Small Businesses Losing U.S. Deals; Size Standards Exceeded in Federal Contracts, GAO Finds

The Washington Times (Washington, DC), May 8, 2003 | Go to article overview

Small Businesses Losing U.S. Deals; Size Standards Exceeded in Federal Contracts, GAO Finds


Byline: Marguerite Higgins, THE WASHINGTON TIMES

Small businesses aren't winning as many lucrative contracts designated for them as the federal government has reported, a study by Congress' investigative arm has found.

About 11 percent of the 50,000 companies receiving contracts set aside for small businesses in fiscal 2001 exceeded the "small" standard defined by the government, according to the General Accounting Office.

The 5,341 larger companies posted $13.8 billion from the small-business contracts while earning $60.6 billion from open contracts.

The findings released this week cast doubt on the government's report of giving 22 percent of the $50 billion pie to small businesses in fiscal 2001, said Dave Cooper, director for acquisition and sourcing management at the GAO.

It also raises questions about future reports, he said.

Most of the size discrepancies are caused by companies not using the standards set by the Small Business Administration (SBA), Mr. Cooper said.

Government contracts may last up to 20 years, and a business considered small at the beginning of a contract may outgrow the definition during the term.

Lawmakers said in a hearing yesterday that poor database systems and little enforcement of the contracting rules have caused much of the problem.

The SBA acknowledged at the hearing that its online database, Pro-Net, a directory of small businesses available for federal contracts, posts large businesses as well.

"But Pro-Net is meant to be a guide for contractors to search for small businesses in various industries," said Fred Armendariz, SBA associate deputy administrator for government contracting and business development.

Mr. Armendariz added that contracting officers are responsible for determining if a company is too large or is owned by a large corporation.

Size standards the SBA uses to classify small businesses have caused information discrepancies between agencies, resulting in small firms losing bids, said U. …

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