest-growing sector in our economy. They need to be represented within the federal market."

U.S. Rep. Don Manzullo (R-Ill.), chairman of the House Small Business Committee, also "has been very concerned about procurement for a long time," said spokesman Rich Carter. "We encourage government agencies to not just reach their goal but surpass it."

In 2004, the government met its overall small-business goal, with small businesses receiving 23 percent of federal prime-contracting dollars, Carter said. Women-owned businesses, however, received 3 percent, falling short of the 5 percent goal, he said.

The problem is partly a matter of educating federal contracting officers that women deserve a chance, Velazquez said.

Turner's company emphasizes customized Web-based solutions for government applications. And when the firm bids on a federal job, it often is notified that it is a finalist, but usually the contracts end up going to much larger, well-known corporations, she said.

"It just kills me," Turner said. "They tell us, `Yes, you had a good solution or idea, but we decided to stick with IBM.'"

"Nobody ever got fired for choosing IBM and Microsoft," she said.

What's more, by bundling numerous small jobs into one large contract, federal agencies have exacerbated the problem, because small firms can't compete for a $100 million contract, Dorfman said.

Despite the frustration of small-business groups, some experts see ripples of progress, as large corporations increasingly seek to subcontract with women- and minority-owned firms.

"Over 700 of the Fortune 1000 have formal supplier diversity programs," said Mike Anguiano, president of CVM Diversity Quest, an Oakbrook Terrace-based minority-owned provider of supplier diversity data and technology.

With the government and large corporations increasingly requiring suppliers to report how much money they spend on women- and minority-owned businesses, Anguiano said, "there's a big trickle-down effect."

Winning a sizable contract can help move a business to the next level, said Susan Phillips Bari, president of the Women's Business Enterprise National Council in Washington, whose women-owned member companies average $7.5 million in annual revenue.

Bari's advocacy group encourages women entrepreneurs to get certified as a women's business enterprise to actively pursue corporate and government diversity contracts.

"You have to be on the bidder list to even get the request for proposal," she said.

Locally, Pam Ackerman, president and owner of Lockport-based Work Zone Safety, is capitalizing on the trend. The company, which puts up barricades and detour signs in road construction zones, has won a growing number of jobs without dealing directly with government agencies.

Instead, Ackerman targets the large general contractors handling the jobs, because they need to hire women- and minority-owned subcontractors to comply with diversity-spending stipulations from state highway authorities.

Ackerman has been getting a warmer reception from general contractors since the Illinois Department of Transportation increased its focus on disadvantaged business enterprises, including women-owned companies in male-dominated fields, she said.

"That really opened the door for me in 2005," she said. "Road construction definitely is a man's field, but I was given the opportunity to help them out because they need to fulfill those numbers."

Still, as Anguiano points out, being a woman- or minority-owned business doesn't guarantee contracts.

"It definitely helps get in the door," he said, "but once you're in the door, you're judged the same way any other company is judged--on quality, qualifications, pricing and delivery."