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Blackwater Gets a Billion in Small Business Contracts with Help from SBA Loophole

SBA Creates Loophole to Help Blackwater Circumvent Size Standards

July 30, 2008

Petaluma, Calif. – A new report from the Small Business Administration (SBA) Office of Inspector General found Blackwater Worldwide had received “at least 100 small business set-aside contracts, worth over $144 million, since 2000.” Additionally, the report pointed to the SBA’s highly controversial ruling regarding Blackwater’s size as a major contributing factor to the inclusion of Blackwater in federal small business contracting statistics.
In November of 2006, the SBA ruled that Blackwater was a small business by considering a substantial number of the firm’s employees to be independent contractors. According to the SBA Inspector General report, more than 1000 employees were considered independent contractors and were not counted towards the company’s size determination by the SBA. As a result, Blackwater was able to avoid the 1,500-employee size threshold for their industry and qualify for federal small business contracts. The SBA’s interpretation helped Blackwater circumvent normal federal small business size standards. Without the SBA’s loophole specifically created for Blackwater, the company would exceed the small business size standard by more than 250 employees and would not be eligible for federal small business contracts.
After reviewing the SBA Inspector General’s report on Blackwater, the American Small Business League (ASBL) launched an independent investigation into the total dollar volume of contracts awarded to Blackwater from 2004 to 2008. The investigation was conducted by reviewing federal contracting data supplied by Fedmine.us. Fedmine.us is one of several companies with access to the XML data-feed from the Federal Procurement Data System-Next Generation (FPDS-NG), the federal government’s repository of procurement data. As part of the ASBL’s investigation, it reviewed contracts awarded to Blackwater Security Consulting, Blackwater Lodge & Training and Blackwater Target Systems LLC. The ASBL found that from 2004 to 2008 Blackwater received more than $1.07 billion in federal contracts coded as small business contracts.
“This appears to be yet another example of a never-ending stream of federal investigations that have all found the Bush Administration to have diverted billions of dollars in federal small business contracts to some of the largest corporations in the world. It is going to take the FBI to get to the bottom of this,” ASBL President, Lloyd Chapman said. “The diversion of federal small business contracts to large corporations was first exposed in 2002, and yet no legislation has been passed to stop it. It is unconscionable that Congress has not passed legislation to stop this problem. Small businesses are sick and tired of members of Congress that are all talk with no action to back it up. This is a problem that should have been solved six years ago.”



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Reid Brownlie
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American Small Business League
3910 Cypress Dr., Suite B
Petaluma, CA 94954

707-789-9528 | fax 707-789-9580
email to rbrownlie@asbl.com




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