Administration Defends Limits on Women’s Set-Aside Bush administration officials mounted a spirited defense of their limited set-aside program for woman-owned businesses, arguing that a broader program would not stand up in court. House Small Business Committee Chairwoman Nydia Velazquez, D-NY, said the SBA proposal would make only 1,247 woman-owned firms eligible for set-asides, out of more than 55,000 such firms registered in the government’s Central Contractor Registration. At a contentious committee hearing on Jan. 16, she called the proposal “insulting” to businesswomen and demanded that SBA rewrite it. In a proposed rule published Dec. 27, SBA restricted the set-asides to just four industries: national security; coating, engraving, heat treating and allied activities; furniture and kitchen cabinet manufacturing; and recreational vehicle dealers. SBA found that those were the only industries where women were underrepresented in federal contracting, based on the dollars awarded to woman-owned firms. But if SBA had used different criteria, women would have been considered underrepresented in many more industries. Before any contract can be set aside for woman-owned firms, the rule requires each agency to determine whether it has discriminated against women in that particular industry. Velazquez called the requirement a “massive roadblock.” Kansas attorney Denise Farris, representing Women Impacting Public Policy, said, “WIPP believes that the practical effect of this rule is that virtually no contracts will ever be successfully set aside under this program.” Deputy Assistant Attorney General Elizabeth Papez, whose office advised SBA on crafting the rule, said the U.S. Supreme Court has held that the government must provide “exceedingly persuasive justification” for gender-based preferences. “For contracting programs, federal courts have consistently held that…the government must show genuine, non-hypothetical evidence of discrimination in the particular field where the program will operate,” she testified. “And the cases make clear that mere findings of underrepresentation or disparity are generally not sufficient to satisfy the constitutional standard.” She added, “It’s not in the agency’s interest, or in women’s interest, to have the program struck down.” But a legal analysis by the committee’s Democratic staff took a broader view of the court decisions, arguing that the Justice Department and SBA made the rule more restrictive than the courts require. Velazquez, who sponsored legislation creating the Women’s Procurement Program, said Congress intended to increase opportunities for women in federal contracting, “But the SBA’s proposed rule is just too narrow and burdensome to achieve this intent.” Last year the House passed legislation that would create set-asides for woman-owned firms in 22 industry sectors. The Bush administration said the bill raised constitutional questions. SBA Administrator Steven Preston said set-asides are just one method of increasing contract awards to women. He said the agency is pursuing outreach and training programs to bring more woman-owned firms into the federal marketplace. SBA says prime contract dollars going to women have increased from $4.6 billion in 2000 to $11.6 billion in 2006. But the percentage of dollars awarded to women was 3.4% in 2006, far short of the congressionally mandated goal of 5%. Preston said it is unrealistic to expect a set-aside program alone to raise the figure to 5%. Under Velazquez’s questioning, he said, “I believe that 5 percent will be achieved someday.” Fueling the advocates’ rage, after a seven-year delay in implementing the set-aside program, SBA has produced a result they regard as worthless. Margot Dorfman, CEO of the U.S. Women’s Chamber of Commerce, testified, “The SBA has turned years of time and money into a ridiculous circus treating the lives of thousands and thousands of American citizens as toys in some political game.” SBA’s proposed rule is open for public comment until Feb. 25.