by Jim Wyss – The Miami Herald – Mar. 25, 2010 – The Small Business Administration — the agency charged with looking out for the interests of small companies — is overstating the number of contracts it doles out to such firms, a new government report has found.
In a survey of 36 SBA contracts awarded in fiscal year 2008, the agency’s Office of Inspector General found 92 percent of the deals contained errors or were incomplete.
In particular, 11 of those contracts, or 34 percent, incorrectly reported the size of the business to which they were awarded.
In most cases, the study found, large companies were recorded as small companies.
Of the 850 contracts the SBA issued in 2008, anywhere from 681 to 830 likely have errors, the study estimated.
The report is a black eye for the SBA, which has been pushing other government agencies to be more accurate in reporting small business contracts.
While the federal government is obliged to put 23 percent of all direct, or prime, contracts in the hands of small firms, it has failed to meet that mark for the past three years.
In 2008 — the latest year for which data is available — the government reported that small firms received $93.2 billion, or about 21.5 percent of all deals.
But a number of reports have found that faulty reporting is causing the government to overstate small businesses’ take.
A 2009 article by The Miami Herald found corporate titans such as General Electric, Dell Computer and Boeing had been counted as small firms performing contracts in Florida.
The issue is important in the state, where 90 percent of all companies have fewer than 20 employees and government contracts represent a valuable lifeline amid a struggling economy.
In the study, the SBA said its workload demand and lack of resources “hindered its ability to fully implement the Data Quality Plan” that should have caught the errors.
Even so, the agency signed off on the Fiscal Year 2008 contracts and certified them as accurate.
As a result, “inaccurate information is being made available to Congress and the public on SBA contracting activities, including potential Recovery Act actions,” the study found.
The report also found that contracts for fiscal year 2010, which ends Sept 30, were flawed. Of the 35 contracts it sampled, 97 percent had errors.