Small businesses losing defense contracts

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Small businesses losing defense contracts

UPI
July 26, 2006

WASHINGTON, July 26 (UPI) -- The Pentagon awarded 14 percent of its contracts to small businesses in 2005, about 10 percent below the government goal, an independent research company says.

It is part of a larger trend across the federal government that increasingly favors larger companies over small, according to Eagle Eye Publishing, a company that collects and analyzes federal market data. The 2005 totals were especially affected by contracts let to support the war in Iraq and the Hurricane Katrina relief effort.

The Federal Small Business Administration reported that $119 billion in federal contracts -- half of them by the Defense Department -- were awarded to small businesses in prime and subcontracts. But according to the American Small Business League, small businesses with 100 or fewer employees actually received less than $20 billion of that amount.

"The remainder of the awards went to large businesses, including major defense contractors like Boeing, Lockheed, Northrop Grumman, Raytheon, Bechtel, and General Dynamics," ASBL said in a press statement issued Wednesday.

Those companies are among the largest defense firms in the world. They often buy out small businesses, but keep those businesses intact and therefore qualify for small business contracts -- even while the profits pour into their bottom line.

Citing U.S. Census Bureau statistics, ASBL says there are 23 million firms meeting the 100 employees or less standard, and half of all working Americans are employed by small businesses, which comprise 98 percent of all U.S. firms. The SBA has a wider definition: 500 employees for most manufacturing and mining industries; 100 employees for all wholesale trade industries; $6 million for most retail and service industries; $28.5 million for most general & heavy construction industries; $12 million for all special trade contractors and $750,000 for most agricultural industries.




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