News
Corporate giants get benefits of being small
Error gives them U.S. work meant for small businesses
By Larry Margasak
Austin American Statesman
July 11, 2003
WASHINGTON -- They are among America's larger companies: Verizon Communications, AT&T Wireless, Barnes & Noble Inc. booksellers and Dole Food Co. B
But in the government's contractor database they are listed as small businesses.
The mistaken designations, contained in records obtained by 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 mistake) 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.
But the government has no idea how many big companies are incorrectly categorized as small businesses.
The General Services Administration, which maintains the records entered by contracting officials across the government, vows to make sure future entries are accurate. But David Drabkin, senior procurement officer for the agency, said 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.
That means smaller firms that the government intended to help may be frozen out from fresh business by the bigger companies.
One small businessman 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 revenue.
The Bush administration already was about 3 points shy of its goal to give small businesses 23 percent of all federal contracts. But the true number is even small because of the improper classifications.
Investigators from Congress' General Accounting Office found no evidence that large companies had tried to manipulate the designations. Rather, they blamed the mistakes on federal contracting officials who either entered wrong codes for business size or re-entered outdated information.
And large companies said they never intended to be listed as small businesses.
The administration can ill afford to arouse the wrath of small businesses, which, collectively, are a significant political force, according to campaign contribution figures supplied by 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 businesses, contributed more than $762,000 to federal candidates in the 2002 election cycle--with 97 percent going to Republicans.
Not so small
Some of the large companies that were incorrectly entered as small businesses in the government's contractor database:
Verizon Communications Inc.: U.S.'s largest phone company.
Hertz Equipment Rental: One of the largest suppliers in the world, part of the world's biggest rental car company.
Time Warner Entertainment: Now-disbanded part of the AOL-Time Warner publishing and Internet empire.
Barnes & Noble: Top bookseller.
AT&T Wireless: Giant spinoff from AT&T Corp.
Dole Food Co.: World's largest producer of fresh fruits and vegetables.
KBR: Halliburton Co. subsidiary formerly known as Kellogg, Brown & Root. KBR is one of the world's largest providers of oil field services.
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