Federal agencies have been taking credit for awarding contracts to small businesses that have actually wound up with large companies, according to a General Accounting Office report released yesterday, casting doubt on the government's effort to boost awards to smaller firms.

The report said that 5,341 large companies were among the 49,366 firms identified in the Federal Procurement Data System as receiving small-business contracts in fiscal 2001. Five large firms, for instance, received $460 million in small-business contracts, the report said. The firms were not named.

The federal government fell short of its goal of awarding 23 percent of all contracts to small businesses in 2001.

" With the latest GAO findings, we will learn that the government didn't just miss the small-business mark, but it missed it by more than we had originally thought since the large business contracts were miscounted -- and misrepresented -- as small ones," Rep. Nydia M. Velazquez (D-N.Y.) told the House Committee on Small Business at a hearing held on the report. "Not only is it wrong and unfair that large businesses win small-business contracts, but it also inflates the federal government's track record for achieving its small-business goals."

The definition of a small business varies among sectors. A retail or service company with revenue of less than $5 million would qualify, as would a manufacturer with 500 employees or less.

In March 2002, the Bush administration unveiled a small-business agenda to increase the access of small business to federal contracting. The figures for the 2002 fiscal year will not be available until later this year.

So far in fiscal 2003, the Small Business Administration has received 193 protests alleging that a small-business contract went to a large company. In 68 of those cases the agency agreed that the company awarded the contract was not small. In fiscal 2002, the SBA received 383 protests on small-business contracts and in 85 of those cases it determined that the firm was not small, according to the agency, and the firm lost the contract.
"Misrepresentation of a firm's . . . size in small-business contracting is a widespread problem for the small-business community," said Lloyd Chapman, president of the Microcomputer Industry Suppliers Association, a trade group representing small information technology companies.
Companies found misrepresenting their status should be prosecuted, Chapman said. That will be "a major step in reduction of abuse in small-business contracting and will dramatically increase contracts for legitimate small businesses," he said.

Representatives of the Small Business Administration and General Services Administration acknowledged the problem and said they were attempting to address it. The SBA has proposed a rule that would require small businesses to certify their status annually, an agency official said. That would help agencies accurately track how many of their contracts go to a small business, they said.