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"Little" Goes a Long Way

By Larry Margasak
St. Louis Post-Dispatch (MO)
July 16, 2003

Dateline: WASHINGTON

Some big companies show up in government small-business databases, inflating the apparent contract totals.

They're among America's larger companies: Verizon Communications, AT&T Wireless, Barnes & Noble and Dole Food. But in the government's contractor database, they're listed as small businesses.

The mistaken designations, contained in records obtained by The Associated Press, mean the government has overstated the contract dollars going to small business at a time when the administration of President George W. Bush has been pressing to give smaller firms as much federal work as possible.

"The numbers are inflated. We just don't know the extent," said David Drabkin, senior procurement officer for the General Services Administration.

Drabkin, whose agency maintains the records entered by contracting officials across the government, said the GSA is working to ensure accurate entries in the future, but past errors aren't "something we can clean up overnight."

Once a company's status is mischaracterized, it stays that way through the life of a contract, which can be 20 years. So, smaller firms that the administration intended to help might be frozen out from fresh business by bigger companies.

"This transition has led to the apparent diversion of contract dollars intended for small business," said Sue Hensley, a spokeswoman for the federal Small Business Administration.

One small-businessman who's pushing to have the listings corrected says workers are paying in lost jobs. "Most Americans work for small businesses. And most of all, the new jobs are created by small businesses. This certainly has a dramatic impact on job creation," said Lloyd Chapman, who formed the Microcomputer Industry Suppliers Association, based in California.

The government defines a small business as one that's independently owned and operated as well as not dominant in its field. Size standards change from one industry to another, based on the number of employees or revenues.

Bush's administration has set a goal of providing small businesses with 23 percent of federal contracts, but it has fallen about 3 percentage point s short after awarding $53 billion to small companies.

Officials acknowledge that the percentage was inflated by the erroneous database entries and that the amount of federal business that went to small firms was less.

Small businesses are significant political players, according to data of campaign contribution supplied by the Center for Responsive Politics, an organization that tracks donations.

The political-action committee of the National Federation of Independent Business, which calls itself the voice of small business, contributed more than $762,000 to federal candidates in the 2002 election cycle, with 97 percent going to Republicans.

Investigators from the congressional General Accounting Office found no evidence that large companies had tried to manipulate the designations in the database. Rather, they blamed the mistakes on federal contracting officials, who entered wrong codes for business sizes or re-entered outdated information.

Large companies said they didn't intend to be listed as small businesses.

"We work with a variety of small businesses in going after federal business. We hope that businesses are properly categorized in accordance with federal regulations," said Kevin Irland, a Verizon spokesman.

AT&T Wireless spokeswoman Rochelle Cohen voiced similar support, adding that the company was unaware that it was mischaracterized on the database.

When it suspects fraudulent misrepresentation, the SBA refers companies to the agency's inspector general.

One company the SBA referred is GTSI Corp. of Chantilly, Va., a computer-equipment company whose business with the federal government accounts for about three-quarters of its sales. The company has noted in its filing with the Securities and Exchange Commission that it lost the "small" designation in February 1998 but continues to have about 80 federal contracts.

Charles DeLeon, acting general counsel for GTSI, said the company "has always provided the government with accurate and truthful information." He said that GTSI has a major contract that began when it was a small business and that the company continues to provide information-technology products under that contract.

 
 

 
 

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