SBA Small Business Report Raises Criticism

Rep. Nydia M. Velazquez (D-NY) has alleged that the U.S. Small Business Administration (SBA) incorrectly reported data contained in their prime contracting report on 2004 federal contacting. The report released in August stated small businesses had been awarded 23.1 percent of all federal contracting dollars or $69.2 billion on about 4.4 million actions.


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Rep. Velazquez with the American Small Business League claimed that large businesses were miscoded as small businesses skewing the reported contracting numbers. Velazquez is the ranking Democrat on the House Small Business Committee.

“Despite the phenomenal growth of the federal marketplace—opportunities for this nation’s 23 million small businesses continue to lag. This is yet another year that the federal government has failed to meet their small-business contracting goal—costing small businesses billions of dollars in lost opportunity,” said the congresswoman.

“Each federal agency is responsible for entering its own contract actions, and each SBA reports the numbers as collected by the General Services Administration, so when [Velazquez] says that we miscode, that’s totally inaccurate because we don’t enter any other data than our own,” Allegra McCullough, SBA associate deputy administrator for government contracting and business development, told the Government Computer News concerning Velazquez’s allegations.

The congresswoman also raised the issue of the exclusion of contracts with other government agencies in SBA’s goaling program and prime contracting report. McCullough explained that the agencies excluded those subject to Federal Acquisition Regulations. This requirement excludes agencies such as the U.S. Mint, the U.S. Postal Service, the Federal Aviation Administration, and the Transportation Security Board. The latter two agencies were cited by Velazquez in her criticism.

Velazquez also claimed that contract bundling hurt small businesses by $1.75 billion in 2004 and questioned the SBA’s monitoring of bundling guidelines. McCullough answered that Velazquez didn’t understand contract bundling as it applied to the SBA. Their definition of contract bundling is a contract action awarded to a small business to which other requirements are later added. Velazquez went on to claim that the Defense Department cost small businesses at least $1.5 billion and up to $2.9 billion when factoring in misrepresented contracts.

“A lot of people, including the congresswoman, look at any large contract as being bundled, but that’s not the true definition," McCullough added. "We take contract bundling very, very seriously, and we are very vigilant in terms of looking at what we consider to be bundling.”

The congresswoman remarked that service-disabled veteran-owned and woman-owned businesses did not meet or exceed set contract award goals of 3 and 5 percent respectively. Their numbers came in at 0.3 and 5 percent instead. Contracts to veteran-owned small businesses more than doubled, reaching $1.15 billion, up from $550 million in 2003. Dollars to woman-owned small businesses increased by $814.6 million to a record $9.1 billion.

“Given the current figures and practices, regardless of all the Bush administration’s rosy rhetoric, the reality is that small businesses continue to struggle to receive fair treatment in the federal marketplace," Velazquez said. "In the end, this is not just bad for small business, but most of all it is bad for the taxpayer who loses out on the quality products at affordable prices that this nation’s small firms provide.”

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