SIZE COUNTS. OR AT LEAST IT SHOULD WHEN IT COMES to the federal government's vendor database, Pro-Net/CCR. Too many big businesses are listed there as "small," allowing them to be awaked "an alarming percentage" of small-business set-aside contracts, according to Lloyd Chapman, president of the Microcomputer Industry Suppliers Association.

The General Accounting Office (GAO) backed up Chapman's complaint in a recent report. David E. Cooper, contracting issues director at the GAO, told the House Small Business Committee that five large companies received $460 million in small-business contracts in fiscal year 2001. He wasn't able to provide the total large-business bite out of the small-business pie, however. Federal law says small business should get 23 percent of federal prime contract dollars, which totaled $50 billion in fiscal 2001.

Many big companies listed as "small" in Pro-Net/CCR started out below the SBA small-business-size ceiling, which differs from industry to industry. But they eventually outgrew that designation, a fact that was not reflected, in the database. "Over the past six months, more than 600 businesses have been removed from Pro-Net because they are not small businesses," says the SBA's Fred C. Armendariz.

The government is scrutinizing small-business designations for errors and fraud in an effort to ensure that small-business benefits go only to companies that deserve them.

Agencies came close to meeting their small-business goals last year, awarding 22.62 percent of their contracting dollars to small businesses, just shy of the 23 percent goal, according to a recent report issued by the Democratic minority of the Senate Small Business and Entrepreneurship Committee. Although agencies failed to come close to the goals for some set-asides, their overall results were good.

The success is misleading, however, because the data that identifies small businesses is confusing, contradictory and often wrong. Officials don't know how wrong, said David Drabkin, deputy associate administrator of the General Services Administration's Office of Acquisition Policy. GSA launched an effort last week to find out how many large businesses are miscategorized and why the errors happen.

A General Accounting Office report released in May found that two issues lead to an overcounting of small-business contracts. One is inaccurate information in the computer systems officials rely on to identify small businesses. The other is a policy that allows small businesses on governmentwide acquisition contracts (GWACs) to retain that status for the life of the contract, no matter how large they become during that time.

Those factors can erroneously count some contracts as meeting small-business goals, the GAO report stated.

"When we finish this effort, we should be able to tell folks what the impact is," Drabkin said. "My sense is it is a minor one, but I need to be able to prove that empirically."

"If you can't have true measurement, why have a measurement at all?" said Fred Armendariz, associate deputy administrator for government contracting and business development at the Small Business Administration. "Knowing where you are allows you to draw a map to address your shortcomings."

An SBA task force is working to simplify the definition of small business. The agency uses the North American Industry Classification System to identify an industry. It then applies one of 32 measures, most based on a maximum number of employees or maximum revenue level, to determine if a business qualifies as small.

The task force should deliver a recommendation by the end of the year, Armendariz said. The size issue is so complicated that often companies don't know what size they are, he said. Companies can be small in some lines of work and not in others.

SBA's Procurement Marketing and Access Network contractor database, meant to list only small businesses, isn't always accurate, said David Gray, counsel to the inspector general at SBA. The agency generally relies on companies to report if they are small or a member of a special set-aside class. Some companies may be confused by the complicated rules for determining size status, and others may need a stern warning about the potential criminal penalties for filing false information, according to an IG report.

The IG's office is reviewing several companies at the request of the Senate Small Business and Entrepreneurship Committee to see if they have lied about their status to win business, Gray said.

At GSA, the Federal Procurement Data System is about to be scrapped and replaced, because it is notoriously inaccurate. Drabkin attributes much of FPDS' inaccuracy to human error, because agency employees have to key in all the data that the system tracks.

FPDS logged 35.9 million transactions in 2001 and more than 34 million in 2002, he said. "Human error happens. It's a lot of data; 34 million transactions is not a small number."

Officials are also addressing the policy that allows small businesses to keep that designation for as long as 20 years without further examination.

Under the policy that has been in place, "you are what you are as you represent yourself to the government for the life of that contract," said Linda Williams, SBA's associate administrator for government contracting.

SBA is developing a rule that would require small businesses to recertify their size annually. But the measure is controversial. Some critics say the process is sufficiently expensive and time-consuming to justify requiring recertification only once every three to five years. SBA has published a preliminary rule, however, and is now reviewing public comments. The Office of Federal Procurement Policy instructed agencies earlier this year to build the annual recertification into new GWACs.

