Democrats: Big Corporations Snatch Small-Business Contracts
BY Angus Loten
A new report claims more than 2,500 large companies received money earmarked for small businesses.
Microsoft, Wal-Mart, and Coca Cola are just a few of the corporate giants that received small-business contracts by the federal government last year, Democratic lawmakers said on Wednesday.
In all, more than 2,500 large companies received federal cash set aside for small businesses in 2005, accounting for nearly $12 billion in miscoded contracts, according to a report by Democrats on the House Small Business Committee.
The report identifies the Treasury, Transportation, State, and Education departments as the worst offenders. The federal government and 12 departments examined in the report received failing grades for small-business contracting.
"Each year, small businesses and taxpayers are losing out on more and more," said Rep. Nydia Velazquez (D-N.Y.), the committee's ranking Democrat. "While agencies and big businesses turn their backs, the problem is only getting worse, to the point where we are seeing record lows of small-business achievement in the federal marketplace."
Velazquez said that when miscoded corporations are taken out of the mix, the amount of federal contracts awarded to small business last year falls to 22% -- below the 25% touted by the Bush administration earlier this year.
Congress sets a goal of 23% for small-business contracts.
Velazquez added that the report found only a small portion of small-business contracts were "absorbed" by larger firms purchasing small businesses -- a tendency both large businesses and Small Business Administration officials say is prevalent.
Rich Carter, a spokesman for the majority office of the House Small Business Committee, acknowledged that some firms are miscoded, but said the number identified in the report is exaggerated.
"These contracts are given to companies when they're small," he said. "What happens is that they either grow into large firms or are bought by larger firms. In either case, they still have to fulfill the terms of the contracts. That doesn't necessarily mean they're being miscoded."
Carter said the committee is currently looking into speeding up the process by which larger firms with small-business contracts are reevaluated.
On Wednesday, Velazquez called on the General Accounting Office and the inspectors generals of several government departments to conduct an investigation into the small-business contracting process.
The committee is also sending letters to each of the large companies identified in the report, saying they are in violation of the law.
"The industry also has to take some responsibility," Velasquez said.
She said the goal is to determine whether government officials are deliberating miscoding larger companies, or if those companies are misleading contract adjudicators -- or both.
Susan Hughes, the owner of a small communications training firm based in Dumfries, Va., who attended Wednesday's press conference, said a similar investigation by the Defense Department had determined that a $190,000 prime contract stripped from her company six years ago was later awarded to a large company.
"This is not just a number," Hughes said. "This miscoding threatens the very existence of small businesses like mine,"