Women-Owned Businesses: Special Sources of Competitive Advantage in the Federal Market
by Dave Alexander Lincoln Strategies, LLC
If your business is women-owned, does this give you a source of competitive advantage in the federal market? The answer is a qualified “yes.” This article provides practical advice on how you can harness these benefits for your firm.
By way of context, since 1994, the federal government has had a goal of awarding at least 5 percent of its contracting dollars to women-owned small business concerns. The statute that established this goal—the Federal Acquisition Streamlining Act (FASA)—did not specify how the government would achieve this goal, nor did it authorize any new set-aside programs or other preference programs towards that end. In fact, the federal government has never achieved the 5% objective. Since 1994, it has never spent more than 2.5 percent of its contracting dollars on women-owned small businesses.
Sections 1-6, below, recommend action items that women-owned small businesses can pursue now, under existing federal procurement rules and programs, to improve their chances of obtaining business in the federal market. In light of the government’s failure to achieve its 5% goal, Congress recently enacted new legislation that will provide substantial new advantages for certain types of women-owned small businesses. The new program, which probably will not be implemented until early 2003, is described in Section 7.
Some Steps You Can Take Now
1. Seek out motivated prime contractors.
Many prime contractors are contractually required to try to subcontract a certain amount of work to women-owned small businesses—and they struggle to meet these goals. If you provide high-quality services, you might find such prime contractors to be a good source of business.
Why do many prime contractors have such goals? In brief, when the federal government awards a contract to a firm, in many cases, the government will not finalize the contract until the apparent winning firm has submitted an acceptable Subcontracting Plan. These plans, among other things, specify goals for the amount of work that the prime contractor will issue to subcontractors in different categories. These plans typically include a specific goal for the amount of work to be subcontracted to women-owned small businesses.
Prime contractors are highly motivated to try to achieve the goals in their Subcontracting Plans. If they do not make good faith attempts, they can be found to be in breach of their contract, which can lead to liability for liquidated damages. A prime contractor’s success or failure in meeting the goals of its Subcontracting Plan will be reflected in the performance evaluation report that the government prepares on the contract. An adverse report—for example, one that notes that the contractor fell well short of the goals in its Subcontracting Plan—will place the firm at a competitive disadvantage the next time it competes for a similar federal contract. The adverse performance evaluation report will form a part of the firm’s “past performance,” which is an important part of the evaluation process in many competitions for federal contracts.
How can you identify federal prime contractors that have Subcontracting Plans?
§ Look at “subcontractor opportunity directories” published by individual federal agencies and a governmentwide directory published by the U.S. Small Business Administration. These documents list current prime contracts that include Subcontracting Plans. For each such contract, the document identifies the contractor and identifies the specific person within that firm who is responsible for coordinating that firm’s achievement of the goals in the Subcontracting Plan.
§ Look at the “active contracts lists” of agencies of interest to your firm. In some cases, you will find contracts listed that do not show up in the directory noted above. Most contracts on the list that exceed $500,000 (or $1 million for construction contracts) are likely to have Subcontracting Plans associated with them.
§ Ask for help from the Office of Small and Disadvantaged Business Utilization (OSDBU) in the agencies of interest to your firm. These offices typically will give you guidance on how to reach out to their agencies’ prime contractors and staff in these offices often are aware of which prime contractors are actively seeking help to meet their Subcontracting Plan goals.
§ Use traditional networking techniques to learn more about firms in your industry with federal contracts.
Once you have identified a firm that has a contract in an area where your firm has expertise, try to arrange for a meeting with the managers within the firm that manage that contract. As one of your pitches in setting up the meeting, mention that in addition to providing high-quality services, you also happen to be a small, women-owned business. In many cases, you will find the prime contractor to be receptive to learning about your firm and identifying opportunities for you to obtain subcontracts with that firm. Even if the prime contractor does not have any current work it needs to subcontract to your firm, you may be able to explore opportunities to join that contractor in competing for new federal contracts.
2. Enlist help from agency advocates for women-owned businesses.
Many federal agencies have designated contracting personnel to act as “advocates” for women-owned small business concerns. The advocates are responsible for helping women-owned small businesses learn how to compete successfully for contracts and subcontracts in their agencies. Advocates are often located within their agency’s Office of Small and Disadvantaged Business Utilization (OSDBU). An appendix to this article lists the women-owned business advocates for many agencies.
