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Proposed contracting rule would benefit women-owned businesses

A new rule proposed by the Small Business Administration could make it easier for women-owned small businesses to win federal contracts,  but only in a few specialized industries.   The rule would apply only to contracts in underrepresented industries. The SBA was tasked with identifying those industries, but its 2001 findings were sharply criticized by the National Academy of Sciences. So the administration contracted with the RAND Corp. for another study.   RAND identified four industries in which women-owned small businesses have been historically underrepresented and are, therefore, eligible for set-aside contracts: national security and international affairs; coating, engraving, heat treating, and allied activities; household and institutional furniture and kitchen cabinet manufacturing; and other vehicle dealer.  

Contracts in other industries cannot be set aside for only women-owned small businesses. And set-aside contracts cannot exceed $3 million, except for manufacturing contracts, which are capped at $5 million  

The proposed rule was published Thursday in the Federal Register, and remains open to public comment until Feb. 25. It carries out the Equity for Women in Contracting Act of 2000, which allows agencies to restrict competitive bidding in areas where women are underrepresented.  

The SBA defended the proposed changes, saying constitutional concerns prohibited the agency from proposing more expansive contracting preferences for women-owned small businesses.  

If the government confers a substantive benefit on a racial group or a gender that it does not offer to others, there has to be a sufficient justification for doing so, the agency said in a statement Thursday. SBA has worked closely with the Department of Justice to consider these constitutional ramifications.  

The bi-partisan National Womens Business Council declined to comment, saying it hadnt yet had a chance to study the new rules.  

But Sen. John Kerry, D Mass., chairman of the Senate Committee on Small Business and Entrepreneurship, said the proposal doesnt go far enough.  

The Bush Administrations proposed rule is a slap in the face to women business owners, Kerry said. By cherry-picking data, theyve not only done nothing to level the playing field, theyve actually shut women out of the process. I will call on the administration to throw out this rule and put forward a workable more inclusive proposal that respects women.  

The SBA will revise the rule after the public comment period, and hopes to implement a final version by late 2008

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