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This is a guest post by Rose Wang, Founder and CEO, Binary Group

In the first part of this post, I shared some statistics about the powerful impact that women-owned businesses have on the U.S. economy. I also shared this disappointing fact: Among the top five federal government agencies to use set-aside contract mechanisms (DoD, GSA, VA, DoJ, and DoI), women-owned small business (WOSB) set-aside contracts are at an average of 0.12% of the total set-aside contracts awarded since FY2011, far below the government’s goal of 5%.

How do we bridge that gap?

Let’s look to the corporate world for inspiration. Corporations have successfully used pay incentives and management by objective methods to motivate C-level executives to achieve corporate goals. CEOs are held accountable and receive pay-for-performance incentives for achieving revenue, profit and hiring goals. If they do not achieve corporate goals, they do not get paid – and in some cases, they may even lose their job.

Currently, the SBA uses an annual Procurement Scorecard as an assessment tool to measure how well federal agencies reach their small business and socio-economic prime and sub-contracting goals, providing accurate and transparent contracting data and reporting agency-specific progress. The Scorecard includes goals for procuring goods and services from women-owned small businesses.

As I mentioned in the first part of this post, an amendment to the FY13 National Defense Authorization Act removed the dollar award caps on the women-owned small business (WOSB) set-aside program. In addition to lifting the caps on the WOSB awards, the National Defense Authorization Act contained several other amendments designed to help federal agencies achieve small business goals. One amendment clarified the steps that the leadership of an agency should take to ensure that all members who are responsible for acquisition assume responsibility for the agency’s success in achieving small business contracting goals and percentages.

This could apply to members of the senior executive service (SES), any member or official who acquires services or supplies, directs agency organizations to acquire services or supplies, and oversees acquisition officials (including program managers, contracting officers, as well as other acquisition workforce personnel responsible for formulating and approving acquisition strategies and plans.

The National Defense Authorization Act outlined these three steps:

  1. Promote a climate or environment that is responsive to small business concerns
  2. Communicate the importance of achieving the agency’s small business contracting goals
  3. Encourage small business awareness, outreach, and support

Promoting, communicating and encouraging personnel to reach set aside goals is great on paper, but where is the accountability? How does this ensure that the 5% goal for women-owned business set asides is actually achieved? More importantly, how do these steps motivate agency leaders and everyone involved in acquisition and contracting to set aside contracts that have real monetary value and offer opportunities for WOSB across every industry, versus just ‘checking the box’ with set asides that are very small in value and provide opportunities in limited ‘service’ categories? The reality is they don’t.

Pay for performance

What if the same pay incentive principles already known to work in the private sector were applied in the federal sector for executive leadership and all contracting and acquisition personnel involved in procuring products and services? Incentives have been proven to work not only in the corporate arena, but have worked to encourage consumers to lose weight, patients to visit doctors, and parents to start college savings plans. Why wouldn’t it work to help federal agencies reach small business and WOSB set-aside goals?

Recently, I was meeting with a SADBU representative, and they were thrilled to have completed their very first WOSB set aside. Many contracting officers want to do the right thing. Adding a sense of urgency – pay incentive for reaching goals and consequences for falling short – may significantly change the practices of underperforming agencies in the number and value of set-asides going to WOSB.

Small businesses are just as competitive in performing work as large publicly-traded companies and women-owned business are just as effective as their male counterparts – sometimes even better, as smaller businesses can be nimble and adapt to change quickly, while gender-neutral leadership teams can outperform companies that have leadership teams that are one-sided.

Ensuring WOSB set-aside goals are met at every agency will ultimately lead to better job creation and economic growth. Adding pay-for-performance incentives for leaders and all acquisition and contracting personnel will give agencies the motivation needed to shift a larger pool of contracting dollars to women-owned businesses, exponentially benefiting employment rates and the economy.

That’s one small step for (wo)man (owned businesses), one giant leap for the economy.

This post originally appeared on the Binary Group blog at http://www.binarygroup.com/blog/article/a_momentous_step_to_shrink_the_contracting_gender_gap, and was adapted and reprinted with permission.

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