During 2006 and 2007, DOI reported millions of dollars in contracts to Fortune 500 corporations such as Dell, GTSI, Home Depot, John Deere, McGraw-Hill, Ricoh, Sherwin Williams, Starwood Hotels, Waste Management Incorporated, Weyerhaeuser, World Wide Technology and Xerox Corporation as small business contracts.
The DOI Office of Inspector General’s report is the latest investigation to contradict two Small Business Administration (SBA) press releases, which claimed that it was a “myth” that large businesses received federal small business contracts.
The General Accounting Office (GAO) first uncovered the diversion of federal small business contracts to Fortune 500 corporations in 2002. Since then, there have been approximately a dozen federal investigations that have all found Fortune 500 firms and other large corporations were the actual recipients of billions of dollars in federal small business contracts every year. Despite the series of federal investigations and over 400 stories in the press since 2002, no legislation has been passed to address the problem.
As opposed to adopting policies to stop the flow of federal small business contracts to Fortune 500 firms, former SBA Administer Steven Preston adopted a SBA policy in June of 2007 that will allow Fortune 500 firms to continue to receive federal small business contracts until the year 2012. Preston also removed all information from the government’s Central Contractor Registration (CCR) database that could be used to determine if a firm was small or large. Additionally, Preston refused to release the specific names of all firms that received government small business contracts.
An SBA news release states:
Since 2006, SBA has initiated reforms that have significantly reduced the large company/small business contracting issue. Those reforms include:
• Clean Data – SBA, in conjunction with the Office of Federal Procurement Policy, ordered the federal contracting database scrubbed last year to bring much greater integrity to the data. This removed $4.6 billion from the contract database.
• Recertification – SBA tightened the definition of small business in the federal database. We estimate an additional $5 billion-$10 billion will be removed this year and that with these steps, the quality of data will increase measurably over time.
• Scorecard – Last year we inaugurated an important tool to hold agencies publicly accountable for their small business contracting achievements. This public scrutiny has greatly improved SBA’s ability to improve small business contracting.
• Public data – The data on all contracts has long been open to the public. However, new Web resources such as usaspending.gov further improve the public’s visibility into the matter. Additionally, SBA provides a snapshot of the small business data annually through its Goaling Report.
Barbara Boxer has introduced legislation to prevent the mis-use of funds and hopefully the expunging of real data from public sources maintained by government agancies.