Small Business Continues to be Treated Unfairly
Approximately six weeks ago, I wrote about how federal government contracts intended for the small business sector were being awarded to large businesses. The excuses were many and varied, but we were assured the “watchdogs” were working with the appropriate parties to remedy the problems.
On January 20, 2010, USA TODAY reported that approximately $25 million in federal government contracts destined for minority or disabled veteran owned businesses that operate in poor neighborhoods, was awarded to ineligible businesses. Upon discovering that one of the businesses was ineligible, the SBA proposed eliminating its approved contractor status, but did not. The ineligible company won a roofing contract several months later from Andrews Air Force Base. Andrews Air Force Base then found the roofing company to be ineligible, but has not cancelled the contract.
The Government Accountability Office (GAO), a government watchdog agency, has discovered 39 businesses that improperly received $235 million in government contracts since 2003. These were contracts set aside for small businesses. Those who review government contract records claim the value of contracts diverted from small business amount to billions of dollars. Records show this diversion from small businesses to large businesses has been going on for years. At this critical time for small businesses, one would think every effort would be made to award small business contracts to their rightful recipients.
On January 25, 2010, the American Small Business League made a troubling announcement. The federal government uses the Federal Procurement Data System – Next Generation to track government contracts. This system incorporates a “small business flag” to identify the contractor as a small business, or in the absence of the flag, a non-small business. Any party that reviews the contract records can see which contractors are small.
This would seem to be a well reasoned and well implemented process, and not a process requiring extensive mathematical skills to properly award the contracts. The current administration’s General Services Administration, decided to delete the “small business flag” marker, which will make contract reviews exceedingly more complex and difficult than need be. The marker will be deleted in all future contracts, and has been deleted from all past contracts.
Even more troubling is the GetList Rules of Behavior which allows the General Services Administration to demand all parties doing contract reviews to sign an agreement preventing the reviewing party from releasing certain facts. This includes percentages of contracts going to small businesses. The penalty for disclosing the forbidden facts is a possible block from contract data.
The GAO’s two pronged announcement of deleting the small business flag and non-disclosure of government contract audits seems suspicious. Why hide this information? Where is the transparency? Small business needs help. These actions do not seem consistent with helping small business.
Dave Von Holten
Co-Founder, Business Credit Services, Inc.
Tags: governement contracts, sba, sba loans, Small Business, small business loans