SBA proposal faces strong opposition from lawmakers

Six senators are opposed to a rule recently proposed by the Small Business Administration’s that would limit set-aside contracts for woman-owned small businesses to four industries.

In a letter sent at the beginning of the month, the senators said SBA fashioned the rule by selectively reading a recent study that measured if and where women business owners are underrepresented in federal contracting.

The rule would determine that woman-owned businesses are underrepresented in national security, engraving and kitchen cabinet manufacturing and as motor vehicle dealers.

“We cannot emphasize enough the depth of our disappointment with this rule,” wrote Sens. John Kerry (D-Mass.), chairman of the Small Business and Entrepreneurship Committee; Carl Levin (D-Mich.), chairman of the Armed Services Committee; Joe Lieberman (I-Conn.), chairman of the Homeland Security and Governmental Affairs Committee; Maria Cantwell (D-Wash.); Ben Cardin (D-Md.); and Jon Tester (D-Mont.).

The rule would miss Congress' intent in the legislation that created a women’s procurement program, they wrote. When Congress passed the law seven years ago, lawmakers said they wanted to level the playing field for women as entrepreneurs in federal contracting. However, the proposed rule is an “insulting, misdirected and narrow interpretation of the law” and does not make it easier for women to compete, the senators said.

SBA has received similar complaints since it published proposed rule on Dec. 27. The House Small Business Committee held a hearing with SBA Administrator Steve Preston Jan. 16. At that session, Rep. Nydia Velázquez (D-N.Y.), the panel's chairwoman, called the proposed rule silly.

Kerry’s committee held a hearing Jan. 30 on the issue, with Preston testifying. Preston told the committee the rule would provide procedures to certify that a business is eligible for the program. It also would help those businesses win contracts and protest contract awards if needed, he said.

Under the rule, agencies would have ways to determine if women business owners are underrepresented because of gender discrimination. The rule also would lay out when contractors can restrict competition to woman-owned businesses.

However, the senators don't like the proposed requirement that each agency show discrimination before giving any set-asides contracts.

Preston said the Rand Corp., which studied the issue and released a report in 2007, found 28 approaches to calculate if women are underrepresented.

“Rand then began to zero in on those methods that most accurately measured under-representation,” he said. SBA decided to base the rule on contracting dollars, not on the number of contracts. In doing so, the agency would limit the under-representation to four industries.

SBA will continue fielding comments on the proposed rule through Feb. 25.