The Small Business Administration (SBA) recently boasted that the federal government exceeded itssmall business contracting target in fiscal year 2014. The government is requiredby law to annually award 23 percent of all prime contract dollars tosmall businesses. According to the SBA's FY 2014 scorecard, agencies awarded a record-high 25percent of contract dollars—$91.7 billion—to companies that meet the size eligibility standards: generally, fewer than 500employees and less than $7.5 million in average annual receipts.

Good news, right? After all, small businesses are "thebackbone of our economy and the cornerstones of our communities," in the words of President Obama. Unfortunately, pastexperience shows that the SBA's numbers must be taken with a handful of salt.

The SBA admits that its scorecard methodology has flaws. An SBA official explainedto Government Executive that the baseline for determiningcontract award percentages excludes certain kinds of contracts, including contractsfor overseas contingency operations. Removing these billions of dollars fromthe calculation obviously makes it easier for the government to attain the 23percent goal. (Studies conducted in 2013 found that these exclusionsinflated the small business contracting amount by roughly 3 percent.)

But there is a more important reason to be skeptical of thesescorecards: the government simply fudges the numbers. Investigations by the GovernmentAccountability Office and SBA's Inspector General, as well as by private groups suchas Public Citizen and the American Small Business League (ASBL), have found thatsmall business contracts are often awarded to non-small businesses and getcounted toward the annual small business contracting goal. Every year, the ASBLcombs through federal contracting data and finds a disturbinglylarge number of Fortune 500 companies that have won federal small businessawards.

This problem, which is more the result of errors by governmentcontracting officials than fraud by the contractors, has persisted for years.During his 2008 campaign, then-Senator Obama proclaimed that "it is time to end thediversion of federal small-business contracts to corporate giants." Nonetheless,large companies obtaining small business contracts and the agencies countingthese contracts toward their small business goals are still among the SBA's Most Serious Management and Performance Challenges.

In the meantime, the SBA is facing heat from a skepticalCongress about its latest scorecard. Senate Small Business CommitteeChairman David Vitter (R-LA) wrote a letter to the SBA requesting a list of allcompanies that were counted toward the FY 2014 goal.

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