Little big men

SBA contract errors are result of deception

In 2003, the Government Accountability Office uncovered more than 5,300 large businesses that were receiving federal small-business contracts.

An analysis of the most recent small-business data by the American Small Business League (ASBL) found that of the top 100 recipients of federal small-business contracts, 60 were actually large businesses. Those large businesses received 64.5 percent of the contract dollars awarded to the top 100 companies.

For the last seven years, the Small Business Administration has persistently argued that the diversion of billions of dollars in federal small-business contracts to many of the largest companies in the world is simply the result of "miscoding," "computer glitches" and "simple human error."

The SBA Office of Inspector General has a different explanation. In a March 2005 report, the inspector general found large businesses had received small-business contracts by making "false certifications" and "improper certifications." A similar investigation by the SBA Office of Advocacy found large businesses had received small-business contracts as a result of "vendor deception."

Visualize a federal database of suppliers with several dozen fields. One of those fields signifies whether a firm is a small business or a large business.

SBA has consistently maintained that the error rate on this field is thousands of times higher than any other field. More astonishing, SBA claims that when federal contracting officials and government suppliers "miscode" this field, 100 percent of the time they "miscode" the field in a way that reports small-business contracts to large businesses.

Lloyd Chapman is president of the American Small Business League, an advocacy group based in Petaluma, Calif.