Woman-owned small firms selling to the federal government have been on a roller coaster ride.

A new report shows that, while their government revenues dipped last year, there was strong growth in a niche program and a new regulation is expected to boost sales further.

The big picture reflected declines in the last two years, according to data compiled by Bloomberg. Federal contracts awarded to women- owned small businesses dropped to $16.4 billion in fiscal 2012, down from $17.3 billion in fiscal 2011, a decrease of 5.5%, Bloomberg said.

By comparison, sales to the government by other small businesses fell 4.1% to $80.9 billion during that period

Both years showed a reduction for woman=owned firms from a high of $18 billion in fiscal 2010, according to Bloomberg.

Bloomberg suggested a main cause of the decline was stiffer competition over a shrinking pool of contract revenue. The shrinkage may worsen as additional rounds of budget cuts are anticipated this year.

The Small Business Administration has not yet released fiscal 2012 figures. Agencies awarded 3.2% of their contracts to women-owned firms in fiscal 2011, falling short of the SBA’s 5% goal.

On the other hand, the SBA’s Woman-Owned Small Business (WOSB) federal contract program has shown expanding sales, according to Bloomberg figures.

From the WOSB program’s start in April 2011 through September 2011, the program generated $21 million in contracts for women-owned firms. From October 2011 to September 2012, the total was $72.5 million, Bloomberg said.

The rate of sales rose from about $3.5 million a month in 2011 to $6 million a month in 2012, based on those figures.

Advocates for women-owned companies anticipate additional increases this year as a result of a provision in the defense authorization bill signed into law in January. The law removed caps on contracts awarded to women-owned contractors. The caps were $4 million for services and $6.5 million for manufacturing.

The caps “made it tough for agencies to find contracts small enough to comply,” particularly on multi-year contracts, said Lourdes Martin-Rosa, the American Express OPEN advisor on government contracting.

“The removal of the caps is a vital step for agencies to meet its goal of awarding 5% of federal contracts to women-owned small businesses, “ Barbara Kasoff, president of Women Impacting Public Policy, told Set-Aside Alert.

The removal of the caps is likely to have the greatest impact on incumbent contractors, Kenneth Weckstein, partner, and Aidan Delgado, associate, wrote in the Brown Rudnick law firm blog.

“Most of that gain will go to already-established woman-owned businesses that are in a position to go after those larger contracts,” they wrote.

An incumbent typically does have an edge, but Dona Storey, American Express OPEN advisor, also predicts a ripple effect for recently-formed women-owned firms.

“More and more businesses are increasingly looking at teaming as a strategy to go after larger contracts,” Storey told Set-Aside Alert.