nesses with paid employees as “ready, willing, and able” to perform federal contracting; it uses an inconsistent definition for the disparity ratio (comparing dollars of contract awards with numbers of businesses); it uses different years for estimating utilization and availability in a period of rapid growth of women-owned small businesses; it uses Standard Industrial Classification (SIC) 2-digit industry categories instead of North American Industry Classification System (NAICS) 3-digit or 4-digit categories; and it provides inadequate documentation of the source data and estimation methods. Finally, the CAWBO estimates are now out of date. For these reasons, the CAWBO estimates should not be used to designate industries in which to permit the use of preferential contracting programs for women-owned small businesses.

RECOMMENDATION 1—REVISE THE CAWBO PRELIMINARY ESTIMATES

The committee recommends that, instead of using the CAWBO preliminary estimates of representation of women-owned small businesses in federal contracting by industry, the Small Business Administration should estimate disparity ratios with more recent data and revised, fully documented methods. New data have become available since the CAWBO preliminary study was completed, and revisions to the basic approach are needed. It is also critically important that the revised study clearly and comprehensively document and base its identification of target industries (those in which women-owned small businesses are underrepresented) on carefully evaluated alternative measures of utilization and availability.

This recommendation addresses eight specific issues: (1) data for measuring utilization, (2) data for measuring availability, (3) types of disparity ratios, (4) industry classification detail consistent with substantive meaning and precision requirements, (5) choice of levels of the disparity ratio for distinguishing underrepresentation and substantial underrepresentation, (6) identification of industries that clearly underrepresent women-owned small businesses on the basis of multiple measures of disparity with more recent data, (7) identification of industries for further analysis, and (8) documentation and evaluation.

1-1 Data for Measuring Utilization

Selecting a data source for measuring utilization shares for women-owned small businesses in federal contracting requires deciding the size of contracts to include and the reference year. The data source must also be carefully evaluated for completeness and quality and to determine outliers and their possible effects on estimates.



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