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The Small Business Administrationís Fabricated and Fraudulent Contracting Data: Coming Soon

July 1, 2013

Any day now the Small Business Administration (SBA) will release their latest data on the Federal government’s compliance with federal law that requires a minimum of 23 percent of all federal contracts are awarded to small businesses.

To avoid media scrutiny of the fabricated and fraudulent data, the SBA routinely releases the annual data on a Friday afternoon. If possible, they release the data close to a holiday weekend, such as the fourth of July.

The SBA will claim to have just barely missed their 23 percent small business goal. Typically, they claim to have achieved a small business contracting level in the neighborhood of 22.8 percent.

The Small Business Act Defines a small business as having no more than 1,500 employees, being “independently owned” and not being “dominant in their field.” These provisions would exclude foreign-owned firms and publicly-traded firms, such as Fortune 500 firms.

To dramatically inflate the true volume of federal contracts awarded to small businesses, the SBA will illegally include billions of dollars in contracts to many of the largest corporate giants around the world. Neither the Small Business Act nor any other federal legislation contains any language that would allow a foreign-owned firm, a Fortune 1000 firm, a publicly traded firm or any firm with over 1,500 employees to legally receive federal small business contracts.

To further inflate the percentage of contracts awarded to small businesses, the SBA will drastically underreport the actual federal acquisition budget. Federal law requires small businesses to receive “a minimum of 23 percent of the total value of all federal contracts.” It is difficult to pin down the exact total federal acquisition budget, but of the $3.5 trillion dollar federal budget for 2012, all available information indicates over $1.2 trillion was spend on acquisitions. The SBA will drastically misrepresent the total acquisition budget to be less than $500 billion.

The SBA Office of Inspector General has named the diversion of federal small business contracts to large business as the largest problem at the SBA for the last nine consecutive years. NBC, CBS, ABC and CNN have covered the story.

The General Accounting Office essentially accused SBA officials of encouraging fraud in Report 10-108 that stated, “The SBA and contracting agencies have sent a message to the contracting community that there is no punishment or consequences for committing fraud.”

The American Small Business League projects, in reality, the nation’s 28 million legitimate small businesses are receiving no more than 5 percent of all federal contracts or at least $200 billion a year less than required by law.



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