THE BLOG

New Government Policy Helps Big Businesses Hide in Small Business Database

09/21/2008 05:12 am ET | Updated May 25, 2011

A new Bush Administration policy will make it easier for large businesses to land government small business contracts by misrepresenting themselves as small businesses in government supplier databases. Under the new policy, firms will no longer be required to list their annual revenue or number of employees on the federal government's Central Contractor Registration Database (CCR).

In the past, firms that listed themselves in the CCR database were required to disclose their annual revenue and total number of employees. This specific information was mandatory, because federal guidelines that determine a firm's eligibility to participate in federal small business contracting programs were based on these two fields. (http://www.ccr.gov/)

Making annual revenue or number of employees' fields optional in the CCR will make it extremely difficult to determine if large firms are misrepresenting themselves as small businesses for the purpose of receiving federal small business contracts.

Since 2002, the Bush Administration has made several modifications to the CCR database as a means of making it increasingly difficult to determine if a firm is small or large.

Despite repeated statements from Bush Administration officials about increasing transparency and improving the accuracy of reported data in federal small business contracting programs, the new policy is seen as another major step backwards in accuracy and transparency.

Since 2003, 15 federal investigations have all found billions of dollars in federal small business contracts actually wound up in the hands of Fortune 500 firms and hundreds of other large businesses. Within the last thirty days, four separate investigations have been released which have found fraud and rampant abuses in government small business contracting programs. In one instance, the Department of Interior (DOI) Office of Inspector General found that the DOI had misstated the achievement of its small business goals by including Fortune 500 corporations.
(http://www.doioig.gov/upload/2008-G-0024.pdf)

In 2005, the SBA Office of Inspector General released Report 5-16, which found large businesses had received government small business contracts by making "false certifications." (http://www.sba.gov/IG/05-16.pdf)

This policy will exacerbate the problem of large businesses receiving government small business contracts. It will now be even more difficult for federal officials, the public and watchdog groups to monitor the CCR database and uncover large businesses trying to masquerade as small businesses to illegally receive government small business contracts.

The new policy is the latest in a long series of similar Bush Administration policies designed to dismantle federal small business contracting programs and divert billions of dollars in federal small business contracts to large businesses. In February of 2007, former SBA Administrator Steven Preston removed all employee and revenue data from the CCR database in the middle of a CBS investigation on the actual recipients of federal small business contracts. In 2007, Preston adopted a policy that will allow Fortune 500 firms and hundreds of other large businesses to continue to receive federal small business contracts until the year 2012. (http://www.asbl.com/showmedia.php?id=553)

The American Small Business League (ASBL) is concerned that Acting Administrator of the SBA, Santanu "Sandy" Baruah may try to institute more policies that will further damage federal small business contracting programs as the Bush Administration comes to a close. The ASBL believes closing the SBA and ending all federal programs to assist woman-owned firms, minority-owned firms, veteran-owned firms and small businesses was a major goal of the Bush Administration. The ASBL predicts President Bush may still try to close the SBA by combining it with the United States Department of Commerce or some other federal agency. (http://www.asbl.com/showmedia.php?id=1068)