Government giving $400 million in contracts to ineligible ‘small businesses’
The inspector general of the Small Business Administration has issued a report that accuses the agency of giving $400 million in contracts to small businesses that didn’t deserve them.
The set aside program has been rife with fraud and abuse since the beginning. White people getting minorities to front for them as small business owners in order to claim contracts is a favorite gambit of the fraudsters. But the IG appears to have uncovered some more subtle forms of abuse.
A report from the Small Business Administration’s inspector general found government agencies are collecting millions in credit for awarding contracts to firms that may not actually qualify for the funds they’re receiving.
Section 8(a) is a program designed to help small companies owned by disadvantaged women or minorities compete for government contracts.
Businesses that participate can remain in the program for up to nine years, at which point they are considered to have “graduated.”
Agencies must set aside a portion of their contracts for 8(a) businesses, as well as those that operate out of historically underutilized business zones, in order to receive credit from the government.
The federal government is required to award 23 percent of contract dollars to small businesses every fiscal year.
But contracting officers incorrectly listed scores of firms as program participants so their agencies could hit their contracting quotas.
Auditors discovered a number of agencies have continued to count contractors as 8(a) businesses long after their graduation from the program.
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