A Look at Federal Contracting for Women-Owned Businesses

March was Women's History Month, and as I saw all the posts on woman who have had an impact in the various fields, I wanted to discuss a topic close to my heart - federal contracting for women-owned businesses. As I look back on my career in the financial industry and with Fedmine, I have had the unique experience to work and see these businesses succeed through their sheer perseverance, strategic outlook and their passion to make a difference. So I thought for this blog I would visit and explore the state of federal spending for Women Owned Businesses (WOB).

Did you know that, as of 2020, there are more than 12.3 million women-owned businesses in the United States? The US Census Bureau reports that in 2018, women-owned firms reported nearly $1.8 trillion in sales, and employed over 10.1 million workers with an annual payroll of $388.1 billion.   

However, when we look at the contracts awarded to WOBs, it is interesting to note that the dollars are more or less constant year over year even though the total contracts awarded has increased from FY 18 to FY 22.

In FY 22, the US Federal Government awarded $26.18B to 17,026 women owned businesses - compare this to $23.31B awarded to 20,840 businesses in FY 18.  So while the dollars awarded has increased by 10% from FY 18 to FY 22, the number of companies winning the contracts has fallen by 18%.  During the same period FY18 to FY 22, while the total contracts awarded to all companies increased by 26% to $706.16B, the increase is not reflected in the contracts awarded to women owned businesses.  

Fedmine's analysis of FPDS data - March 2023

It is also interesting to note the fall in the number of businesses that are winning contracts, which is pretty much in line with what we see across all of industry.  In terms of Women Owned Businesses winning contracts for the first time, we again see a decline in the numbers as seen below:

While the trends are a little disheartening, I think it is necessary for us to dive deeper in the data and and look at the top agencies that work with WOBs.  it is no surprise to see  our defense agencies as also the Dept. of Veterans Affairs in the listing of the top 10 agencies that have awarded contracts to WOBs.  

Fedmine analysis of FPDS Data - Top 10 agencies sorted by FY 22, awarding contracts to WOBs

Also pay attention to the products and services that are being procured from the WOBs which will also vary by agency.  A look at the top NAICS purchased from WOBs indicate that computer related services, Construction, Engineering and Administrative services are some of the top NAICS that are purchased, however it is interesting to see R&D and other professional services in the top NAICS categories.  See the chart below which shows the top NAICS for Women Owned Businesses:

The federal government has set a goal of 5% for Women Owned Small Businesses, and as we can see the trends are concerning and we yet have to see sustained increases in the dollar value of contracts awarded to WOBs as also an increase in the number of businesses that are winning contracts. 

Yes, progress has been made over the years, however challenges exist, and it is important for us to support WOBs to ensure that they exceed the 5% goal that the federal government has put in place.  The US Small Business Administration has in place the Women Owned Small Business Federal Contract Program to help WOBs in the federal contracting world.  In FY 20 the SBA implemented certain changes to help make it easier for businesses to participate in the WOSB program.  However, we must remember that certification is just one part of the process.  Using market research to create your own agency plan and opportunity is essential as the business provides the value they bring to the end user.

As someone who is passionate about empowering women in business, I understand the importance of closing the gap in federal contracting opportunities. We have come a long way, but there is still plenty of room to improve.