By Jan Norman
August 31, 2010
The federal government spent a record $96.8 billion with U.S. small businesses in the 2009 fiscal year, according to an annual report from the U.S. Small Business Administration.
However, a major critic of federal small-business contracting calls the report "dramatically inflated."
However, the report is flawed in two ways, according to Lloyd Chapman, president of the American Small Business League in Petaluma. He claims:
* It includes billions of dollars in contracts that actually went to large corporations.
* The calculations are based on $500 billion in spending when the real federal acquisition budget is $1 trillion.
The SBA acknowledges that the federal government missed its goal for small-business spending in four of the five categories, but in each category the spending increased.
SBA Administrator Karen Mills said the report "represents real progress, but not enough. We must reaffirm our commitment to ensuring that the 23% goal is met and exceeded."
Chapman said that his organization had analyzed 2009 small-business contracting data and found "the actual percentage of contracts awarded to small businesses is closer to 5%...Of the top 100 recipients of federal small-0business contracts...60 large firms received 64.5% of the total dollars the government claimed to have awarded to small business.
"The ASBL also identified a series of Fortune 500 corporations and other large firms in the government's 2009 contracting data...including Lockheed Martin, Boeing, Raytheon, L-3 Communications, British Aerospace, Northrop Grumman, General Elect4ric, Booz Allen Hamilton, Thales Communications, General Dynamics and Dell Computer," Chapman added.
There’s no legal requirement to give contracts to small businesses, but since 1953, the federal government has encouraged its biggest agencies to spend some money with the little guys that account for half the nation’s gross domestic product, more than half the jobs and more than half the net NEW jobs.
Chapman has been insisting for years — through the administrations of both political parties — that these reports are at best mistaken and at worst fraudulent and involve “$100 billion a year.” He created the league to call public attention to the issue.
In the past, the SBA has attributed the issue to data-entry mistakes, to companies winning contracts while they were small but then outgrowing the limit and to multi-year contracts automatically renewed for as long a s 20 years if a business did a good job.
It’s not that the definition of a small business is so restrictive. In some industry categories, a company can have 1,500 employees or $35.5 million in annual revenues.