You may want to meet with the advocate in each agency of potential interest to your firm. A few ways they may be willing to help you include the following:
§ Help you make contact with Contracting Officers (COs). For most federal solicitations over $25,000, the announcement of the upcoming Request for Proposal (RFP), Invitation for Bid (IFB), or Request for Quotations (RFQ) is made on the FedBizOpps web site. (All firms interested in the federal market should regularly review this site to learn of upcoming solicitations and to obtain solicitation documents.) Under a variety of circumstances, the Contracting Officer (CO) also will reach out to potential offerors by compiling a source list and proactively sending firms on this list an announcement. For example, a CO may do this to ensure that a large number of women-owned small businesses are aware of an upcoming small business set-aside or full-and-open competition. By working with the women-owned business advocates in each agency of interest to your firm, you can learn how to increase your chances of being included on such lists. Some types of procurements are not posted on FedBizOpps (e.g., most procurements under $25,000; competitions for task orders under GSA Schedule Contracts) and in some of these cases, the only firms that learn of these opportunities are firms on the relevant CO’s source list.
§ Help you be considered for GSA task orders. If your firm has one or more GSA Schedule Contracts, it can be helpful to make your firm known to COs who use these schedules. When a CO decides to obtain services from a GSA Schedule Contractor, the CO required to “consider including, if available, one or more small, women-owned small, and/or small disadvantaged business schedule contractor(s).” (Section 8.404(b)(6) of the Federal Acquisition Regulation)(emphasis added)
§ Help you learn of available assistance. An advocate can help you learn of special programs that his or her agency sponsors to provide outreach, education, or technical assistance to help women-owned businesses improve their chances of winning federal contracts.
§ Provide coaching. A women-owned business advocate may be willing to coach you in your search for subcontracting opportunities. For example, an advocate might have insights as to which existing prime contractors are actively seeking additional small, women-owned business concerns for subcontracting to help them meet goals in their Subcontracting Plans.
§ Provide marketing advice. In addition, an advocate might be able to provide you with insights about how to market your services to specific parts of the agency.
Finally, as explained in Section 7, below, the federal government eventually will establish a new set-aside program for women-owned small businesses. Women-owned business advocates probably will play an important role in helping decide which contract competitions will be set aside under this new program. This is another reason to get to know advocates now in agencies where you would like to do business.
3. Compete for small business set-asides.
If you do not feel that you are ready to compete in full-and-open competitions for federal contracts, you might want to look at small business set-asides. (The Contracting Officer for an acquisition will designate the appropriate size standard for that acquisition and will identify whether the competition is restricted, for example to business concerns that do not exceed that size standard. Go to SBA's Office of Size Standards for more information on size standards. You may be a small business for some acquisitions but not for others). If you are a women-owned small business, a small business set-aside solicitation will not give you any preference over other small businesses competing for these contracts. You might, however, have an advantage in attracting certain large, established contractors to join your team, especially large contractors that are interested in developing strong working relationships with women-owned small businesses.
4. Obtain certification as a women-owned small business (WOSB).
When competing for a federal contract, either as a prime contractor or a subcontractor, you are almost always required to fill out “representations and certifications” (“reps and certs”), including one in which you declare whether your firm is a small business (under the size standard for that procurement) and/or a women-owned business. This is a self-certification. (Note: If you also want to declare your firm to be a “disadvantaged” and/or an “8(a)” business for the purpose of a federal procurement, you cannot self-certify for such a designation; see Section 5, below.)
It might make sense for your firm to obtain a third-party certification that attests to your status as a women-owned small business. For example, consider a case in which you approach a large contractor with an existing prime contract and for which the contractor has a Subcontracting Plan. The prime contractor might require you to have a third-party certification before it will issue work to you as a subcontractor. You can contact the Women’s Business Enterprise National Council (WBENC) or the National Women’s Business Owners Corporation (NWBOC), both of which run certification programs for women-owned businesses. Many federal prime contractors accept these certifications (as do some state and local agencies).
5. Obtain 8(a) and/or “small disadvantaged business” status, if you qualify.
You might want to determine whether your women-owned firm can qualify for certification by the Small Business Administration (SBA) as an 8(a) firm. To qualify, your firm must be considered to be “small” under federal guidelines. In addition, the firm must be unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of the United States, and must demonstrate potential for success.
