Small Business Administration Accused of Fabricating Small Business Contracting Data

PETALUMA, Calif., March 3, 2016 -- Yesterday the Small Business Administration (SBA) announced that small businesses received 25.8 percent of all federal contracts in fiscal year 2015, a total of $90.7 billion.

The American Small Business League (ASBL) has challenged the accuracy of the data pointing out that the SBA included thousands of large businesses including 151 Fortune 500 firms in the calculations of their data.

Some of the firms that the SBA has included in their small business contracting data include: Verizon, Apple, Microsoft, General Electric, Home Depot, AT &T, UPS, Hewlett Packard, IBM, Bank of America, Citigroup, Wells Fargo, Pepsi, Oracle, Raytheon, General Dynamics, Northrop Grumman, Anthem and John Deere.

The SBA's Inspector General has challenged the accuracy of the SBA's data for over a decade. In 2005, they released Report 5-15 that described the diversion of small business contracts going to corporate giants as, "One of the most important challenges  facing the Small Business Administration (SBA) and the entire federal government today."

A series of federal investigations have all found that the numbers were dramatically inflated. ABC, CBS, NBC, CNN, CNBC, MSNBC, Fox News and RTTV have all reported on the fraud and abuse in federal small business contracting programs.

As early as 2003, the Government Accountability Office (GAO) conducted the first investigation into corruption and fraud in federal small business contracting programs. The GAO uncovered over 5,300 large businesses had been the actual recipients of billions in US Government small business contracts.

President Obama acknowledged the magnitude of the abuses by releasing the statement, "It is time to end the diversion of federal small business contracts to corporate giants."

On March 25, 2015, Congresswoman Janice Hahn requested a GAO investigation into small business contracting based upon research done by the American Small Business League.

In 2014, Public Citizen released a report titled "Slighted" which accused the federal government of using accounting tricks to "create false impression that small businesses are getting their share of federal procurement money."

Research by the ASBL found that the SBA has shortchanged small businesses in two ways. First, to inflate the percentage the SBA uses a number which is less than a third of the actual federal acquisition budget. Secondly, the SBA has included billions of dollars in contracts to Fortune 500 firms and some of the biggest companies around the world in their numbers.

"It is astounding that the President and Congress have allowed this rampant fraud to go on for so long. When you look at any reasonable definition of a small business, and the total federal acquisition budget, small businesses are receiving probably closer to one tenth of what the SBA claims they are awarding to small businesses. This is blatant fraud and it should be investigated by the FBI," stated ASBL President Lloyd Chapman.

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