SBA contracting numbers are confirmed

In 2007, $5 billion of federal contracts coded as having gone to small businesses actually went to large companies, according to The Washington Post. The U.S. Small Business Administration (SBA) says this confirms the agency's assessment of the relative size of the large-business/small-business contracting issue and refutes claims that a much larger amount goes to large companies. In 2006, SBA's contracting analysis found $4.6 billion in miscodes.

The Washington Post reviewed fiscal year 2007 contracts in the General Services Administration's Federal Procurement Database System-Next Generation that were counted toward federal agencies’ small-business contracting goals. In 2007, $83.2 billion in federal prime contracts went to small businesses, a significant increase from $77.7 billion in 2006. In 2001, the total number of federal small-business contracts was $50 billion.

"Although we haven't had a chance to review The Washington Post's analysis in detail, in general, the findings confirm SBA's analysis," says Acting SBA Administrator Sandy K. Baruah. "Transparency is the best medicine, and SBA welcomes public scrutiny to help identify errors in the government's database."

Baruah says the 2007 miscode number is likely higher than it would be in the future because SBA's recertification rule took effect in summer 2007. This rule requires small businesses with federal contracts to recertify their size if they merged or were acquired and recertify their size a minimum of every five years on contracts longer than five years. In some cases, small businesses have won contracts but then grew, merged or were acquired by large firms and were still recorded as small businesses. As a result of the new rule, SBA estimates at least $10 billion in incorrectly coded small-business contracts will be cut from federal roles.

The Washington Post report confirmed SBA's claim that large companies were listed as small businesses because of miscodings in the government-wide database, Baruah says. In summer 2007, the Department of the Interior's inspector general found contracting officer coding errors were the primary reason large companies were listed as holding small-business contracts. It said the main reasons contracts had been incorrectly coded included data-entry mistakes, reliance on incorrect data and contracting officials' failure to verify business size reported in Central Contract Registration.

Since 2006, SBA and the Bush Administration have made several reforms to improve the small-business contracting system, including scrubbing the federal contracting database to bring more integrity to the data; tightening the definition of "small business" in the federal database; employing a tool to hold agencies publicly accountable for their small-business contracting achievements; and using new Web resources, such as, to further improve the availability of the data to the public.

"The Washington Post's report, taken along with other credible analyses, should lay to rest once and for all the unsubstantiated or uninformed claim that scores of billions in small-business contracts are purposely diverted to large businesses," Baruah says.

Date : 10/28/2008