SOURCE: American Small Business League

American Small Business League

August 07, 2014 07:00 ET

Washington Post Questions Accuracy of SBA Small Business Contracting Statistics

PETALUMA, CA--(Marketwired - Aug 7, 2014) - According to the American Small Business League, an article in the Washington Post by J.D. Harrison has questioned the accuracy of the Small Business Administration's (SBA's) annual Scorecard data.

In a press conference at the NASA Goddard Space Flight Center, SBA Administrator Maria Contreras-Sweet announced for FY 2013, the federal government awarded 23.39 percent of federal contracts to small businesses.

Federal law requires that a minimum of 23% of the total value of all federal contracts be awarded to small businesses. 

For more than a decade the SBA has dramatically inflated the actual percentage of contracts to small businesses by including billions of dollars in contracts to Fortune 500 firms and thousands of large businesses around the world. CBS, NBC, ABC and CNN have all reported on the diversion of federal small business contracts to Fortune 500 firms.

Another tactic used by the SBA to significantly misrepresent the actual percentage of federal contracts awarded to small businesses is to use a federal acquisition budget number that is dramatically lower than the actual federal acquisition budget.

Based on the latest data from the US government spending website, for fiscal year 2013, the government spent a total of $3.5 trillion. In calculating the percentage of federal contracts awarded to small businesses the SBA used a federal acquisition budget number of just $355 billion or less than 10% of what the total government spending was for that year.

A recent legal opinion by Professor Charles Tiefer, one of the nation's leading experts on federal contracting law, finds the acquisition budget number the SBA should be using to calculate the percentage of awards to small businesses is closer to $1.1 trillion.

Professor Tiefer's legal opinion also finds no legal justification for the SBA's long standing policy of including billions of dollars in federal contracts to large businesses in calculating the volume and percentage of federal contracts awarded to small businesses.

Using Professor Tiefer's real federal acquisition budget number of $1.1 trillion, the $83.1 billion the SBA claims was awarded to small businesses would be approximately 7.5% and not the 23.39% claimed by the SBA.

The latest data from the Federal Procurement Data System indicates in fiscal year 2013, 175 Fortune 500 firms and their subsidiaries received federal small business contracts.

Research by the American Small Business League concludes if the actual federal acquisition budget were used as prescribed by law and if all firms that did not meet the current federal definition of a small business were excluded from the SBA's calculations, legitimate small businesses would have received less than 5% of federal contracts in fiscal year 2013 and not the 23.39% claimed by the SBA.