Contracting opportunities with the world’s largest consumer of goods and services offer tremendous potential for financial growth to women-owned small businesses.
As part of the Federal Government Resources Streamlining Act of 1994, the U.S. government set a goal of awarding 5% of its contracts to small businesses owned by women. To help reach this goal, in 2011, the Small Business Administration (SBA) instituted the Women-Owned Small Business Program. This allows federal government contracting officers to set aside contracts for competition exclusively among women-owned small businesses (WOSBs) or among economically disadvantaged women-owned small businesses (EDWOSBs) in industries in which WOSBs and EDWOSBs, respectively, are deemed underrepresented. (Note: only industries on these lists can qualify for such set asides; but these are not the only contracts for which women-owned businesses can compete and win.)
To put the 5% goal in context, the U.S. federal government spends an estimated $500 billion annually on goods and services and of this about $260 billion are contracts on which small businesses can be prime contractors. That means about $25 billion should be going to WOSBs and EDWOSBs with close to $13 billion eligible to them as primes. The Small Business Dashboard shows federal agencies’ spending on contracts awarded to small businesses.
These opportunities mean that WOSBs and EDWOSBs should know what steps to take to get started in government contracting and then take them when they see an opportunity! 2015 was the first year in which the 5% goal was met and there are still plenty of opportunities for WOSBs and EDWOSBs to capitalize on sales to the government. SBA and its partners – PTAC, SBDC and SCORE – have advisors who can help small businesses, including WOSBs and EDWOSBs, get started in government contracting.
The first step for eligible businesses is getting certified as a WOSB or EDWOSB. The second is competing for contracts.
Eligibility for WOSB
Size: To be eligible to qualify as a WOSB for the purpose of federal government contracting, a business must, of course, be a small business according federal standards. This is determined, on an industry by industry basis, differentiated by North American Industry Classification System (NAICS) code. (Read more about NAICS.) The limit will pertain either to the annual gross revenues (e.g., only $750K for strawberry farming – NAICS 111333 – but $36.5 M for commercial and institutional building construction – NAICS 236220) or to number of employees (e.g., only 250 employees for solar electric power generation- NAICS 221114 – but 1,250 employees for manufacturing chocolate and confections made from cocoa beans – NAICS 311351). When bidding on a contract, additionally, the business must be a small business according to the NAICS code for the job if more than one NAICS code applies to the business. This tool from the SBA can be used to determine size-eligibility. (Note: WOSB and EDWOSB have separate NAICS codes for determination of industry-specific underrepresentation for set aside contracts.)
Women-ownership: One or more women must have ownership with at least 51% of the business owned and controlled by a woman or women; and these women must be U.S. citizens. This means that up to 49% of the company’s ownership can be men.
Women-management: Women must not only manage daily operations of the business but also be responsible for making long-term decisions affecting the business. This means that the 51% women owners cannot be uninvolved owners or even play just a minor role in the company.
Eligibility for EDWOSB
In addition to meeting the requirements for WOSB, EDWOSB are subject to the following economic restrictions.
Annual Income: The women who own and control the business must each have an adjusted gross income (averaged over 3 years) of less than $350K.
Personal Net Worth: The women who own and control the business must each have personal net worth (i.e., worth of assets minus liabilities) of less than $750K.
Personal Assets: The women who own and control the business must each have personal assets (regardless of liabilities) of $6M or less.
Before starting the process, a business should have a profile in the System for Award Management (SAM). It is important to set this up correctly. Businesses that have been in existence for at least one year can receive assistance with the process from an advisor at their local Procurement Technical Assistance Center (PTAC). PTAC can also assist with steps such as getting a Dun & Bradstreet Number (DUNS), a Commercial And Government Entity Code (CAGE) and a notarized letter listing ownership of the company.
Self-Certification: For now, women-owned small businesses can still self-certify at certify.SBA.gov. The process involves answering questions and uploading documents. It is a good idea to review the preparation checklist before starting. (Due to potential abuse of the self-certification system, the ability to self-certify may change in the future and so it is a good idea for certified businesses to stay current on changes in certification requirements.)
Third-Party Certification: In the future, some sort of third-party certification may be needed for eligibility for federal contracting and it is already required by some smaller government agencies and private companies. There are currently four organizations that have SBA approval to do certifications which can be found toward the bottom of the SBA webpage on WOSB.
Competing for Contracts
The main place to look for opportunities is FedBizOpps.Gov . This is the website where government contracts for $25,001 – $150K are posted. The website has a FAQs page and training videos for using the site. Use this to search for potential contracts. Respond to sources sought notices for jobs that you are capable of performing. If two or more women-owned businesses respond, the contract might be set aside for WOSBs or EDWOSBs; but if there are not responses from WOSBS/EDWOSBs to sources sought notices, or if the responding firms are not capable of performing the jobs, the contracts cannot be set aside.
Contracts of $5,001 – $25K do not need to be publicized but must receive at least three bids. For this reason, it is a good idea to attend government contracting events, such as contracting open houses, to make connections for learning about opportunities.
It is important that bids submitted be reasonable, i.e., you need the ability to perform the contract, perform it at a reasonable price and still be able to make a profit. It is also important to understand the mission and goals of the federal agency and of the project for which it is soliciting bids. Proposals should reflect familiarity with this background. Further tips can be found on the SBA blog.
If this sounds promising, the SBA has a 30-minute online course that small businesses can take on preparing proposals for bidding on government contracts. The SBA and its partner organizations also offer in person workshops on government contracting.
Bid contracts, however, are not the only avenue for selling to the federal government. Jobs for $5K and under do not have to go through the bidding process but may be filled on the open market. Even for these, certification as a WOSB or EDWOSB can be advantageous because even jobs under $5K, when filled by certified businesses, help fulfill the government’s 5% goal and there are a lot of jobs that fall into this category.
Federal government contracting can be complicated; but, because of the vast array of opportunities and the potential value they hold for small businesses, there are resources for assistance available through the SBA and its local partners:
Wichita SBA Office Phone: 316-269-6616
Kansas City SBA Office Phone: 816-426-4840
Wichita State University PTAC Office Phone: (316) 978-6788
GO Topeka PTAC Office Phone: (785) 234-2644
Johnson County Community College PTAC Office Phone: (913) 469-8500 x. 2313
Kansas SBDC Locations and Contact Information
SCORE Chapters in Kansas
Small businesses interested in government contracting are encouraged to make use of assistance available from the resources!
Links to further information:
Laurie Pieper, Ph.D.
Kansas SBDC at Washburn University
America’s SBDC Kansas