The Spokesman-Review Newspaper
The Spokesman-Review Newspaper The Spokesman-Review
Spokane, Washington  Est. May 19, 1883
Current Temperature
58°F
Current Conditions
Broken clouds
View complete weather report

Color Scheme

Subscribe now

Contracts for small firms go to giants

Art Munn said he has lost several government contracts aimed at small businesses to larger firms. He lodged a protest with the Small Business Administration to save one contract. (Associated Press / The Spokesman-Review)
Frank Bass Associated Press
Art Munn said he has lost several government contracts aimed at small businesses to larger firms. He lodged a protest with the Small Business Administration to save one contract. (Associated Press / The Spokesman-Review)

WASHINGTON – At least $12 billion in contracts the government claimed it gave to small companies last year wound up instead in the coffers of corporate giants like Microsoft and Wal-Mart, greatly inflating the Bush administration’s record of help to small businesses, Democratic congressional investigators say.

When small business contracts with large companies are excluded, the government missed for a sixth straight year a requirement that 23 percent of its $314 billion in annual contracts go to small businesses, House Democrats conclude in a report to be released today.

There were two basic problems, the investigators said: Federal agencies miscoded thousands of contracts to big companies as small business awards. And many other companies that started small grew large or were purchased by corporate giants but continued to get small business contracts.

“It’s just unbelievable,” said Rep. Nydia Velazquez of New York, the top Democrat on the House Small Business Committee. “We have just got to start holding agencies accountable.”

Velazquez is asking the Government Accountability Office and internal watchdogs for the State, Treasury, Defense and Transportation departments to investigate their contracting procedures and see if criminal activity is involved.

Generally, the government defines a small business as one with fewer than 500 employees, though that limit can vary among industries. In general, retail firms can only have maximum average annual receipts of $6.5 million.

The Small Business Administration last month issued a report saying the government gave 25.4 percent of its contract dollars in 2005 to small firms. SBA said it relied on contracting figures provided by each federal agency. The Democrats’ report said the accurate figure was 21.6 percent.

The House Democrats’ report said the administration’s tally of small business contracts in 2005 included some of the world’s largest companies:

•Computer giant Microsoft Corp. won eight small business contracts worth $1.5 million. Five contracts, worth $475,000, came from the Pentagon. The others came from the Drug Enforcement Administration and the Bureau of Prisons.

•Wal-Mart, whose more than 1.5 million workers make it the nation’s largest private employer, received three small business contracts totaling $14,232 from the Department of the Army.

•Exxon Mobil Corp., with $370 billion in annual revenues in 2005, won a $63,855 contract from the Pentagon’s Defense Logistics Agency and a $50,000 award from the Interior Department’s Minerals Management Service.

House Republicans said much of the controversy can be attributed to small businesses that have prospered under the Bush administration, either adding enough employees to become a large company or being acquired by large businesses.

But Art Munn, a California, Md.-based contractor who said he lost several contracts to larger firms, said it’s not just an accounting issue.

Munn said earlier this year he had to lodge a formal protest with the SBA to save a Marine Corps contract he’d been awarded for a radar dome installation in Bahrain. Munn said he was competing with a large company that had bought out a much smaller competitor.

“It gets ugly,” he said.