Federal Audit: Women Own Only 10% of Private Companies in Pipeline Industry

By Patrick Burke | August 7, 2012 | 4:08pm EDT

(AP Photo)

(CNSNews.com) – About 10 percent of U.S. pipeline firms are owned by women, according to a Government Accountability Office (GAO) audit report, released on Aug. 2.

Another 6 percent are minority-owned, according to the GAO, based on industry-wide data from 2007.

“Minority- or female-owned, minority-owned, and female-owned firms represented 15 percent, 6 percent and 10 percent, respectively, of firms in the U.S. pipeline industry in 2007,” the federal auditing agency said in summary.

“In terms of market share, minority- or female-owned firms are estimated to have accounted for a total of 13 percent of industry receipts, with minority-owned firms having accounted for 3 percent and female-owned firms having accounted for 11 percent of receipts,” the report said.

(Note: The numbers are estimates. According to GAO, "The category 'minority- or female-owned firms' includes firms owned by nonminority women, minority men, and minority women. As such, minority women are counted in our individual estimates for both minority-owned and female-owned firms and these estimates may add up to more than the total estimate for minority- or female-owned."

In terms of pipeline companies with federal contracts, the GAO said that minority-owned firms or companies owned by women “accounted for about $484 million out of $3 billion -- or 16 percent -- of federal contract obligations to the pipeline industry from 2007 to 2011.”

The majority of these contracts went to minority-owned firms for pipeline construction projects, it said.

The GAO report was done at the request of the Senate Committee on Commerce, Science and Transportation -- led by Sen. Jay Rockefeller (D-W.Va.) – and the House Committee on Energy and Commerce, and the House Committee on Transportation and Infrastructure, chaired by Reps. Fred Upton (R-Mich.) and John L. Mica (R-Fla.), respectively.

In 2011, Congress passed a law -- the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 -- which mandated that GAO assess the levels and types of participation of minority-owned, woman-owned, and disadvantaged firms in the construction and operation of pipeline facilities in the United States.

The report defines the “pipeline industry” as firms involved in the construction of pipelines that transport materials such as oil, natural gas and hazardous materials, and under the jurisdiction of the U.S. Department of Transportation.

In 2007, the most recent year for which data are available, there were 2,519 pipeline firms in the U.S. --  2,028 of which were “classifiable by gender, ethnicity, race and veteran status” and included in the study.

Of those 2,028 firms in the study, 298 were minority- or female-owned.

According to the breakdown of pipeline firm ownership, 67 percent of firms are owned by men or are non-minority-owned; 15 percent are minority-owned or female-owned, the government auditors reported.

Another 19 percent fall into the category of “other,” which is the share of firms that are co-owned equally between non-minorities/males, and minorities and/or women, the GAO said.

The 67 percent of companies owned by males and non-minorities account for 80 percent of all receipts in the pipeline industry, with 13 percent of receipts going to women and minority owned firms.

The federal statute established a goal that at least 10 percent of DOT-assisted contracts are expended on “socially and economically disadvantaged firms,” which include minority- and female-owned firms.

“About $246 million -- or 8 percent -- of federal contract obligations went to disadvantaged pipeline firms, which may be minority-owned or female-owned firms, from 2007 to 2011,” the GAO said, with the majority of these contracts for construction projects.

The report noted that the Transportation Department develops and enforces safety regulations for the transportation of hazardous materials through pipelines.

“DOT does not administer any programs aimed specifically at encouraging the participation of minority-owned, female-owned, or disadvantaged firms in the pipeline industry,” the report said.

When granting federal contracts, the U.S. Department of Transportation “presumes that women and certain racial and ethnic groups are socially disadvantaged,” the GAO said, but does not give assistance to woman- or minority-owned firms on a “recurring basis.”

However, DOT does administer a program “aimed at helping disadvantaged firms participate in contract opportunities created by DOT financial assistance programs in some sectors of the economy, such as public transportation,” the GAO report noted.

The Transportation Department requires that program applicants prove their personal net worth is less than $1.32 million.”

Overall, the 2,500 pipeline firms in the U.S. generated almost $200 billion in receipts and employed approximately 275,000 workers.

There are currently more than 2.5 million miles of pipeline across the country, the GAO noted, and “recent shale oil and gas exploration has spurred construction of new pipeline infrastructure, as some firms take advantage of improved drilling technologies to access large volumes of oil and gas found in fine-grain sedimentary rocks.”

In 2007, the most recent year for which data are available, minority-owned firms (regardless of industry) represented about 22 percent of all U.S. firms, based on race and gender, and generated about 9 percent of all receipts, the GAO noted.

Also in 2007, female-owned firms represented about 30 percent of all U.S. firms classifiable by race and gender, and generated about 11 percent of all receipts.

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