RAND Study Assesses Whether Women-Owned Small Businesses Are Underrepresented in Federal Contracting
Apr 27, 2007
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In 2000, the Small Business Reauthorization Act authorized restricting competition for federal contracts on a discretionary basis to women-owned small businesses (WOSBs) in industries where they are underrepresented, i.e., where the share of contracts awarded to them is small relative to the prevalence of like firms in the pool of those “ready, willing, and able” to perform government contracts. Underrepresentation is commonly measured by a disparity ratio. A disparity ratio of less than 1.0 suggests that the firms are underrepresented in federal contracting, one greater than 1.0 suggests that they are overrepresented.
This report presents disparity ratios for WOSBs, computed in four ways: based on number of contracts and on contract dollars for the population of all employer firms, and based on number of contracts and contract dollars for the population of all firms that have registered as potential bidders for federal contracts.
The measurement is sensitive to whether awards are measured in dollars or in number and to whether the population of ready, willing, and able firms comprises all employer firms or just those that have registered as potential bidders on federal contracts. Depending on the measure used, underrepresentation of WOSBs in government contracting occurs in 0 to 87 percent of industries. The variation is especially large in the measures that use contract dollars rather than number of contracts. The report highlights industries where disparities occur and discusses how their identification varies depending on the methodology used and on data limitations.
This study was undertaken in response to a request by the SBA for the RAND Corporation to provide different measures of WOSB representation in federal contracting, by industry. The work was funded by the SBA and completed under the auspices of the RAND Labor and Population program and the Kauffman-RAND Institute for Entrepreneurship Public Policy.
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