Giants grabbing small-business jobs
By Frank Bass
Associated Press
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WASHINGTON � At least $12 billion in contracts the government claimed it gave to small companies last year wound up instead in the coffers of corporate giants like Microsoft and Rolls-Royce, greatly inflating the Bush administration's record of help to small businesses, Democratic congressional investigators say.
When small-business contracts with large companies are excluded, the government missed for a sixth straight year a requirement that 23 percent of its $314 billion in annual contracts go to small businesses, House Democrats conclude in a report to be released today.
There were two basic problems, the investigators said: Federal agencies miscoded thousands of contracts to big companies as small-business awards. And many other companies that started small grew large or were purchased by corporate giants but continued to get small-business contracts.
"It's just unbelievable," said Rep. Nydia Velazquez of New York, the top Democrat on the House Small Business Committee. "We have just got to start holding agencies accountable."
Velazquez is asking the Government Accountability Office and internal watchdogs for the State, Treasury, Defense and Transportation departments to investigate their contracting procedures and see if criminal activity is involved.
Under federal law, representatives of large companies that falsely claim to be small firms can be punished with 10 years in prison, $500,000 in fines and a permanent ban from doing government business.
Generally, the government defines a small business as one with fewer than 500 employees, though that limit can vary among industries. In general, retail firms can only have maximum average annual receipts of $6.5 million.
The Small Business Administration last month issued a report saying the government gave 25.4 percent of its contract dollars in 2005 to small firms. SBA said it relied on contracting figures provided by each federal agency. The Democrats' report said the accurate figure was 21.6 percent.
When asked about corporate giants appearing in the tally, SBA spokesman Raul Cisneros said, "That's the official information that agencies give us."
The House Democrats' report, however, said the administration's tally of small business contracts in 2005 included some of the world's largest companies:
Executives at the companies were not immediately able to comment without researching the contracts.
Velazquez said she plans to write roughly 2,500 big companies, asking them to remove their names from a government list of approved small-business firms, and also will seek legislation to punish agencies that cheat.