Lockheed Martin is the largest federal contractor. It had morethan $45 billion in revenue in 2013 and currently employs 112,000people. But as far as the Small BusinessAdministration (SBA) is concerned, it can be counted as a smallbusiness.

The federal government reserves some of its contracts, 23% forprime contracts and 36% of subcontracts, for small businesses. What constitutesa small business varies, but generally it can't have more than 1,500 employeesor have more than $38.5 million in revenue.

So how did Lockheed Martin and other huge corporations such asBoeing and General Dynamics qualify for contracts set aside for businesses ofthat size? At least partly due to the misconception that a small businessacquired by a giant corporation may keep its status for several years,according to a report(pdf) by Public Citizen. Thatmisconception starts at the top. SBA Administrator MariaContreras-Sweet was asked last year by a House panel why largecorporations were getting contracts set aside for small businesses. "We have arule in place that says that once you get in a contract with government, thatyou are given five years. And so if a large company acquires a small business,then it is grandfathered in for a number of years," Contreras-Sweet replied.

Except that's not the case. According to a 2007 rule:

"Inthe case of a merger or acquisition, where contract novation is not required,the contractor must, within 30 days of the transaction becoming final,recertify its small business size status to the procuring agency, or inform theprocuring agency that it is other than small. If the contractor is other thansmall, the agency can no longer count the options or orders issued pursuant tothe contract, from that point forward, towards its small business goals. Theagency and the contractor must immediately revise all applicable Federalcontract databases to reflect the new size status."

Toview full article, click here: http://www.allgov.com/news/where-is-the-money-going/small-business-administration-uses-variety-of-accounting-tricks-to-give-contracts-to-big-businesses-150510?news=856445