Small businesses are getting short shrift from federal agencies, receiving only 20% of their contracting dollars last year, far below the government's goal. And the problem goes beyond one lackluster year:

When Congress set up the U.S. Small Business Administration in 1953, it declared that small businesses would be awarded at least 23% of all federal government prime contracts.

It hasn't been easy going.

A preliminary analysis of fiscal 2004 contract data by Eagle Eye Publishers, a Fairfax, Virginia-based firm that monitors federal procurement, puts last year's percentage at a mere 20%. While the SBA has yet to release the official data, Eagle Eye President Paul Murphy doesn't think that further number-crunching will get them to 23%. "The numbers just look way down from last year," he says.

And the troubles go way deeper than a disappointing 2004. Federal agencies have been caught miscategorizing large companies as "small businesses" casting doubt on past data. For instance, many question whether the agencies did in fact award 23.6% of their contracting dollars to small businesses in 2003--the first year that the government reached its goal since 1999.

In the past few years, billions of dollars in federal contracts that purportedly went to small businesses actually lined the pockets of giants such as Titan Corp., Raytheon Co., General Dynamics Corp., Booz Allen Hamilton Inc., Archer Daniels-Midland, and Hewlett-Packard Co.

Even the SBA admits that it has inadvertently given small business contracts to big companies, though SBA officials contend that only a small portion of the government's small business contracts are affected and that database errors are to blame.

Small business advocates beg to differ.

"I believe that 80 to 90% of the contracts they say are going to small business are actually going to large businesses," Lloyd Chapman, president of the California-based American Small Business League, tells the New Mexico Business Weekly. "Everywhere you look you find blatant fraud and abuses by agencies like the Small Business Administration. They say these are honest mistakes and computer glitches, but these glitches inflate their numbers 100% of the time and divert funds away from small businesses."

Chapman advises the SBA to start by reworking its definition of small businesses, which the agency says can include some companies with as many as 500 employees. Meanwhile, Chapman notes, 98% of all U.S. firms have 100 workers or fewer.