Senate Chairmen Protest Recent Contracting Rule
WASHINGTON, Feb. 4 /PRNewswire-USNewswire/ -- Members of the Committee
on Small Business and Entrepreneurship expressed extreme disappointment at
the Bush Administration's failure to help women-owned firms gain equal
access to federal contracts under a law enacted seven years ago. In a
letter to the Administration, Small Business and Entrepreneurship Committee
Chairman John Kerry (D-Mass.), Armed Services Committee Chairman Carl Levin
(D-Mich.), and Homeland Security and Government Affairs Committee Chairman
Joseph Lieberman (I/D-Conn.) outlined their objections to a proposed rule
that severely restricts opportunities for women in federal contracting.
They were joined by Small Business and Entrepreneurship Committee Members
Maria Cantwell (D-Wash.), Benjamin Cardin (D-Md.), and Jon Tester
(D-Mont.).
"By putting up more roadblocks for women entrepreneurs trying to enter
the federal marketplace the Bush Administration is making a serious
mistake," said Senator Kerry. "Women own almost 30 percent of small
businesses in our country, yet they receive only 3.4 percent of federal
contracts. When Congress passed the law seven years ago, we intended to
level the playing field for the 10 million women entrepreneurs in our
country, but this insulting, misdirected and narrow interpretation of the
law does nothing to make it easier for women to compete."
"The SBA's decision to exclude most industries from the program fails
hundreds of thousands of woman-owned businesses that are ready and able to
fulfill federal contracts," Senator Levin said. "The rule is inconsistent
with Congressional legislative intent, and I'm hopeful that the SBA will
amend the program so that these businesses are given the opportunity to
compete."
"I am greatly concerned about the proposed Women's Procurement Program
rule. I urge the SBA to reconsider its current position," stated Senator
Lieberman. "As the rule is currently written, women small business owners
will see little improvement in current federal contract awards."
"Women-owned small businesses deserve the same support as all small
business owners," said Cantwell. "Since taking office, I have worked hard
to make sure small business owners, regardless of gender, are able to
compete in a free and fair market. Road blocks like these imposed by the
administration is a step in the wrong direction. Small businesses are the
backbone of our communities and contribute greatly to our economy. During a
time of economic instability, proposing this rule puts the market at great
risk."
"The newly proposed rule is a step backwards and denies women-owned
businesses the equal opportunities that the SBA is supposed to be
promoting," said Senator Cardin. "I join with Chairman Kerry and my
colleagues to urge the SBA administrator to re-write the rule to ensure
women are not excluded from the resources they deserve."
"Like most rural states, small businesses are the backbone of Montana's
economy," Tester said. "And when it comes to federal contracts, the playing
field needs to be even for all men and women who run small businesses.
We'll make sure the SBA gets that message, loud and clear."
The Women's Procurement Program, enacted into law in 2000, creates a
set-aside program to help women fairly compete for federal contracts. Women
receive only 3.4 percent of federal contract dollars - far short of the
five percent goal. Yet a recent rule proposed by the Small Business
Administration (SBA) claims that women are underrepresented in only four
out of more than 140 categories of federal contracts. Despite repeated
bipartisan calls for action, the Bush Administration has failed to
implement this program over the last seven years, costing women-owned
businesses an estimated $6 billion in lost potential revenue.
At a Small Business Committee hearing this week Kerry and Levin
aggressively pressed the Administration to rewrite the proposed rule and
come up with something that more closely follows Congressional intent.
Below is the letter sent to Administrator Preston:
February 1, 2008
The Honorable Steven C. Preston
Administrator
U.S. Small Business Administration
409 Third Street, S.W.
Washington, DC 20416
Dear Administrator Preston:
As members of the Senate Committee on Small Business and
Entrepreneurship, we would like to express our deep concerns about the
proposed rule to implement the long delayed Women's Contracting Set-Aside
Program.
The women's set-aside program enacted in December 2000 authorized, on a
discretionary basis, contracting officers to "set-aside" competition for
federal contracts to women-owned small businesses. The program required SBA
to conduct a study determining which industries would be characterized as
under-represented. The study was finally completed and made available to
the public in April of this year. Regrettably, on the basis of a selective
reading of that study you have proposed a rule that severely undermines the
intent of Public Law 106-554.
