Small Business Contracts Flow to Mega Corporations
Policy + Politics

Small Business Contracts Flow to Mega Corporations


Behemoth corporations like Apple, Bank of America and General Electric are scooping up federal contracts that are intended for small businesses, an advocacy group maintains.  

The American Small Business League reviewed procurement data for 2013 and found that only 16 of 100 companies receiving the highest valued contracts were actually small firms, Government Executive first reported.

Related: Defense Cuts Increase Risks for Small Businesses

Meanwhile, 79 of the 100 companies receiving the largest contracts were huge corporations, including defense contractors Lockheed Martin, General Dynamics and Boeing. Other companies taking federal small business contracts include Citigroup and Bank of America, as well as Apple and Oracle. Five companies were anomalous, the group said.


“Once again, large companies are the fraudulent recipients of a large portion of federal small business contracts,” the group’s president, Lloyd Chapman said in a statement. “This practice is disastrous to our economy and hurting the American people.”

The government is supposed to award 23 percent of total contracts to small businesses – though it’s not required to do so by law. And according to the Small Business Administration (SBA), it has missed that target every year since at least 2006. In 2012, for example, the government awarded $89.9 billion in contracts to small businesses, or roughly 22 percent of total contracts, Bloomberg noted. The government awarded small businesses just 21.6 percent of total contracts in 2011.

Related: Pentagon Has No Idea What 108,000 Contractors Are Doing

The SBA, however, argued that in some instances, small businesses might not be identified that way in the Federal Procurement Data System. John Shoraka told GovExec that if a contract was awarded to a large business, it doesn’t mean it was taken away from a small business “or that small businesses suffered.”

“Unless a contract was set aside for a small business, the designation as a small business does not benefit that business in receiving the award,” Shoraka said. He added that the designation could be the result of a mistake on the part of the contracting officer, who actually enters the designation in the database, or the firm “when filing its representation for that contract.”

The SBA offers a “protest” process in case businesses were inaccurately identified.

“SBA cannot alter the federal procurement data that has been [entered] into FPDS,” Shoraka said. “However, we are continuously taking steps to improve data integrity. Each agency is responsible for ensuring the quality of its own contracting data.”

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The concern of big firms snatching small business contracts is nothing new.

Last year, Congress approved legislation within the National Defense Authorization Act aimed at reforming how contracts flowed to small businesses. The measure, signed into law by President Obama, changes the way contractors can count the amount of subtracting dollars they pass onto smaller firms.

House Small Business Committee Chairman Sam Graves (R-MO) applauded the passage of his committee’s legislation at the time, saying, “The purpose of the federal contracting goal is to ensure small businesses get a fair opportunity.”

However, a spokesperson for the House Committee on Small Business said the SBA is “dragging its feet on finalizing the rule.”

In the interim, the Defense Department, General Service Administration and NASA have all issued a rule saying the contracting guidelines are at the discretion of federal agencies.

“The interim rule is nothing more than an egregious attempt on the part of federal regulators to grant federal agencies the authority to decide whether or not to recognize the constitutional rights of small business concerns,” the American Small Business League said in a statement.

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