Large is the new small?

Check out this GovExec article on accusations that contracts allocated for small business are being given to large contractors instead.  Last week, Senator Kerry, the ranking Democrat in the Senate Small Business and Entreprenuership Committee, sent letters to Small Business Administration's head Hector Barreto and to its Inspector General Harold Damelin.  Kerry charged that SBA "is fostering an atmosphere that encourages widespread fraud and abuse in small business contracting."

In December 2004, the SBA's Office of Advocacy found in a report that $2 billion of small business contracts in 2002 actually went to large corporations such as Raytheon and Northrop Grumman.

At issue is whether SBA miscoded large corporations (or their subsidiaries) as small businesses or whether these were instances of large corporations mischaracterizing themselves (or their subsidiaries) as small.  However, read this bit of tongue-twisting:

[David Safavian, head of the Office of Management and Budget's Office of Federal Procurement Policy] added that letting companies self-report their size "allowed for some of these cases to sneak through the process," but that he has seen no evidence that companies are purposely lying.

Does Safavian see a difference between sneaking and lying? If you unknowingly sneak are you unpurposely lying?  Whatever the answers to these ridiculous questions are, Safavian indicates that he knows self-reporting is a failure--on his watch!  But he doesn't seem to have a problem with it.  Is this the type of chap we want as head of the OMB's Office of Federal Procurement Policy?

Comments

[Susan Hughes]

I am the owner of a small woman-owned business that has had competitively won contracts terminated or canceled four times and the work given via this miscoding fraud to large business. In one instance, I had a commercial-item contract that I won in full and open competition partially terminated for convenience and the work subsequently given to a large business. As a result of this partial termination for convenience, I have been in litigation with the government for going-on five years. The government has pursued me viciously.

In a September 2004 decision bereft of logic, Judge Coldren of the Armed Services Board of Contract Appeals ruled that the government had the right to partially terminate one of our commercial items after acceptance. This decision is akin to stating that the government has the right to purchase a light bulb, accept it, let it burn for three months, and then call the vendor and demand part of the purchase price back. When the vendor refuses to refund a portion of the purchase price, the government then has the right to issue an assessment for part of the purchase price. In my case, that assessment was approximately $20,000.

I launched an investigation via the office of Senator John Warner into the subsequent award of the work to a large business. This investigation resulted in a letter from the Department of Defense, Office of Inspector General, stating that the NAICS code for the work we had won had been altered in order to "improperly facilitate" contract award on a sole-source basis to an otherwise noneligible firm. As a result of this letter, nothing has happened to the perpetrator. I am still operating the contract on less than half the revenues I bid, and I have been subjected to insidious retaliation.

Susan E. Hughes
President
Individual Development Associates, Inc.
Dumfries, Virginia
hughes-s@erols.com