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COSMOS'S WORLD: Small Businesses, big questions

By Costmo Macero Jr.
Boston Herald
October 10, 2004

John Kerry landed an easy punch in his debate Friday night with President Bush when he decried Halliburton Corp.'s abuse of bidding rules for federal Small Business Administration-controlled contracts.

If he's looking to open a major wound, Kerry should keep picking away at this issue. All signs point to a major scandal in how big corporations game the federal SBA contract rules to their advantage.

According to the San Francisco-based American Small Business League, SBA officials are sitting on a report that details widespread abuse of federal bidding rules. Lloyd Chapman, president of the Small Business League, called me on Friday (before the debate) to alert me to the fact that companies such as Dutch conglomerate Buhrmann are getting over on the SBA.

Buhrmann, located in Amsterdam, employs 26,000 people in 28 countries. But last year, the company received $50 million in small-business contracts.

``They are one example of hundreds of companies in the U.S. and elsewhere doing this,'' Chapman told me in a follow-up e-mail. ``This means that small businesses in Massachusetts are being cheated and losing millions of dollars in contracts meant for them.''

Others playing this game: The Titan Corp., a top defense contractor, and Level 3 Communications. Those and other large companies have benefited from Pentagon contracts set aside for small businesses under SBA guidelines. Indeed, the Center for Public Integrity says between 1998 and 2003, the Pentagon awarded more than $47 billion in contracts designated for small businesses to large-scale defense contractors.

Was Chapman's Friday phone call part of a coordinated campaign designed to get the most bounce out of Kerry's debate comments? Possibly.

He also noted a Dow Jones story from last week about the ASBL's effort to get the SBA fraud report - authored by the research firm Eagle Eye Publishers - released to the public. The SBA says the report isn't completed.

Still, the General Accounting Office has found similar abuses.

Either way, it appears the system is in dire need of reform.

{Other unrelated column stories not reprinted)

With contributions from Andrew J. Manuse and Reuters. Watch Cosmo Macero Jr. on ``The Heavy Hitters'' every Tuesday on the Fox 25 Morning News.



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