Ms. Cleo from the Psychic Hotline has nothing on me. I am going to put my psychic abilities to the test here. Historically, the Small Business Administration (SBA) releases its Small Business Goaling Report and Procurement Scorecard on the previous fiscal years small business contract activity with the federal government towards the end of August. This means the FY 2009 numbers should be coming out within the next few weeks. Additionally in April, President Obama formed a small business taskforce to look into federal contracting opportunities for small businesses and will be presenting the president with a report on its findings within the next few weeks. We all know that commissions and taskforces are a way to whitewash important issues, (this one is no different) and it will be interesting to see if the taskforce recommendations match any of the dozens of federal investigations that have come out over the past decade showing rampant fraud and abuse in small business contracting programs.
So here is prediction #1: The SBA will release the FY 2009 Small Business Goaling Report and Procurement Scorecard on a Friday afternoon, possibly right before Labor Day weekend, and President Obama’s small business taskforce will release its report at the same time. We all know the government has a track record of releasing really bad news on Friday afternoons when most people are distracted. This way, no one will notice or pay any attention to what will be another consecutive year that our government has not achieved its small business mandates, and has continued its horrendous track record of working with small businesses.
Prediction #2: When examining the data on the actual small business contract recipients for FY 2009, the majority will be large businesses, Fortune 500 firms and multinational corporations. In fact, this is already true. Several months ago, the American Small Business League (ASBL) conducted its own analysis and report of the Top 100 small business contract recipients for FY 2009 and found that 61 out of 100 were not actual small businesses. These 61 large firms received 64 percent of the total dollars for the Top 100, which came out to almost $10 billion. The ASBL’s report can be found here.
Prediction #3: The SBA will make the claim that large firms received small business contracts because of “miscoding,” “simple human errors,” and “data entry mistakes.” The SBA has been making that claim every year since at least 2002, and every year they say the contracting data is scrubbed of these errors and that the “data is as clean as it has ever been.” It is almost amusing that every year, simple miscoding and data entry mistakes seem to give billions of dollars in small business contracts to large firms, but never the other way around.
Prediction #4: The SBA will overstate the percentage of the federal acquisition budget and the dollar volume flowing to small businesses. During FY 2008, the SBA claimed small businesses received over $93 billion in contracts, which amounted to 21.5 percent of the governments 23 percent mandate. The truth is that the SBA falsely inflates its small business numbers. One way of doing this is by counting large firms as small businesses. The SBA also deflates the contract dollar totals. The SBA claims that for FY 2008, the total “small business eligible dollars” was just over $434 billion, which, when you take $93 billion out of $434 billion, comes to 21.5 percent. The problem is that the total dollar amount of all prime contracts for that year (the number the SBA is supposed to be using) was over $536 billion. Now, the SBA has never defined or been able to explain what a “small business eligible contract” is or where the law states that they can use this figure instead of the actual total. This is just a way to make it appear that small businesses are doing more work with the government than they actually are.
On another interesting note, if you take into account all of the “black” projects and intelligence operations that do not get counted officially as part of the government’s procurement numbers, the dollar amount spent on contracts for FY 2008 jumps to right around $1 trillion, which would mean that small businesses should be receiving close to $230 billion in contracts.
The fraud and abuses will continue in small business contracting programs until federal agencies are held accountable and the SBA actually admits there is a serious problem instead of trying to deny the issue. There is legislation in Congress right now, H.R. 2568, the Fairness and Transparency in Contracting Act, introduced by Congressman Hank Johnson (D-GA-4) that currently has 26 cosponsors, which will do more to end these abuses, and bring billions of dollars a year in contracts back into the hands of small businesses than anything proposed so far. And when we talk about job creation and economic growth, we are talking about small businesses, so why not utilize small business contracting programs as a means of driving demand into the hands of our small businesses? The programs are already in place and would be deficit neutral. All we need is for Congress to finally do something that will actually help small businesses and pass H.R. 2568.
Break out your scorecards and within a few weeks we will see how accurate my psychic abilities are…