We have a number of objections to the rule as proposed. First, the
SBA's use of the narrowest statistical model from the RAND study to
implement the program undermines the intent of this Congress to expand
opportunities for the broadest number of women-owned small businesses.
Amazingly, the SBA has excluded all but four industries from the program.
Given that the RAND study can be fairly read to include as many as 87
percent of all industries as underrepresented with respect to women, it is
particularly troubling that you have chosen to read the report as narrowly
as possible.
We find it hard to believe that cabinetmaking, engraving, other motor
vehicles dealers and national security and international affairs are the
only industries in which the SBA has determined that women-owned small
businesses are under-represented or substantially under-represented in
government-wide federal procurement. As a result, contracting officers can
only restrict competition under 8(m) to businesses in these industries.
Second, we are concerned about the requirement that each individual
agency show discrimination in its procurement practices before even those
four categories enumerated by the SBA can have a set-aside program
implemented. SBA's proposed rule requires that agencies, in order to
restrict competition under subsection 8(m), must determine whether the
set-aside is substantially related to remedying sex discrimination in that
industry. This creates a substantial burden for the Agency to meet before
women-owned businesses can receive contracts under this program.
This portion of the rule would substantially limit the ability of
agencies to make use of the authority granted in subsection 8(m). It would
do so by requiring federal agencies to find evidence of direct
discrimination against women-owned small businesses in order for them to
qualify for the protected status created under 8(m). To show cause, the SBA
has proposed that in order for an agency to set aside a new contract, the
procuring agency would have to conduct an appropriate analysis of its own
procurement history to show that there has been discrimination against
women-owned small businesses in the past.
Third, we believe that this proposed rule misinterprets the present
state of Constitutional law to such an extent that it may jeopardize a host
of other programs designed to open opportunities for other socially or
economically disadvantaged persons.
The rule that the SBA has proposed seems to incorrectly apply a strict
scrutiny level of review to a gender-based program. As you may know, the
Supreme Court held in Craig v. Boren, 429 U.S. 190 (1976), that
gender-based programs are subject to "intermediate scrutiny" standards,
meaning that to justify the program, the government need only prove an
important governmental interest, and a program substantially related to
achievement of that interest or purpose. Simply put, intermediate scrutiny
does not require disparity studies to implement the program, nor does it
require the narrower structuring required of race-based programs as laid
out by City of Richmond v. J.A. Croson, 488 U.S. 469 (1989) and the three
Adarand decisions.
The RAND study makes a disturbing reference to what Constitutional
standard of review is required in this instance. The study states that
"[a]lthough there have been few cases concerning women-owned businesses per
se, it appears that Congress assumes that a (strict -scrutiny) standard
would hold. . ." We strenuously object to RAND interpreting our intent and
to the SBA relying on that interpretation in its promulgation of this rule.
RAND is a contractor that had one job and one job only -- to analyze
procurement numbers with respect to women-owned businesses. By attempting
to adopt a rule based on an erroneous interpretation of Constitutional law,
the SBA is narrowing opportunities for women in business.
We cannot emphasize enough the depth of our disappointment with this
rule. We have waited seven years for implementation of a program that we
believe has the potential to open up opportunities for women business
owners for years to come. To put it simply, this rule is not what we
envisioned and does not reflect Congressional intent. We urge you to fix
the rule by expanding significantly the number of industries eligible for
the program. We also urge you to drop the requirement that each individual
agency conduct an analysis of its procurement history before implementing a
set-aside program.
If you have any questions or need any additional information, please do
not hesitate to contact us or have your staff contact our staff.
Sincerely,
JOHN F. KERRY
Chairman
Committee on Small Business & Entrepreneurship
CARL LEVIN
Chairman
Senate Armed Services Committee
JOSEPH I. LIEBERMAN
Chairman
Homeland Security & Government Affairs
MARIA CANTWELL
Senator
BENJAMIN L. CARDIN
Senator
JON TESTER
Senator
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SOURCE U.S. Senate Committee on Small Business & Entrepreneurship
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CONTACT:
Laurel Brown (Kerry), +1-202-224-0216; Tara
Andringa (Levin), +1-202-228-3685; Erika Masonhall (Lieberman),
+1-202-224-4041; Ciaran Clayton (Cantwell), +1-202-224-8277; Sue
Walitsky (Cardin), +1-202-224-4524; Aaron Murphy (Tester),
+1-406-252-0291
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