Are Big Businesses Taking Small Business Government Contracts?

Over the past few years, the federal government has struggled to meet the goals it sets for itself with regard to providing contracts to small businesses in particular. But now new data shows that even those deals might not actually be helping small businesses as much as people might think, because larger companies are actually getting them instead.

In fact, the share of major deals struck between the government and big companies for these small business contracts could actually be quite high, according to a report from Government Executive. A recent study by the American Small Business League found that of the 100 companies receiving the most lucrative government contracts, 79 did not fit the U.S. Small Business Administration’s definition of a qualifying company, and five more were simply considered anomalies. Altogether, that 84 percent of top-100 deals last year was up from 60 in 2009.

Who’s in on these deals?
When it comes to the larger businesses receiving these contracts intended for small businesses specifically, many of the names on the list are quite well-known, the report said. They include Lockheed Martin, Bank of America, Apple, Verizon, Pepsi, Comcast, Intel, Boeing, and General Electric, to name just a few.

Lloyd Chapman, president of the ASBL, noted that these companies are “fraudulent recipients” of the federal funds, and that their getting these contracts was detrimental to small business overall, the report said. On the other hand, an SBA spokesman argued that many of the companies which did not appear to technically be “small” may have been able to obtain those contracts when they did fit the agency’s definition, but have since grown as a result of getting the deals. He further added that many of the entries observed in the study might have been mislabeled by the contracting officer, because the SBA has no power to alter data once it has been entered into the database.

Owners who want to prepare their companies for broad success in their fields – whether they define that as being able to obtain for small business contracts from the federal government or simply qualify for financing from a lender – might have to do some more work to streamline their expenditures going forward. That could include finding more affordable small business insurance, including coverage for general liability insurance, as a means of potentially saving thousands every year.