How Many Big Contractors Are Actually Posing As Small Businesses?

In the sixth of its annual studies, a small business advocacy group has again blasted the government for allegedly awarding contracts to major corporations when policy intends for them to go to legitimate small businesses. The Small Business Administration offered other possible explanations for the apparent discrepancies.

The Petaluma, Calif.-based American Small Business League’s new study of fiscal 2013 procurement data concluded that of the top 100 companies receiving the highest-valued small business federal contracts, “79 were large companies that exceeded the SBA’s small business size standards, five were anomalous and 16 were legitimate small businesses.”

The group’s annual studies also show that the number of top-100 contracting companies that are large firms has risen steadily, from 60 in fiscal 2009 to 84 in fiscal 2013.

The large corporations that received the contracts in question in fiscal 2013 included Lockheed Martin Corp., General Dynamics Corp., Boeing Co., General Electric, Oracle Corp., Apple Inc., Verizon, Bank of America Corp., Citigroup Inc., PepsiCo, Comcast Corp., Intel Corp., John Deere Co. and many more, said the league, which published brief company-by-company profiles.

“Once again, large companies are the fraudulent recipients of a large portion of federal small business contracts,” League President Lloyd Chapman said in a statement. “This practice is disastrous to our economy and hurting the American people. The ASBL urges leaders to enforce renewed oversight and monitoring of federal small business programs.”

Asked for a response, an SBA official declined to comment on the league’s methodology but reiterated the agency’s commitment to getting contracts to small businesses. “In some instances, a legitimate small business may appear to be ‘other than small’ in the Federal Procurement Data System,” said John Shoraka, associate administrator for government contracting and business development. “This occurs for a variety of reasons, including the growth of a business, mergers and acquisitions, or human data entry error. SBA has no tolerance for fraud, waste and abuse, and takes corrective steps when actionable information comes to light.”

Shoraka stressed that SBA over the past three years has initiated more governmentwide suspension and debarment actions against contractors than in the previous 10 years. “The fact that a contract awarded to a large business is coded in a database as an award to a small business does not mean that the contract was taken away from a small business or that small businesses suffered,” he said. “Unless a contract was set aside for a small business, the designation as a small business does not benefit that business in receiving the award.  The designation could be a result of a mistake on the part of the contracting officer, who actually enters the designation in the database, or the firm when filing its representation for that contract.”

He added that SBA has a protest process for the size representation in contracts containing small business set-asides. “SBA cannot alter the federal procurement data that has been [entered] into FPDS,” he said. “However, we are continuously taking steps to improve data integrity. Each agency is responsible for ensuring the quality of its own contracting data, but SBA conducts additional analysis to help agencies identify any potential data anomalies.  As part of its ongoing data quality efforts, SBA is continuing to work with federal agency procurement staff to provide tools to encourage data reviews, improvements to procurement systems and training sessions to improve accuracy.”

(Image via Andrey Bayda / Shutterstock.com)