Senate Grills SBA Over Federal Contracts Investigation finds small-business contracts might actually be going to larger companies.

By Jason Fell

Senate Grills SBA Over Federal ContractsBillions of dollars in federal contracts that are intended for U.S. small business might actually be awarded to large companies -- and the Senate isn't happy about it.

At a hearing Tuesday, senators questioned the SBA over its claim that 22.7 percent of federal contract dollars went to small businesses in 2010. In an effort to make sure entrepreneurs can get in on government contract work, federal agencies aim to award at least 23 percent of those contracts to small businesses each year.

Sen. Claire McCaskill (D-Mo.), chairman of the Senate Subcommittee on Contracting Oversight, said the SBA's system for tracking and qualifying companies for small business contracts "doesn't seem to make sense." "We don't need to be spending taxpayer dollars to prop up a system that allows the government to take credit and large businesses to profit at the expense of the small businesses that the system is meant to help," she said.

McCaskill argued that a complicated framework of regulations makes it "virtually impossible" to track the number of federal contracts being awarded to small businesses. The Senate investigation claims several large companies abuse special exemptions to the SBA's size standards while others hold small-business contracts although they no longer qualify as small businesses.

According to small business advocacy group the American Small Business League, 61 of the top 100 firms on the SBA's Small Business Procurement Scorecards for Fiscal Year 2010 -- ranked by the total dollar amount of their federal contracts -- are in fact large companies. Some of the larger companies named in the report include Lockheed Martin, Northrop Grumman and Motorola.

In his testimony, Joseph Jordan, an associate administrator of the SBA's Office of Government Contracting and Business Development, defended the SBA's "rigorous analysis" and monitoring of the contracting data, saying his group's top priority is to "ensure that the benefits of our programs flow to the intended recipients."

Has your business ever tried to secure a federal contract? Do you think the system works? Let us know in the comments section below.

Jason Fell

Entrepreneur Staff

VP, Native Content

Jason Fell is the VP of Native Content, managing the Entrepreneur Partner Studio, which creates dynamic and compelling content for our partners. He previously served as Entrepreneur.com's managing editor and as the technology editor prior to that.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Starting a Business

The Next Chapter of Basketball? Why This New League Is Betting Big on 1v1 Hoops

The Next Chapter is a premier 1v1 league turning streetball culture into a marketable, competitive sport. With unique players and pay-per-view events, the league aims to become a billion-dollar basketball business.

Starting a Business

This 'Dream' Side Hustle Out-Earned Her Corporate Salary in 2 Years — Now It's a $2 Million Business

Here's the exact blueprint she used to leave her W2 job behind and step fully into entrepreneurship.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Business News

Deloitte Is Reimbursing Employees Up to $1,000 — For Buying Lego Sets

Each Deloitte employee can spend up to $1,000 on items to improve their well-being.

Business News

Meta Is Reportedly Offering Up to Nine-Figure Pay for Researchers on Its New Superintelligence AI Team

Meta CEO Mark Zuckerberg, 41, is overseeing the hiring of staff for the new 50-person team.

Leadership

5 CEOs Sat Down for a Candid Conversation — What They Revealed Could Change Your Entire Perspective on Leadership

These five CEOs get brutally honest about leadership, pressure and letting go of control.