Key Statements from 13 Federal Investigations


Thirteen Federal Investigations and Two Private Studies Find Fraud, Abuse, Loopholes, and a Lack of Oversight in Small Business Contracting.

Here are key statements from the official reports of those investigations. For complete versions of these documents, please visit our Document Library.

SBA Office of Inspector General Report 5-15: February 24, 2005

"One of the most important challenges facing the Small Business Administration and the entire Federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards ." (Attached Memo)

U.S. Govt. Accountability Office Report for the Department of Energy - May 2005

" Misleading data has created the false impression that DOE is meeting its small business subcontracting goals and undermined DOE's oversight of subcontracting efforts, and generated mistrust among members of the small business community." (Pages 26-27)

"DOE knew there were problems with the data reported by the facility management contractors but did not take adequate corrective action." (Page 21)

U.S. Government Accountability: Alaska Native Corporations

Increased Use of Special 8(a) Provisions Calls for Tailored Oversight - June 2006

". . .the Army awarded noncompetitive 8(a) contracts to two ANC firms; these firms in turn subcontracted with large security guard companies. " (Page 4-5)

". . .significant improvements are needed in SBA's oversight of the program. Without stronger oversight, there is potential for abuse and unintended consequences ." (Page 6)

U.S. Government Accountability Office:   Commerce Information Technology Solutions Next Generation Governmentwide Acquisition Contract - June 2006

"We found that many of the 55 COMMITS NexGen contractors have grown significantly or have been acquired by larger businesses and may no longer meet small business size standards ."

"We also found that a significant portion of the task orders intended for the smallest contractors were issued to larger, incumbent contractors." (Attached memo)

U.S. Government Accountability Office:   Increased Use of Alaska Native Corporations' Special 8(a) Provisions Calls for Tailored Oversight - April 2006

"Examples where SBA's oversight has fallen short include not . . . adhering to a legislative and regulatory requirement to ascertain whether 8(a) ANC firms have, or are likely to obtain, a substantial unfair competitive advantage within an industry . . ." (Page 7)

"One contracting official told us that SBA has 'stepped aside' when it comes to overseeing 8(a) contracts and that it would not occur to her to coordinate a contract modification . . .with the SBA." (Page 19)

SBA Office of Inspector General:   The Central Contractor registration
Needs Large business and Small Business Designation Improvements
Report 6-18 - March 16, 2006

"CCR has two sections that reflect a company's size information and the information in one section can mistakenly contradict the information in the other section. Contracting Officers and other government officials may use incorrect size information to justify a small business procurement . . ." (Page 2)

SBA Office of Inspector General:   Audit of Monitoring Compliance with
8( a ) Business Development Contract Performance, Report 6-15 - March 16, 2006

"Though SBA delegated 8(a) BD contract execution authority to 26 procuring agencies, SBA did not ensure that procuring agencies monitored whether companies complied with 8(a) BD regulations when completing 8(a) BD contracts . . . SBA has ultimate responsibility for ensuring that companies comply with 8(a) BD regulations" (Page 3)

SBA Office of Inspector General Semiannual Report - September 2005

"In June 2005, the OIG recommended that SBA debar a company for misrepresenting that it was a small business concern in obtaining a Government contract which was set-aside for a small business. The OIG's recommendation to the Agency related that the company had exceeded the applicable size standards identified in the relevant solicitation at the time that it bid on the contract ." (Page 13)

"An SBA employee allegedly used his position to obtain over $20,000 for his personal benefit from an 8(a) contractor who received over $3 million in contracts." (Page 44)

SBA Office of Inspector General:
Audit of the Contract Bundling Process, Report 5-20 - May 2005

"SBA did not review the majority of reported bundled contracts that we identified, though procuring activities must provide, and SBA must review proposed bundled acquisitions. As a result, 192 contracts identified by procuring agencies as bundled were awarded without SBA's review. If all of these are actually bundled contracts, a minimum of $384 million would be potentially lost to eligible small businesses, based on minimum dollar reporting requirements of $2 million ." (Page 4)

SBA Office of Inspector General Report 5-16: March 8, 2005

"The second MAC [small business contract] was awarded based on a false certification that the company was a small business manufacturer and regular dealer." (Page 3)

SBA Office of Inspector General Report 5-14: February 24, 2005

"The SBA awarded four of the six high dollar procurements, reported as small business procurements, to large companies at the time of the procurements ." (Page 3)

"If SBA had put as much effort into verifying whether the company currently met the award's size standard as it put into trying to find ways to earn credit toward its small business goals, then perhaps the contract action would have been awarded to a company that was legitimately small at the time of the award." (Page 7)

SBA Office of Advocacy: Eagle Eye Publishers' Report - December 2004

" Of the top 1,000 small business contractors in FY 2002, Eagle Eye Publishers' analysis found 44 parent companies it identified as either large firms or 'other' . Contracts to these two groups taken together had a total value of $2 billion." (Page 2)

"The Department of Defense and the General Services Administration accounted for 79 percent of the contract awards found to have gone to large businesses." (Page 2)

"As a result of this lack of transparency, many awards that should be reserved for small firms . . . go to large firms unchallenged." (Page 12)

  " There are a number of possible explanations for small business coding inconsistencies in the FY 2002 database [including]: Vendor deception " (Page 2 of draft document)

"There did not appear to be a bundling concern with SBA even though several reports by GAO, Eagle Eye Publishers, Inc., and OMB indicate that a problem exists." (Page 10)

Center for Public Integrity: The Big Business of Small Business - Sept 30, 2004

" Thirty percent of all defense contract money reported as going to small businesses and special minority-owned businesses has ended up in the hands of the top defense companies.

"Between 1998 and 2003, the Pentagon awarded more than $47 billion in contracts designated for small businesses to companies that have each earned more than $100 million from Defense Department contracts alone during that six year period." (Page 1)

U.S. General Accounting Office: Reporting of Small Business Contract Awards
Does Not Reflect Current Business Size - May 7, 2003

" We reviewed awards to five large companies . . .[that] received contracts totaling over $1.1 billion in [FY] 2001, including 460 million reported as small business awards ."
(Page 1 of Letter of Introduction)

". . .contracting officials were using databases that contained outdated and inaccurate information about the size of the companies we reviewed." (Page 6)

"While these results cannot be projected to all contract actions reported, they raise serious questions about relying on FPDS data to measure federal agencies' effort to meet the government's 23 percent small business goal." (Page 1)

SBA Office of Inspector General Semiannual Report: September 1995

" Over the past few years, the Investigations Division has noted several instances of a particular fraudulent practice: companies that SBA, after sustaining protests against them, had prohibited from representing themselves as small businesses . . .were continuing to falsely certify themselves as eligible for small business set-aside contracts ." (Page 48)





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