Some individuals are presumed to be socially disadvantaged (e.g., Black Americans and Hispanic Americans). A woman who is not in one of these designated groups (for brevity, a “non-designated woman”) is not presumed to be socially disadvantaged. A non-designated woman can, however, still apply to the SBA to participate in the 8(a) program. A non-designated woman needs to prove that she has personally experienced negative treatment in the U.S. that is not common to small businesspersons who are not socially disadvantaged, and which is chronic and substantial. Such negative treatment may stem from gender bias. A non-designated woman, or any other non-designated person applying for the 8(a) program, must support such a claim by the “preponderance of the evidence.”
The SBA considers an applicant to be “economically disadvantaged” for the purposes of 8(a) certification if, among other things, his or her ability to compete has been impaired due to diminished capital and credit opportunities and if the person’s net worth, after excluding that person’s equity in the firm and primary residence, does not exceed $250,000.
If your firm obtains 8(a) certification, you will be eligible to seek federal contracts that are restricted to competitions among 8(a) firms. The government cannot, however, restrict competition to 8(a) firms that are also women-owned small businesses. You can also be eligible for sole-source 8(a) procurements—i.e., contracts that are awarded without competition.
A firm that obtains 8(a) certification also automatically qualifies for “small disadvantaged business” (SDB) certification. A firm that does not qualify for the 8(a) program might qualify as an SDB, as the qualification requirements for the latter are somewhat less stringent. For example, for the purposes of SDB certification, the SBA considers an applicant to be “economically disadvantaged” if, among other things, the person’s net worth, after excluding that person’s equity in the firm and primary residence, does not exceed $750,000 (in contrast to the 8(a) program’s $250,000 standard). As with the 8(a) program, an applicant must be socially disadvantaged; the same considerations as described above apply for applicants that are not in a designated minority group (e.g., “non-designated women”).
The federal government does not set aside contracts for competition only among SDBs. A firm that has an SDB certification can, however, obtain substantial advantages even in “full and open” competitions. For example, for many full and open competitions, an SDB firm proposing as a prime can claim a 10% pricing preference. When the evaluation panel evaluates the firm’s price proposal, it will evaluate it as if it were 10% lower than the actual price. This advantage is not available to non-SDB firms.
In addition, if your women-owned, small firm obtains SDB certification, you may find that you are even more attractive to federal prime contractors than other women-owned small businesses. In brief, in a Subcontracting Plan, a federal prime contractor specifies separate targets for the dollar amounts it will subcontract to women-owned small businesses, to SDBs, and to other categories of small businesses. If a federal prime contractor subcontracts, say, $10,000 to a women-owned small business that also has an SDB certification, that same $10,000 counts towards both of these goals.
Click on one of the following links if you would like to see the portions of the SBA web site that explain how to apply for certification as an SDB and/or an 8(a) firm.
6. Register in various federal databases.
It might be helpful to list your firm and self-certify it as a women-owned business or women-owned small business in various federal government databases. For example, you can register your firm as such in “PRO-Net,” a web-based database system maintained by the SBA (pronet.sba.gov). Accessible at no charge, this system contains profiles of almost 200,000 firms. Federal COs often use PRO-Net to help assemble source lists for upcoming procurements (e.g., for small business set-asides). Federal prime contractors use the system to search for subcontractors, especially for special status firms. Firms that are assembling teams for upcoming procurements also use the system, especially when they are searching for subcontractors in various socioeconomic categories, such as women-owned small businesses. You also might want to register your firm in SUB-Net, a similar system maintained by SBA, which prime contractors sometimes use to post subcontracting opportunities, often for subcontractors in various socioeconomic categories.
You can also register your firm in the Central Contractor Registration (CCR), which is used by the Department of Defense (DOD) and by an increasing number of federal civilian agencies (e.g., to compile source lists for set-aside contracts). You do not need to register in CCR before submitting a proposal or bid. Registration is mandatory, however, before you can be awarded a contract with DOD and an increasing number of civilian agencies, so be optimistic and register ahead of time. As part of the registration, you can indicate any special status you’re your firm has, including whether your firm is women-owned and/or a small business. You can register at www.ccr.gov.
For some agencies you can submit applications to be placed on Solicitation Mailing Lists (SMLs). These are lists of firms that have indicated their desire to sell their services to that agency. When your firm’s name is placed on an SML, the agency will automatically mail to you most solicitations for that type of service. When an SML is long, the agency may use only a portion of it for any one solicitation. In such situations, at least some small businesses on the SML will be included in the mailing. To have your firm added to an SML, most agencies use Standard Form 129 (“Solicitation Mailing List Application”), a relatively short document. You will need to check with each agency to learn of its procedures. In some cases, different contracting offices within an agency will have different procedures. Firms often have to submit separate SMLs to each office within an agency of potential interest to the firm. Not all agencies use SMLs. The use of SMLs is gradually being phased out, as more federal agencies begin to use the CCR.
