Accessing new markets is an important avenue for business growth for all businesses, large and small. For many women business owners, federal agencies provide an excellent opportunity for market expansion and business growth. As many are aware, the U.S. government is the world’s largest single purchaser of goods and services, spending just over $535 billion in external contracts in fiscal year 2011. And with a 5% federal spending goal for agency spending with women-owned firms, and a newly-implemented Women-Owned Small Business Procurement Program, federal procurement is a market ripe for expansion by growth-oriented women entrepreneurs.
A recent survey conducted among women and men small business owners who are active federal contractors1 shows that women-owned firms that are active in federal contracting have achieved the same level of business and procurement success as their male peers A new report from this second annual survey, Women and Minority Small Business Contractors: Divergent Paths to Equal Success, focuses on key trends among women- and minority-owned firms in federal contracting. This report, published by American Express OPEN’s Victory in Procurement (VIP) program, finds that while business and procurement achievements do not vary by gender, procurement strategies do vary, as do success rates.
Notable survey findings include:
- Women-owned active contractors have achieved the same level of procurement and business success as all active small contractors. Over one-third (35%) of women active contractors have received $1 million or more in federal contracts to date, statistically identical to the 38% of all active contractors who have reached the same level of procurement success. In addition, 19% of women contractors employ 50 or more workers and 42% have $1 million or more in annual revenues, virtually the same as the 18% and 47% seen among all active small business contractors.
- Investments made in seeking contract opportunities have risen over the past year, but remain lower for women. On average, active contractors invested $103,827 in staff and financial resources seeking federal contracting opportunities during 2010. During that same period, women contractors spent 17% less —a total of $86,643. Both generally and among women, however, procurement investments are up this year over last — 23% among women and 21% overall.
- Women business owners are more likely than average to have obtained a special designation or certification. Over eight in 10 (82%) of women-owned firms have one or more of these designations, compared to 70% of all active contractors. The most helpful certifications for women are getting on the GSA Schedule (24% are on the schedule, 41% of them have found it very or extremely useful) or taking advantage of veteran or disabled veteran status (less than 10% of women-owned firms have these designations, but nearly 40% of those who do have found it to be very or extremely useful to them).
- Bidding activity and contracting success rates have declined, more so for women than the average small business contractor. Comparing the most recent three-year contracting period (2008-10) with the previous period (2007-09) finds that the number of prime contract bids and participation in bids as a subcontractor are down: 47% for prime contracts and 48% for subcontracts. Among women-owned firms, there has been a 55% decline in prime contract bids and a 30% decline in subcontracting participation. Success rates have also declined: down 8% among all firms and 17% among women for prime contract wins, and -27% and -34%, respectively, for subcontract wins.
Finally, it’s interesting to note that women business owners do not yet find the women-owned firm designation to be very helpful to them in obtaining federal government contracts. However, as this survey was taken, the WOSB Procurement Program was just getting underway. Tracking the improvements that program will have on the number and value of federal contracts going to women-owned firms will be f great interest to the women business owner community.
This report is the second in a series of four reports that will be published from the second annual survey among active small business federal contractors. The first, Trends in Federal Contracting for Small Businesses, focused on the overall situation for small firms in the federal marketplace today as well as key trends seen over the past year. Other upcoming reports will focus on how strategies and outcomes change with level of procurement experience, and what lessons can be shared from firms that focus on subcontracting as a procurement strategy. To download and read the entire 11-page report click here, and to learn more about American Express OPEN’s VIP program, visit www.openforum.com/governmentcontracting.
A separate Womenable-authored blogpost focusing on the findings from the perspective of minority-owned businesses can be found on OPENforum.com.
1 An active contractor is defined as a business that is registered on the Central Contractor Registry to do business with federal agencies and is either currently performing on a federal contract or has performed on a contract within the past five years.