This may come has no surprise, but a Senate panel finds that many contracts earmarked for small business have been awarded to large ones, according to a Tuesday story from McClatchy Newspapers. Here’s the report:
The contracts are being counted toward the congressionally mandated goal of ensuring that 23 percent of all federal contracts go to small businesses, the Senate inquiry found.
“A system that should be helping small business is in fact doing little more than helping the government play a numbers game,” said Sen. Claire McCaskill, D-Mo., chairman of the Homeland Security and Governmental Affairs contracting oversight subcommittee, which looked into the issue.
At a hearing Tuesday, McCaskill took note of the looming possibility that Washington could default next week on its bills and said, “This is a time for all of us to take a hard look at the way the government does business.”
The subcommittee’s investigation found that some contracts meant for small businesses go to large corporations because of a complex system of rules, loopholes and lax oversight.
SBA regulations generally define a “small business” as one with no more than 500 employees and average annual earnings of $7 million for most non-manufacturing industries. But there are exceptions that have to do with certain industry categories and wholesale vs. retail operations.
The inquiry also suggested that possibly willful ignorance of regulations occurred, including those that require subsidiaries of large corporations to be counted as part of the parent operation and not as separate businesses.
Among the top 100 small business federal contractors last fiscal year, 61 were large firms — including major defense contractors such as Lockheed, Raytheon and General Electric — according to an analysis by the American Small Business League, a marketing group for small businesses around the United States. The analysis is based on information from the Federal Procurement Data System.
The subcommittee cited a situation involving the VSE Corp., a Virginia-based engineering company and defense contractor that had been a small business but has since grown into a $364 million operation with four subsidiaries, nearly 3,000 employees and $165 million in federal small business contracts last year.
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