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Russian Arms Dealer Was Classified as a Small Business, Briefly

By Robb Mandelbaum
NY Times
June 18, 2012

Here’s a new topic for You’re The Boss: Russian arms for Syria. Russian-made helicopters are en route to Syria, sold to the Assad regime by Rosoboronexport, the Russian state-owned arms exporter. Since 2007, Rosoboronexport, the sole Russian arms exporter, has supplied Syria with 78 percent of its arms imports, according to the Stockholm International Peace Research Institute. (The New York Times has reported that the copters heading to Syria were most likely already part of that country’s fleet, returning after routine maintenance in Russia.)

So why are we discussing this here? Because it turns out that Rosoboronexport holds contracts with the United States government, mostly to supply Russian helicopters to Iraq, Afghanistan and Pakistan — and it was briefly labeled a minority-owned small business by the Army. This was in two actions, worth $378 million, that were part of a larger contract that has since grown to $960 million, according to the original contract action reports, gathered by the government contract monitoring service Fedmine and provided to The Times by the American Small Business League. On the current versions of the reports, retrieved last week from the Federal Procurement Data System, the small-business designation has been corrected, but the company is still identified as minority-owned.

(The contracts raised eyebrows in the United States for other reasons: both because they have deprived American companies the opportunity to do business with the government and because until 2010, Rosoboronexport was under American sanctions for its sales to Syria and Iran.)

An official with the Army did not respond to a request for comment.

Careful readers of this column know that these things happen — even The New York Times has been identified as a small business in a government contract (and also by the Army). Though the mistake was partly corrected, it is yet more evidence of an unwieldy system and one more reason that many observers greet government trumpeting of small-business contracting success with skepticism.



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