SBA Data Under Fire: POGO and Public Citizen Join ASBL in Questioning Government's Small Business Reporting

The Project on Government Oversight (POGO), in conjunction with Public Citizen and the American Small Business League (ASBL), has raised concerns about the accuracy of small business procurement data released by the Pentagon and the Small Business Administration (SBA). On June 26, SBA Administrator Maria Contreras-Sweet and the Pentagon's Under Secretary of Defense for Acquisition, Technology and Logistics, Frank Kendall, unveiled the fiscal year 2014 Small Business Procurement Scorecard, claiming small businesses received 24.99% of federal contracts. However, research by POGO, Public Citizen, and ASBL found widespread discrepancies, with billions of dollars in federal small business contracts awarded to large corporations, including Fortune 500 firms and their subsidiaries.

Key Takeaways:

Research by POGO, Public Citizen, and ASBL found that the SBA's small business data was inflated, with billions of dollars in federal small business contracts awarded to large corporations, including Fortune 500 firms and their subsidiaries.
The SBA's Small Business Scorecard was found to be dramatically inflated, with legitimate small businesses not receiving the percentage of federal contracts they claimed.
Public Citizen's study found that the SBA had falsified the true percentage of federal contracts to legitimate small businesses by 23.1% and the volume of contracts by 43.5%.
ASBL's analysis found that the SBA had falsified the percentage and volume of federal contracts to legitimate small businesses by 23.1% and 48.5%, respectively.
The largest recipient of federal small business contracts was Verizon, with over $125 million.
Some of the firms the SBA reported as small businesses included Chevron, Apple, General Electric, AT&T, CVS, UPS, Bank of America, Wells Fargo, Home Depot, Target, Microsoft, Hewlett Packard, Pepsi, Coca-Cola, Boeing, Oracle, Raytheon, Lockheed Martin, General Dynamics, Northrop Grumman, and BAE.
Every year since 2005, the SBA Office of Inspector General has named the diversion of federal small business contracts to large businesses as the top management challenge.
The House Small Business Committee has requested a new investigation into fraud in federal small business contracting programs.

Statistics:

$125 million: the amount of federal small business contracts awarded to Verizon.
2005: the year the SBA Office of Inspector General first named the diversion of federal small business contracts to large businesses as a top management challenge.
24.99%: the percentage of federal contracts the SBA claimed were awarded to small businesses, according to the fiscal year 2014 Small Business Procurement Scorecard.
23.1%: the percentage by which the SBA inflated the true percentage of federal contracts to legitimate small businesses, according to Public Citizen's study.
43.5%: the volume of contracts by which the SBA inflated the true percentage of federal contracts to legitimate small businesses, according to Public Citizen's study.
23.1%: the percentage by which the SBA inflated the true percentage of federal contracts to legitimate small businesses, according to ASBL's analysis.
48.5%: the volume of contracts by which the SBA inflated the true percentage of federal contracts to legitimate small businesses, according to ASBL's analysis.

Sources:

"SBA Data Under Fire: POGO and Public Citizen Join ASBL in Questioning Government's Small Business Reporting" (PR Newswire, July 9, 2015)
"The Government's Small Business Scorecard is Dramatically Inflated" (POGO, July 7, 2015)
"Slighted: Accounting Tricks Create False Impression That Small Businesses Are Getting Their Share of Federal Procurement Money, and the Political Factors That Might Be at Play" (Public Citizen, May 2015)
"Federal Small Business Contracting Data, 2014" (American Small Business League, July 2, 2015)
"SBA Office of Inspector General" (SBA, 2015)