Congress has voiced concern that women-owned small businesses are not receiving an appropriate share of federal contracts. The goal set by Congress for that share is at least 5 percent of the value of contract dollars awarded, separately for prime contracts and subcontracts. Aggregate estimates suggest that this concern may be warranted. The estimates are suggestive, not definitive, because of limitations in the publicly available data (see “Limited Data on Outcomes,” below, and Chapter 4).
In 1997, women-owned small businesses were estimated to be 26 percent of the total number of 20.8 million U.S. businesses with at least $1,000 in gross receipts (including corporations, partnerships, and individual proprietorships). They were estimated to be 16 percent of the 5.3 million businesses with one or more paid employees (and at least $1,000 in gross receipts). Based on revenues, however, women-owned small businesses were estimated to account for only 4.4 percent of total dollar gross receipts of businesses with at least $1,000 in gross receipts (www.census.gov/epcd/mwb97.us/us.html [December 2004]).
In fiscal year 1998, women-owned small businesses received only 2.2 percent of the value of total federal prime contract awards of $181.7 billion in fiscal year 1998—less than one-half the congressional goal. By fiscal year 2003, the share of federal prime contract awards going to women-owned small businesses had increased to 3 percent of the total amount of $277.5 billion (Federal Procurement Report FY 2003, p. ix, https://www.fpds.gov [December 2004]).1 More recent Census Bureau data that would indicate whether women-owned businesses had increased their share of total businesses or total business gross receipts are not yet available.
Both business supply-side and government demand-side barriers may impair market efficiency, leading to aggregate disparities and disparities among industries in the share of women-owned businesses receiving federal contracts. An example of a business supply-side barrier would be if women entrepreneurs experienced greater difficulties in obtaining sources of startup and working capital compared with other businesses, so that fewer women-owned small businesses were large enough to be credible bidders on federal contracts. An example of a government demand-side barrier would be if federal contracting officers were less active in networking with women than with men entrepreneurs or engaged in other possibly discriminatory practices and behaviors.