Woman-owned businesses represent a third of all privately held companies in Virginia, and they are growing faster than businesses generally.  In 2002, woman-owned businesses in Virginia employed more than 225,000 people and produced more than $25 billion in sales.

These are clearly impressive numbers in a sluggish economic climate. However, there is a cloud in the silver lining of this success story.  Woman-owned businesses in Virginia are not growing as fast as their sisters’ counterparts in other states.  And, one reason why this might be the case is that woman-owned businesses may not be getting their “fair share” of the business in goods and services generated by the Commonwealth of Virginia.

The most recent data available from the state indicate that out of $10 billion in government-issued contracts for goods and services awarded so far through the state’s new electronic procurement program, called eVA, only 1% went to woman-owned businesses.  This compares unfavorably with the federal government’s almost equally unimpressive record of consistently awarding less than 5% of all federal contract dollars to woman-owned businesses. Futhermore, it is estimated that less than 3% of the billion dollars spent annually by each of the Fortune 1000 companies goes to woman-owned businesses.

Given that 33% of all private firms in Virginia are women owned, it would not be unreasonable to suggest that 1% of $10 billion spent by our state government does not constitute a  “fair share” for woman-owned businesses.  At a minimum, these contract award figures require review and explanation.  Is there active discrimination against woman-owned businesses in the process of public procurement?  Are purchasing agents simply “unconscious” when it comes to ensuring that woman-owned businesses are included when bids are sought and purchasing decisions are made?  Does eVA help or hinder participation in contracting by woman-owned businesses? Are there capacity issues among woman-owned businesses that need to be addressed, e.g., are woman-owned businesses generally undercapitalized or are they simply not large enough to compete for some contracts? 

Before we attempt to answer these questions, we need a clearer picture of what a “fair share” of public business would look like for woman-owned firms.  To draw this picture, we require data showing what proportion of the companies qualified and able to provide needed goods or services to the state are woman-owned businesses.  Currently, no such data are readily available.

Once we are able to use the data from these studies we will be in a better position to evaluate whether woman-owned businesses are being awarded their “fair share” of public contract dollars.  Where the data show that there is a significant disparity between the availability of woman-owned firms in particular industries and their utilization as suppliers of goods and services by state government, we should hold decision makers accountable for explaining and eliminating those disparities.

Nevertheless, women business owners do not need to wait for these studies to advocate changes in the current procurement system that would enhance their likelihood of receiving business with the state.  Current Virginia law prohibits discrimination against women business owners in public procurement.  Governor Warner has strengthened the state’s commitment to compliance with this law by issuing Executive Order 29.  This Executive Order requires state agencies to have written plans “to facilitate the participation of small businesses and businesses owned by women and minorities in procurement transactions.”  Compliance with the state law and the Governor’s order could be strengthened further if the following changes were made in state policy:

1)         Although eVA can track purchases made from woman-owned businesses, the computer software is not programmed to require or encourage purchasing agents to include either small businesses, or those run by women or minorities among the businesses they consider for contract awards.  The computer software could be reconfigured to require purchasing agents to go through this step prior to making award decisions.

2)         Although eVA can track awards made by individual purchasing agents, there is no current plan to review this data to determine whether individual purchasing agents are complying with state law, the Governor’s Executive Order or their own agency; nor is there a plan to statistically evaluate the performance of these agents.  Performance standards could be updated to include compliance with state policy as a factor in evaluating and rewarding performance.

3)         Although the Governor’s Human Resources Management Standards Score Card includes “fairness and diversity” among its applicable standards and also requires managers to champion equal employment opportunity, there is no requirement of managers that they champion compliance with the Governor’s Executive Order or that they assure effective inclusion of small, woman- or minority-owned businesses in purchasing decisions made by the manager or employees under his or her supervision.  The Score Card could be updated to include inclusive purchasing decisions as a factor in evaluating and rewarding management performance.