A new report, "Women and Minority Small Business Contractors: Divergent
Paths to Equal Success," by American
Express OPEN finds that minority active contractors are
making a bigger investment to gain federal contracts in 2010 -- 35 percent
greater than the average small firm -- and submitting more bids compared
to the average small-business contractor. Between 2008 and 2010,
minority business owners report having submitted an average of 12.7 bids
for prime contracts, while the average small business contractors
submitted 10.3 prime bids during that same time frame.
Their greater investments and higher bidding activity seem to pay off -- the success rate in prime contracting among minority contractors
improved 10 percent between the 2007-09 and 2008-10 periods in contrast to the
8% decline in overall prime contracting success rates among average
small business contractors in the same period.
"Minority small contractors invested $139,709 seeking federal contracts
in 2010 versus $103,827 and $86,643 spent by the average small business
contractors and women contractors, respectively," said Karen-Michelle
Mirko, Director of Customer Advocacy at American Express OPEN. "Their
greater investment indicates the importance minority contractors place
on government contracting to fuel their businesses. Obtaining 8(a)
status has proven to be a fruitful route to contract success for
minority contractors -- exploring this route could help other
minority-owned firms access greater contracting opportunities."
The 8(a) status offers restricted competition for qualified firms.
For women contractors, getting on the General Services Administration
(GSA) Schedule, a pre-approved list of vendors that can sell directly to
the federal government without competitive bidding, has been effective
in opening up procurement opportunities -- 41 percent of women contractors who
are on the schedule say it's been very useful for getting federal
contracts. Consequently, women contractors report spending 17 percent less than
average in seeking federal contracts. The report also found that 37 percent of
active women contractors who have self-certified as a woman-owned small
business report that the designation has been useful to them.
"With the Women-Owned Small Business (WOSB) Procurement Program now in
its first full year of implementation, more women contractors will start
to benefit from the program as well as the designation," said Mirko.
"The Give
Me 5 program is also helping more women access and win contracts set
aside just for them through a series of events, one-on-one mentorships
and a comprehensive online training curriculum." Launched in 2008 by Women
Impacting Public Policy(WIPP) and American
Express OPEN, the Give Me 5 program aims to educate women business
owners and increase the number of government contracts awarded to women.
Although women and minority contractors take different routes to achieve
procurement success, both are more likely to own larger firms versus
their noncontracting peers: 42 percent of women and 41 percent of minority business
owners have business revenues in excess of $1 million, coming in just
under the average among all small business contractors (47 percent). This far
exceeds the 5 percent of all small businesses that have achieved that level of
business success.
The U.S. government is the world's largest single purchaser of goods and
services, spending just over $535 billion in contracts in fiscal year
2011. Small businesses are in a prime position to grow their business
through government procurement, since there is a 23% goal for federal
spending with small firms, 5 percent with women-owned firms and 5 percent with
minority-owned firms. The survey looked at how women and minority active
contractors compare with other small firms in terms of overall
contracting activity and success.
Additional survey findings are:
Certification and Designation Can Open Procurement Doors: Women
(82%) and minority business owners (81 percent) are more likely to have a
special procurement designation or certification compared to active
small business contractors (70 percent). For women, the most helpful
certification is the General Services Administration (GSA) schedule.
The 8(a) status and disabled veteran status are the most helpful among
minority-owned firms.
Investments are Up for Minorities and Women: The annual
investment made by minority business owners actively seeking federal
contracts was $139,709 in 2010, 35 percent higher than the $103,827 average
of all surveyed small firms and up 29% from their investments
($108,368) in 2009. Women business owners report investing $86,643 in
seeking federal contracts, 17 percent less than average but still up 23 percent from
their 2009 investments ($70,512).
This survey is the second in a series of four reports that will be
published from the second-annual American Express OPEN survey of small
business federal contractors. The first, Trends
in Federal Contracting for Small Businesses, focused on the overall
environment of small firms in the federal marketplace as well as key
trends seen over the past year. Future reports will focus on how
contracting 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.
The American Express OPEN Victory in Procurement (VIP)
survey reports findings from a survey of more than 740 small business
owners listed in the Federal Procurement Data System (FPDS) and
registered on the Central Contractor Registration (CCR), the primary
vendor database for the federal government. The survey is conducted as
part of American Express OPEN's VIP program for small business
contractors. The program, which includes the Give Me 5 program in
partnership with Women Impacting Public Policy (WIPP), offers free
resources and events to help entrepreneurs grow their business through
procurement. To learn more, visit www.openforum.com/governmentcontracting.
