del.icio.us
Digg
Sphere
Stumble
Technorati
Twitter
The Federal Contracting Fraud, and How to Fix It
By Marc Tracy
There are two things wrong with the federal government's recently released 2008 contracting numbers. One, as we've already had the displeasure of reporting, is that the amount of federal contracts did not reach the Congressionally mandated level of 23% of agency totals. (It's really worth remembering that the quota is not some suggestion, but actually the law.) But the second problem is that even the new number is bogus: as with last year's numbers, this year's numbers are inflated by reporting as small-business contracts procurement deals that went to small subsidiaries of gigantic corporations. In fact, Fortune Small Business reports, 2008's two top small business contractors, as reported by the Small Business Administration, are one company with $1 billion in revenues and another company that is a subsidiary of a company with $14 billion in revenues.
But don't blame the SBA. For one thing, it doesn't have the manpower or money to do the sort of job we'd want it to. For another, under current rules, those two might count as "small", even though they clearly shouldn't. Besides, and to its credit, SBA was able to scrub about $13 billion from the numbers reported by the individual federal agencies by getting rid of blatant violations and exemptions.
So whom to blame? How about Congress, who has the chance to fix all this, but so far hasn't? They can fix it by passing the Fairness and Transparency in Contracting Act (for which there is bipartisan support). This bill, which was crafted with the aid of Lloyd Chapman and his American Small Business League--the most outspoken voice on the problem of small business procurement--would require that a business that wins a contract be reported as its parent company, and would thereby hopefully end the practice wherein a $14-billion-a-year corporation is reported as a "small business". In turn, real small businesses would get the dollars to which they are morally, and legally, entitled. Sounds sensible to us.
Comments (0)October 7, 2009 9:56 AM
