Small Business Contracts Flow to Mega Corporations


Small Business Contracts Flow to Mega Corporations

By Brianna Ehley
The Fiscal Times
October 9, 1600

ByBrianna Ehley, The FiscalTimes


August19, 2014


Behemothcorporations like Apple, Bank of America and General Electric are scooping upfederal contracts that are intended for small businesses, an advocacy groupmaintains.  

TheAmerican Small Business League reviewed procurement data for 2013 and foundthat only 16 of 100 companies receiving the highest valued contracts wereactually small firms, Government Executive first reported.

Related: Defense Cuts Increase Risksfor Small Businesses

Meanwhile,79 of the 100 companies receiving the largest contracts were huge corporations,including defense contractors Lockheed Martin, General Dynamics and Boeing.Other companies taking federal small business contracts include Citigroup andBank of America, as well as Apple and Oracle. Five companies were anomalous,the group said.


"Onceagain, large companies are the fraudulent recipients of a large portion offederal small business contracts," the group's president, Lloyd Chapman said ina statement. "This practice is disastrous to our economy and hurting theAmerican people."

Thegovernment is supposed to award 23 percent of total contracts to smallbusinesses – though it's not required to do so by law. And according to theSmall Business Administration (SBA), it has missed that target every year sinceat least 2006. In 2012, for example, the government awarded $89.9 billion incontracts to small businesses, or roughly 22 percent of total contracts,Bloomberg noted. The governmentawarded small businesses just 21.6 percent of total contracts in 2011.

Related: Pentagon Has No Idea What108,000 Contractors Are Doing

The SBA,however, argued that in some instances, small businesses might not beidentified that way in the Federal Procurement Data System. John Shoraka told GovExec that if acontract was awarded to a large business, it doesn't mean it was taken awayfrom a small business "or that small businesses suffered."

"Unless acontract was set aside for a small business, the designation as a smallbusiness does not benefit that business in receiving the award," Shoraka said.He added that the designation could be the result of a mistake on the part ofthe contracting officer, who actually enters the designation in the database,or the firm "when filing its representation for that contract."

The SBAoffers a "protest" process in case businesses were inaccurately identified.

"SBA cannotalter the federal procurement data that has been [entered] into FPDS," Shorakasaid. "However, we are continuously taking steps to improve dataintegrity. Each agency is responsible for ensuring the quality of its owncontracting data."

Related: Tax Exempt Groups Owe IRSNearly $1 Billion

Theconcern of big firms snatching small business contracts is nothing new.

Last year,Congress approved legislation within the National Defense Authorization Actaimed at reforming how contracts flowed to small businesses. The measure,signed into law by President Obama, changes the way contractors can count theamount of subtracting dollars they pass onto smaller firms.

HouseSmall Business Committee Chairman Sam Graves (R-MO) applauded the passage ofhis committee's legislation at the time, saying, "The purpose of the federalcontracting goal is to ensure small businesses get a fair opportunity."

However, aspokesperson for the House Committee on Small Business said the SBA is"dragging its feet on finalizing the rule."

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