Stains Still Set After SBA Scrub

Removal of $4.6 billion in incorrectly coded contracts failed to weed out large businesses

The Small Business Administration recently released its 2006 Top 100 Small Business Government
Contractors report as a result of a self-described 14-month “scrub” to ensure that federal contracts were legitimately awarded to small businesses. The review removed $4.6 billion in incorrectly coded contracts from the SBA database.

However, critics found that the report was still fraught with inaccuracies including firms that outgrew their size classifications and companies that had merged with larger companies years prior. There were only six black-owned companies on the report, two of which were miscoded as small. World Wide Technology (No. 1 on the be industrial/service 100 list with $2.1 billion in sales) and RS Information Systems Inc. (No. 16 on the be industrial/service 100 list with $328 million in sales) were the two companies miscoded as small businesses. RSIS has recently been acquired by the majority-owned Wyle, a high-tech company (See “RS Information Systems Signs Buyout Deal,” Newspoints, February 2008.)

Compared with the $12 billion awarded to the Top 100 companies, only $319 million represent contracts legitimately awarded to small black-owned businesses.

“Government spending at larger firms is growing at the expense of smaller firms,” says Paul Murphy, president of Eagle Eye Publishers, a market research firm specializing in helping companies find new government business. “In 2006, there were 3,893 black-owned firms that were active federal vendors and who received a total of $4.4 billion in prime contracts,” reports Murphy. That is a mere 1.3% of total government contracts awarded.

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