Safety Equipment Co. is part of a massive conglomerate boasting 17,500 employees, annual revenue of $4.7 billion and offices in the Netherlands, Australia and Malaysia. But when it comes to federal contracting, Safety Equipment is a small business based in Tampa.

It's also a prime example of how complex rules allow the government to brag about millions in small-business spending that is actually lining the pockets of corporate giants, critics say.

Earlier this year the government announced that it had pumped $69 billion into small-business contracts nationwide in fiscal 2004 -- the most current annual data available. Small Business Administrator Hector Barreto trumpeted the results, saying the government "broke records by awarding more contracting dollars to America's small businesses than ever before.''

Florida's take of that was a healthy $3.2 billion -- reason for cheer in a state where small ventures dominate and 90 percent of all companies have fewer than 20 employees.

But a Miami Herald review of more than 28,000 federal procurement documents provided by the General Services Administration for fiscal 2004 casts a different light on those figures.

• Of the top 20 small-business contractors in the state, more than half exceeded the SBA's basic definition of a small business: one with 500 or fewer employees. Four of the companies had more than 1,000 workers. All had revenue in the millions -- including three with more than $1 billion in annual sales.
• Some of the Florida small ventures are neither small nor from Florida. One example: Chugach Alaska Corp., based in Anchorage, with 5,000 employees and revenue of more than $700 million.
• Data-entry errors may have resulted in millions of contract dollars being mistakenly credited to small businesses -- including to the state's top ''small'' contractor Point Blank Body Armor, of Pompano Beach.

ALL LEGAL

There's nothing illegal going on. Federal contracting rules allow small companies that grow large -- or firms absorbed by larger corporations before December 2004 -- to keep their small-business status for the life of a contract, which can often last decades. In the case of Chugach, its special designation as an Alaska Native Corp. allows it to be counted as small regardless of size.

But just because it's legal doesn't make it right, said Lloyd Chapman, president of the American Small Business League -- a California-based organization lobbying for reform. ''There are laws in place that divert money -- that Congress intended to go to small businesses -- to Fortune 500 companies,'' he said. Not only does it skim resources from entrepreneurs but "[puts] them in a competition they have no hope of winning.''

GOALS

The government has a mandate to channel 23 percent of all federal contracts to small business -- a target it hit in 2004 but has missed in the past. But a spate of new reports has questioned the reliability of that yardstick.

A recent SBA study found 44 large companies, including defense giants Raytheon and Titan, were counted among the small businesses that won contracts in 2002. Combined, the large firms soaked up at least $2 billion in contracts. The Office of Inspector General found similar problems with 2001 data.

Then there are concerns about the way the SBA defines small business. There are 37 different industry standards -- some based on the number of employees and some based on revenue -- but critics say they are far too inclusive. When the SBA held a nationwide hearing earlier this year about the issue it received more than 6,000 responses -- many from entrepreneurs worried that the small-business definition is pitting them against behemoths.

It all adds up to one thing, said Sen. John Kerry, D-Mass., the ranking member of the Senate Small Business Committee: "Small businesses are not receiving their fair share.''

The Safety Equipment case illustrates how the rules work: In 1999, when the Tampa-based firm was small it won a contract to make firefighting equipment for the Defense Logistics Agency. Then, in 2001, it was purchased by Fisher Scientific, a Fortune 500 company.

If size were measured annually -- as some are suggesting -- Safety Equipment would have lost its small-business status (but not the contract) that year. Instead, Fisher -- which operates in 45 nations and is traded on the New York Stock Exchange -- has been counted as a Florida small business for the past four years.

In 2004 alone, $121 million in ''small business'' awards credited to the state actually went to Safety's parent, New Hampshire-based Fisher.

The SBA acknowledges the system isn't perfect but defended the companies on the list.

''What we are seeing is small businesses that follow the rules, do what they are supposed to do and grow,'' said SBA Administrator Barreto. "After a period of time they exceed the small-business definition. That's what we want to happen.''

One of the obstacles to making sense of small-business figures is the government database that houses the contracting information. The Government Accountability Office recently wrote it had ''concerns'' regarding the ''timeliness, accuracy, accessibility, and ease of use of the system'' that is the sole agency-wide source of information on millions of contracts and more than $300 billion in annual spending.

Of the 28,000 small-business contracting documents The Miami Herald reviewed, more than 14,500 had no information about company revenue or employees -- data that would be key for auditors to determine the true size of businesses on the list.

Missing data and wrong information have been persistent problems, said Paul Murphy, CEO of Eagle Eye Publishing, a company that uses the database to study government procurement.

''It may not be malicious at all,'' he said. "[But it's] contributing to this growing lack of transparency.''

The data irregularities represent honest errors, not attempts to cheat the system, the SBA said. As Barreto put it: "What we do not see is big businesses masquerading as little businesses.''

Under the Small Business Act, any company caught lying about its size to win federal contracts is subject to fines of up to $500,000 and its officers and other officials could face up to 10 years in prison. In the past 20 years only about ''a dozen'' companies have been penalized, according to the SBA's Administrator for Size Standards Gary Jackson.

''Part of the difficulty is that it is always difficult to prove fraud,'' he said. ``Did someone knowingly misrepresent themselves? A lot of what we're seeing are companies outgrowing the size standard on existing contracts, or companies that have been purchased.''

THE MAIN EVENT

But for Chapman of the American Small Business League, talk of fraud and data errors are just sideshows to the main event -- small business' fair share of government contracts.

By the SBA's own account, 99.7 percent of all companies in the nation are small, yet the government is barely meeting its goal to channel 23 percent of all contracts to small business.