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Claim: Small business federal contracts hit new low
Central Valley Business Times
June 13, 2006
When is a company "small" when it comes to getting government contracts supposedly earmarked for "small" businesses?
A new report indicates that "small businesses" getting contracts include General Dynamics, L3 Communications and BAE Systems, all of which are multi-billion dollar companies.
The report by a company that monitors federal contracting indicates that just 17 percent of federal contract dollars were allocated to small businesses in fiscal year 2005. If the figures are correct, it could be the lowest award of government contracts to small businesses since 1998.
The federal government has a stated goal of spending 23 percent of contract dollars with small businesses.
According to the figures from Eagle Eye Publishers Inc., of Fairfax, Va., the 17 percent added up to $65 billion. The remainder, $377.5 billion, was spent with "large" companies.
Eagle Eye describes itself as "the leading commercial provider of federal procurement and grant business intelligence."
The Small Business Administration did not comment directly on Eagle Eye's figures.
"We are reviewing the official numbers from the Federal Procurement Data System, which collects the data from all of the federal departments that provide the contracts," says Michael Stamler, an SBA spokesman in an e-mail to CVBT.
The Eagle Eye figures were first reported by the Miami Herald newspaper.
The Herald cites Eagle Eye President Paul Murphy as suggesting that one reason could be increased spending by the Department of Defense, which typically goes to large contractors.
But Eagle Eye's list of the top 100 "small" businesses getting federal contracts contains awards to some of the nation's largest corporations, says the American Small Business League, a Petaluma-based organization which has been critical of the Small Business Administration.
The list includes General Dynamics Corp. (NYSE: GD) with 2005 sales of $21.2 billion; L3 Communications (NYSE: LLL) with $9.4 billion in 2005 revenue; and BAE Systems, a subsidiary of British-owned BAE Systems plc (Pink Sheets BAESY [ADR]) with revenue of $17.5 billion.
ASBL contends at least 30 of the top 100 companies on the list are large corporations.
"Small" is in the eye of the beholder, apparently. The Herald notes that SBA contracting regulations can allow large corporations to be counted as small, especially if the contract was made with the "small" company that was later acquired by a large corporation.
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