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60 percent of small-business contracts go to large firms, analysis finds

By Sarah Chacko
Federal Times
June 30, 2011

Of the top 100 firms awarded small-business contracts in fiscal 2010, 61 were large businesses or owned by large companies, according to an analysis by the American Small Business League.

The 61 firms received more than $8 billion, or nearly 60 percent, of the $14 billion that went to the top 100 companies, ASBL reports.

The ASBL's analysis, released Tuesday, comes days after the Small Business Administration's June 27 announcement that the federal government is close to its congressionally mandated 23 percent small-business contracting goal. In 2010, agencies awarded 22.7 percent, or $98 billion, of federal contract dollars to small businesses, SBA said.

ASBL concludes, however, that the government actually spent 5 percent of its total contract dollars on small businesses in 2010.

SBA has not responded directly to ASBL's analysis. But SBA checks agencies' contract data at the end of each fiscal year and alerts them to any errors that show contracts were given to companies that do not meet small-business standards, said Michele Chang, a senior adviser in SBA's Office of Government Contracting and Business Development.

Small-business contracts sometimes show up as being awarded to large businesses because of contracting officer errors or because the company grows into a large business after the award of the contract, Chang said.

Agency contracting officers might mistakenly miscode a large business as small when they report contracts in the federal procurement database or they may not verify that a company's information in the contractor registry is correct, she said.

Errors also occur when a small business fails to report its merger with a large company or if the contracting officer does not change the company's information in the federal procurement database, Chang said.

ASBL spokesman Chris Gunn said the problem cannot be generalized that easily.

"While there are problems with the acquisition process that allow companies to appear small when in reality they are large, other times we're looking at outright fraud and abuse," he said.

Contracting officers must do more to ensure small-business contracts go to companies that legitimately meet the size standards, Gunn said.



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