Las Vegas Sun

June 3, 2012

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SUN EDITORIAL:

Helping the little guy

Many federal contracts intended for small businesses wrongfully go to large companies

Monday, Oct. 27, 2008 | 2:07 a.m.

The Small Business Administration notes on its Web site that small businesses are the heart of the United States economy. It backs that up by stating that those enterprises generate most of the nation’s new jobs and half of the nonfarm private output.

That is why it was disappointing to read in The Washington Post on Wednesday that federal government agencies erroneously recorded at least $5 billion in contracts as going to small businesses when, in fact, they were awarded to large companies.

The significance is that Congress in 1997 mandated that nearly one-quarter of all work be awarded to small companies — including those with fewer than 500 employees or $17 million in annual revenue — because they play such a key role in driving the economy. Because small businesses employ more than half of the nation’s workers, freezing them out of government contracts would be a foolish proposition.

Yet the Post found that Lockheed Martin and its subsidiaries, which are major Defense Department contractors, were counted as small businesses for $143 million worth of work last year, and Dell computers nabbed $89 million worth of “small business” contracts.

The agencies that made the biggest errors were the Defense and Homeland Security departments and the General Services Administration. In many cases, the agencies didn’t bother to check that a business it thought was small was actually large or had been absorbed by a larger company, thereby making it ineligible for a small business award.

“It is clear that more needs to be done and that contracting offices need to be held accountable for accurate reporting,” Peter McClintock, the acting SBA inspector general, told the Post.

Although the SBA vows that these errors are being corrected, government agencies should do a better job of performing background checks on companies before they are awarded small business contracts. Failure to do so would run afoul of a congressional mandate that was clearly intended to keep small businesses strong and make sure they continue to play a vital role in our economy.

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