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Women-Owned Businesses to Benefit From New Legislation

Tickers in this article: AXP

NEW YORK ( TheStreet) -- After the U.S. government missed its 23% small-business contracting goal for the past six years, small firms, particularly women-owned businesses, are getting a boost this year from a policy overhaul.

Under the National Defense Authorization Act for Fiscal Year 2013 (NDAA), which authorizes appropriations for military-specific activities of the Department of Defense, military construction, defense activities of the Department of Energy, also included, among other things, are a host of reforms aimed to boost small-business government contracting.

President Barack Obama signed the legislation into law Jan. 3.

"Our committee made it a priority to listen to the concerns of small contractors who want to seek business opportunities with the federal government. The process uncovered various barriers that made it harder for small businesses to succeed, so we introduced legislation to address the problems," House Small Business Committee Chairman Sam Graves said in a statement last week. "The small-business provisions in the NDAA will help make sure existing small-business goals are actually met, empower small-business advocates and crack down on fraud."

The new law removes "the set-aside caps" on contract awards to women-owned firms -- a provision that kept them from getting their fair share of business (roughly $20 billion, or 5%, in total contracts to small businesses) set aside by the federal government.

The removal means these small businesses will now have greater opportunity to gain revenue from federal procurement awards, despite the potential for sequestration -- the $500 billion in across-the-board spending cuts that will automatically go into effect, mainly in the Department of Defense and Department of Homeland Security, if Congress doesn't reach an agreement to avoid those cuts in the next two months.

The U.S. federal government is the world's largest purchaser of goods and services. The changes mean there is no better time to for small-business owners to start selling to the government, according to Lourdes Martin-Rosa, American Express (AXP) OPEN's advisor on government contracting.

The government will "continue to purchase goods and services to fulfill agency-wide requirements. So sequestration will not dramatically affect the government contracting provisions in the NDAA legislation," she says.

The Small Business Administration formally launched the federal contracting program for women-owned small businesses in February 2011. Previously, there was only an informal goal attached to women government contracting, Martin-Rosa says.

Women-owned businesses were the only group of small-business contractors that had caps placed on its procurement program.

The government capped those contracts at $4 million for products and services and $6.5 million for manufacturing and construction awards made to women-owned businesses under the program. That hampered the program's ability to meet its 5% goal and impact in boosting female-owned firms, Martin-Rosa says.

An SBA spokesman was not immediately available for comment.