Few would disagree that federal contracts set aside for small businesses should go to small businesses -- not corporate behemoths.
And yet it seems to happen again and again. Take one recent example: in late December, an IT company named QSS, a subsidiary of Dell Inc., landed a small-business contract for nearly $21 million from the U.S. Coast Guard.
What's more, QSS -- which in 2006 was purchased by Ross Perot's "Perot Systems" before Perot was gobbled up by Dell last year -- is listed in a federal database as a "self-certified small disadvantaged business."
How can this be? After all, Dell employs some 76,000 people, and the government's definition of a small business is one that, in this particular industry, employs no more than 1,000.
The answer depends on whom you ask. The most vocal small business activists insist that the government is acting negligently, even nefariously. Regulators in the federal Small Business Administration counter that the issue is mostly the byproduct of coding mistakes and mergers -- human errors that the agency purports to be addressing aggressively under the Obama administration.
Whatever the case, the example with QSS -- which HispanicBusiness Magazine found through a simple search in the federal contracting database FedMine.Us -- isn't an isolated event.
Other companies that have landed small-business contracts include General Dynamics -- the fifth largest defense contractor in the world -- Xerox, Office Depot, John Deere and McGraw Hill, according to a 2008 report from the Department of Interior's Office of Inspector General. As for QSS, in 2008 it was the nation's 28th largest recipient of small business federal contracts, according to FedMine.Us.
The 2008 report found that large corporations received $5.7 million in awards that should have gone to small businesses. But that was just within the Department of Interior. The total amount of small business contracts getting diverted to large corporations every year is difficult to ascertain, given the inherent murkiness of the issue. Some activists say it is well into the billions.
In October, the government organization in charge of watching over the SBA -- that is, the SBA's Office of Inspector General -- said this issue is among the SBA's most serious problems.
"Audits and other governmental studies have shown widespread misreporting by procuring agencies," the report said. "Many contract awards recorded as going to small firms have actually been performed by larger companies."
The issue is drawing more and more attention as politicians, economists and pundits talk about boosting small businesses in an effort to create jobs, reduce the unemployment rate and stimulate the lagging economy.
At least two bills are working their way through Congress to address this issue. One is co-authored by a duo of Senate moderates, Democrat Mary Landrieu of Louisiana and Republican Olympia Snowe of Maine; the other, by the lesser-known Congressman Henry Johnson, a Georgia Democrat.
By law, the federal government must strive to spend 23 percent of its entire purchasing budget for goods and services on small businesses. That's a lot of money, seeing how the federal government spends more than half a trillion dollars every year. But by the government's own admission, it hasn't been meeting that mark.
It claims to come close. The federal government says it hit 21.5 percent in 2008. (The official report for 2009 hasn't come out.)
Most Popular Stories
- Yahoo to Pay $1.1 Billion for Tumblr
- Gas Prices Expected to Stay High
- Will Yahoo Splurge on $1-Billion acquisition of Tumblr?
- Google Fiber Making an Impact
- Federal Rules Least of Coal Industry's Problems
- New 'Arrested Development' Episodes 'Dressed Up'
- Consumer Spending Will Offset Sequester: Economists
- Yahoo Indeed Buying Tumblr
- Facebook, Twitter Announce Apps for Google Glass
- AT&T Seeks to Fill 120 Jobs in South Carolina