Steps You Can Take to Prepare for a New Program
7. New Set-Aside Program for Women-Owned Small Businesses
In December of 2000, new federal legislation was enacted that authorizes a new set-aside program for women-owned small businesses. Specifically, Section 811(m) of Public Law 106-554 authorizes federal Contracting Officers (COs), under certain circumstances, to set aside a procurement for competition only among small business concerns owned and controlled by women.
A CO can restrict a competition in this manner if each of the following conditions are met:
§ The CO has a reasonable expectation that 2 or more small business concerns owned and controlled by women will submit offers (e.g., proposals, bids, or quotes, depending on the type of solicitation) for the contract.
§ Each of the concerns is not less than 51 percent owned and controlled by women (and such ownership is determined without regard to any community property law).
§ The women owners are found to be economically disadvantaged (e.g., each woman’s net worth, excluding her primary residence and equity in the firm cannot exceed $750,000). This requirement is waived in the event that the contract is for the procurement of goods or services is in an industry in which the SBA has found that small business concerns owned and controlled by women are substantially underrepresented.
§ The anticipated award price of the contract, including all option periods and amounts, does not exceed $3 million (for services) or $5 million (for manufacturing).
§ In the estimation of the CO, the contract award can be made at a fair and reasonable price.
§ Each of the concerns either: (a) is certified by a federal agency, a state government, or a national certifying entity approved by the SBA as a small business concern owned and controlled by women; or (b) has self-certified to the CO that the business meets this definition (and has adequate documentation to back up the self-certification).
A working group within the federal government has prepared a draft set of regulations to implement this new program. This draft is currently being reviewed by the Office of Management and Budget (OMB) and is not available for public comment. OMB might approve the draft or may require changes. After OMB approves the final language, the draft regulations will be published in the Federal Register for public comment, as part of the rulemaking process. It is possible that the final regulations will be promulgated sometime in early 2003.
As a practical matter, what does this mean today for women-owned small businesses?
§ If you are contemplating seeking 8(a) and/or SDB certification, this might be an additional reason to do so. It is likely that a women-owned small business that has an 8(a) and/or SDB certification automatically will eligible to participate in the new set-aside program.
§ Keep alert to the rulemaking process. Take the time to look at the draft regulations when they are published for public comment and by all means consider sending in your comments. I can tell you from personal experience that well-reasoned public comments are definitely considered as part of the federal rulemaking process.
§ After the regulations are in place, COs will have a substantial amount of discretion in deciding which procurements should be set aside under the new program. It is likely that each agency’s women-owned business advocates will have an important role in persuading COs to set aside certain procurements under the new program. This is another good reason for you to develop good working relationships now with these advocates in agencies of interest to your firm. There may be a time in the future when you want to enlist the support of an advocate (or vice versa) in trying to persuade a CO to set aside a particular procurement under the program. Remember, if a contract is set aside, you will not get favorable treatment in comparison to other eligible competitors, but at least you will probably have a better shot at a contract award than had the competition not been set aside in the first place.
—Dave Alexander, the Principal of Lincoln Strategies, LLC (www.LincStrat.com), is the author of the new book Guide to Winning Federal Government Contracts for Architectural, Engineering, Construction and Environmental Consulting Firms, published by ZweigWhite of Natick, MA. For information on the book, click here.
This article Copyright © 2002, Lincoln Strategies, LLC.
Appendix: Women-Owned Business Advocates in Various Federal Agencies(Source: sba.gov) Department of Commerce/OSDBU U.S. Agency for International Dev./OSDBU Department of the Navy/OSDBU Environmental Protection Agency (EPA) Defense Logistics Agency / OSDBU U. S. Department of Agriculture/OSDBU Department of Army Department of Treasury/OSDBU Department of HUD/OSDBU Department of Justice/OSDBU Department of Transportation/OSDBU GSA Office of Enterprise Dev. NASA/ OSDBU Department of Education/OSDBU Department of Defense/OSDBU DOD, Director Defense Procurement DOD Office of Dir of Def. Procurement Department of HHS/OSDBU Department of Labor/OSDBU Department of Interior/OSDBU Department of Energy / OSDBU Small Business Administration Department of State A/OSDBU Veterans Affairs SAF/SB Air Force/Pentagon Defense Finance & Accounting Service |
