Interior faulted on small-business contracts

The Interior Department took credit during the past two years for more than $5.7 million in small-business contracts that it actually awarded to large corporations, some of which are Fortune 500 companies, auditors have found.

In fiscal 2006 and 2007, the department counted contracts it awarded to major companies, such as Home Depot, Dell, John Deere and others, toward its small-business contracting goals, wrote Earl Devaney, inspector general at the department, in a report issued July 1.

The primary reasons for the problems are mistakes contracting officers make when entering company data into their records, their reliance on incorrect information in federal registries, and their failure to verify business sizes in the Central Contractor Registration (CCR), Devaney wrote.

As a result, on certain contracts, officers coded John Deere, which is No. 98 on Forbes Fortune 500 list, and Waste Management, which is No. 181 on the list, as small businesses. Then, the department’s Office of Small and Disadvantaged Business Utilization included the contracts in the Small Business Goaling Reports for 2006 and 2007, the report states.

“Contracting officers often click through mindlessly when entering contracts” in the government’s data system, called the Federal Procurement Data System-Next Generation (FPDS-NG), Devaney wrote in quoting an Interior contracting officer.

The auditors found outdated and erroneous information in several governmentwide data systems. Businesses are required to update their profiles in the CCR annually, but some profiles are obsolete or simply wrong, Devaney wrote. For example, three divisions of Xerox Corp., which is No. 145 on Forbes’ list, were coded as small businesses in the CCR. Similarly, John Deere Construction & Forestry was listed as a small business in the CCR and other federal registries, according to the report.

Dell Federal Systems, a subsidiary of Dell Inc., which is No. 34 on Forbes’ list, is also marked as a small business in the CCR, the report states.

“Conversations with contracting personnel highlighted the need for increased attention to small-business procurements, including the importance of accurate FPDS-NG data entry,” according to the report.

Problems also are created when contracting officers use interagency contracts, such as multiagency contracts or governmentwide acquisition contracts. The contracting officers must rely on a company’s size determinations made by contracting officers from other agencies. However, only the agency that made the original contract award can correct the code, Devaney wrote.

He added that the contracting officers said the General Services Administration, the government’s premier procurement agency, is slow to respond to requests to correct size determinations.

Acquisition officials, especially in the Office of Federal Procurement Policy (OFPP) at the Office of Management and Budget, have pushed to make reliable data a top priority for agencies. In May, OFPP told agencies they will need to verify their fiscal 2008 information in FPDS-NG and create plans to assure that it’s correct.

Devaney recommended that contracting officers at the Interior Department report incorrect information in the CCR to the Small Business Administration and they should pay special attention to businesses’ sizes in all federal registries. He suggested reviews of FPDS-NG data during regular internal control reviews.

He also recommended that training emphasize the importance of accurate information to make sure the department’s small-business goals are correct.