Contracts Set Aside for Women-Owned Businesses Slowing
Justin Siken06/10/2023
Strategy Defense Civilian
HigherGov
Women-Owned Small Business Set-Asides Reached Record in 2022
For small federal government contractors, contract set-asides are a critical pathway to winning contracts that would otherwise go to large businesses. While virtually all set-aside categories have grown significantly over the past ten years, the women-owned small business (WOSB) set-aside has experienced by far the most significant percentage growth, going from virtually non-existent in 2013 to more than $1.5 billion awarded in government fiscal year 2022.
While it remains the smallest of all of the major set-aside categories, the WOSB set-aside has become increasingly viable for women-owned businesses to rely on to grow their businesses.
The award this week of the $365 million Army Systems Engineering and Technical Assistance (SETA III) contract to Advanced Technology Leaders with a WOSB set-aside shows that these awards can also be dramatically transformative for women-owned businesses.
Growth in WOSB Set-Asides Has Slowed in 2023
However, growth in WOSB set-asides may have peaked. Disclosed WOSB and Economically Disadvantaged WOSB (EDWOSB) set-aside awards so far in the government fiscal year 2023 are trailing behind awards from 2022.
WOSB and EDWOSB Set-Asides by Year
(2023 Run-Rate in Green)
HigherGov Analysis
While reforms in obtaining WOSB certification implemented in 2020 have successfully grown the number of WOSB-certified businesses, the number of WOSB-certified contractors winning awards has declined while the dollar value has stagnated.
The number of WOSB set-aside awards by count peaked in 2019 at 5,884 and declined to 3,264 in 2022 as awards shifted to larger and larger contracts, mirroring larger market trends. Likewise, while the number of WOSB and EDWOSB opportunities posted to the government's primary contract solicitation system SAM peaked in 2017 with 827 and had declined to 511 by 2022.
Change in WOSB Set-Aside Solicitations and Award Counts
Count of Public WOSB Solicitations (Excluding DLA)
Count of WOSB Awards (Excluding DLA)
Even by its own scorecard, the government fell short of its goal to award 5% of all contracting dollars to WOSBs in 2020 and 2021, only reaching 4.63% in 2021 (the most recent year disclosed). The Department of Defense only awarded 3.8% of dollars to women-owned small businesses in 2021.
This underperformance strongly suggests that many agencies should be issuing more solicitations with a WOSB set-aside in order to reach their WOSB award targets.
Recommendations for Women-Owned Businesses
For certified WOSB and EDWOSBs, we recommend focusing new business development efforts on agencies and types of contracts where a higher percentage of awards are allocated to WOSB set-asides. The charts below summarize the agencies and NAICS codes that have had the most WOSB set-aside obligations in 2022.
Largest WOSB Set-Asides by Agency (2022)
| Agency | Obligations ($M) | Percent of Total WOSB |
|---|---|---|
| Department of the Army [DoD] | $306 | 20.5% |
| Department of the Navy [DoD] | $166 | 11.1% |
| All Other | $147 | 9.8% |
| Department of the Air Force [DoD] | $94 | 6.3% |
| National Institutes of Health [HHS] | $81 | 5.4% |
| National Oceanic and Atmospheric Administration [DOC] | $59 | 3.9% |
| DOS Office of Acquisition Management [DOS] | $54 | 3.6% |
| Washington Offices [USAID] | $38 | 2.5% |
| Federal Emergency Management Agency [DHS] | $37 | 2.5% |
Largest WOSB Set-Asides by NAICS (2022)
| NAICS | Obligations ($M) | Percent of Total WOSB |
|---|---|---|
| 541519 - Other Computer Related Services | $221 | 14.8% |
| 541611 - Administrative Management and General Management Consulting Services | $200 | 13.4% |
| 541330 - Engineering Services | $146 | 9.8% |
| 236220 - Commercial and Institutional Building Construction | $121 | 8.1% |
| 541511 - Custom Computer Programming Services | $90 | 6.0% |
| 541512 - Computer Systems Design Services | $66 | 4.4% |
| 561210 - Facilities Support Services | $36 | 2.4% |
| 541990 - All Other Professional, Scientific, and Technical Services | $34 | 2.3% |
| 541715 - Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology) | $31 | 2.1% |
| 237990 - Other Heavy and Civil Engineering Construction | $28 | 1.9% |
If your business focuses on agencies or contracts that have not historically seen a strong percentage of WOSB set-asides, we recommend monitoring sources sought notifications and government contract forecasts to find future solicitations where the set-aside has not yet been determined to try to shape opportunities where possible.
For businesses that are not yet certified, we believe that obtaining the certification remains worthwhile, particularly if the set-aside is already commonly used with your target agencies.
The SBA's qualifications for certification are:
- Be a small business according to SBA size standards
- Be at least 51% owned and controlled by women who are U.S. citizens
- Have women manage day-to-day operations and also make long-term decisions