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.

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

The mistaken designations, contained in records obtained by The Associated Press, mean the government has overstated the contract dollars that are going to small business at a time when the Bush administration has been pressing to give smaller companies 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 are "not 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. That means smaller firms that the administration intended to help may be frozen out from fresh business by the bigger companies with the incorrect designations.

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

One small businessman who is pushing to have the listings corrected said 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 California-based Microcomputer Industry Suppliers Association.

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

Among the contractors designated as small businesses in the records obtained by the AP were:

• Verizon, the largest local phone company in the nation, and Verizon Wireless, the company's joint venture that is the largest U.S. wireless provider.
• Barnes & Noble, the top U.S. bookseller, with superstores in 49 states and the District of Columbia, plus mall stores under different names.
• KBR, a Halliburton subsidiary formerly known as Kellogg, Brown & Root. KBR is one of the world's largest providers of oil field services and part of the company Vice President Dick Cheney ran before taking office in 2001. The government had awarded the company a total of $76.7 million to extinguish oil-well fires in Iraq and restart that country's oil industry after the war to oust Saddam Hussein.

The Bush administration has set a goal of providing small business with 23 percent of all federal contracts, but has fallen about 3 percentage points short after awarding $53 billion to small companies.

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

Small businesses are significant political players, according to campaign contribution figures supplied by the Center for Responsive Politics, an organization that tracks campaign finance 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 Congress' General Accounting Office found no evidence that large companies had tried to manipulate the designations found in the database. Rather, they blamed the mistakes on federal contracting officials who either entered wrong codes for business size or re-entered outdated information.

Large companies said they never intended 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 spokesman for Verizon.

The SBA said it refers companies to the agency's inspector general whenever it finds suspected fraudulent misrepresentation. One company it 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 its "small" designation in February 1998, but continues to have some 80 federal contracts. Charles DeLeon, acting general counsel for the company, said the company has a major contract that began when the company was a small business.

Mischaracterized Companies

Some of the large companies that were incorrectly entered as small businesses in the government's contractor database:

• Hertz Equipment Rental, one of the largest suppliers of rented and leased heavy equipment in the world.
• Time Warner Entertainment, a now-disbanded part of the AOL-Time Warner publishing and Internet empire.
• Starwood Hotels & Resorts Worldwide, which includes Sheraton, St. Regis and Westin hotels.
• Dole Food Co., the world's largest producer of fresh fruits and vegetables.

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

The mistaken designations, contained in records obtained by The Associated Press, mean the government has overstated the contract dollars that are going to small business at a time when the Bush administration 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 are "not 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. That means smaller firms that the administration intended to help may be frozen out from fresh business by the bigger companies with the incorrect designations.

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

One small-business man who is 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 California-based Microcomputer Industry Suppliers Association.

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

The Bush administration has set a goal of providing small business with 23 percent of all federal contracts, but has fallen about 3 percentage points short after awarding $53 billion to small companies.

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

Small businesses are significant political players, according to campaign contribution figures supplied by the Center for Responsive Politics, an organization that tracks campaign finance 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 Congress' General Accounting Office found no evidence that large companies had tried to manipulate the designations found in the database. Rather, they blamed the mistakes on federal contracting officials who either entered wrong codes for business size or re-entered outdated information.

Large companies said they never intended 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 spokesman for Verizon.

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

The SBA said it refers companies to the agency's inspector general whenever it finds suspected fraudulent misrepresentation.

One company the SBA said it 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 its "small" designation in February 1998, but continues to have some 80 federal contracts.

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

On the Net:

General Services Administration: www.gsa.gov

Small Business Administration: www.sba.gov

NOT-SO-SMALL BUSINESSES

Some of the large companies that were incorrectly entered as small businesses in the government's contractor database:

*Verizon, the largest local phone company in the nation.

*Hertz Equipment Rental, part of the world's leading rental car company.

*Time Warner Entertainment, a now-disbanded part of the AOL-Time Warner publishing and Internet empire.

*Barnes & Noble, the top U.S. bookseller.

*AT&T Wireless, the giant spinoff from AT&T.

*Starwood Hotels & Resorts Worldwide, which includes Sheraton and Westin hotels.

*Dole Food Co., the world's largest producer of fresh fruits and vegetables.