Did Small Business Get Fooled On Synfuels?

 

A government audit recently cited small business accusations that the Department of Energy had mislead the small business sector by implying that smaller companies would get a sizable share of the funding for synthetic fuels projects.

In fact, the General Accounting Office report says, the DOE awarded 70 grants totaling $244 million to large companies, but only 14 grants, totaling $44 million, to small firms.

The GAO acknowledged that large firms with billions of dollars in assets were best suited to the objective of the program, which is to develop maximum alternative fuel capability in the shortest possible time. But the Energy Department may also have led small companies to believe "they had a bigger potential role than was reflected in the actual awards," the GAO report said.

The criteria that tended to favor large companies in the DOE's selection process were proof that the proposal could be carried through to successful commercialization, and proof that the company had the managerial, technical, and financial capability to carry out the project. Energy Department officials also favored firms that owned their own land and material resources over firms that held leases or options on land and resources, the report noted.

If the government wants to encourage small business, the GAO suggests that they should be given assistance in preparing proposals, small business technical advisers should be placed on proposal evaluation teams, targets for small business participation should be established, and a percentage of the available funds should be set aside for small companies.