Dems flunk feds on small-biz contracts

The federal government has failed to meet its small-business contracting goal for the sixth consecutive year, according to a new report released by the Democratic members of the House Small Business Committee.

The lawmakers issued Scorecard VII today, which found that in fiscal 2005 nearly $12 billion was coded as small-business awards when the contracts actually went to large businesses.

The score card, established in 1999, evaluates how small businesses are doing in the federal marketplace.

At a noon press briefing on Capitol Hill, the Democrats said the Bush administration claimed the federal government had achieved its goal of 25.36 percent small-business awards. But when the miscoding was taken into account, the percentage dropped to 21.57, or $4.5 billion in lost contracting opportunities.

“What we are seeing is a sheer lack of accountability from the administration that is resulting in these large businesses receiving small-business awards,” said Rep. Nydia Velázquez (D-N.Y.), ranking member of the committee. “As a consequence, entrepreneurs are getting less and less contracting opportunities each year.”

The American Small Business League said its calculations showed that small businesses with 100 or fewer employees received no more than $20 billion in contracts last year, far less than the $119 billion the Small Business Administration announced.

The Democrats called on the Government Accountability Office to investigate whether some large businesses are intentionally certifying themselves as small. In addition, the lawmakers are asking the inspectors general at the Treasury, Transportation, State and Education departments, which had the most incidents of miscoding, to determine if their contracting officers are using miscoding to meet small-business goals, according to a statement from the committee.

The committee said it is sending letters to 2,500 large businesses and other ineligible entities that received small-business awards, asking them to take responsibility and rectify the situation.

According to the statement, miscoding first became a major concern in 2004 when the SBA Office of Advocacy released a report showing that $2 billion had been miscoded in 2002. The analysis found that more than 2,500 large companies and ineligible entities had received contracts, including Fortune 500 companies, universities and not-for-profits. Only 3 percent of them were small businesses that had grown.

Scorecard VII gave 12 agencies a failing grade and the federal government an overall grade of D this year, the statement said. Education, Energy and USAID have received Fs every year since the inception of the report.

Velázquez said women-owned businesses lost $5.2 billion and minority-owned businesses lost $4.5 billion in contracts.

“While agencies and big businesses turn their backs, the problem is only getting worse for small businesses, to the point where we are seeing record lows of small-business achievement in the federal marketplace,” she said.