In late June, the Subcommittee on Investigations, Oversight andRegulations, of the U.S. House of Representatives' Committee onSmall Business, in conjunction with the Veterans AffairsSubcommittee on Oversight & Investigations, held a jointhearing on "Manipulation and Fraud in the Reporting of VA SmallBusiness Goals."

In a subsequent press release, Rep. Steve Chabot (R-OH), chairof the House Committee on Small Business, shared some thoughts onwhat his committee believes is flawed reporting of federalcontracting goals by the Small Business Administration (SBA).

"The SBA is robbing small businesses," said Rep. Chabot. "Forevery dollar the SBA doesn't count, small businesses are losing 23cents. In FY 2014, that means small businesses lost nearly $18billion in contractors."

According to Rep. Chabot, "The numbers reported by the SBA areincorrect, because the SBA continues to exclude nearly $78 billionin federal contract dollars reported into the federal procurementdata system, plus at least $6 billion to $10 billon that theDepartment of Veterans Affairs illegally excluded from thedatabase." He went on to add that these are dollars being spent bythe federal government that should be subject to small businesscontracting goals.

Moreover, the SBA scorecard focuses intensely on just one factor- prime contracting dollars. "While this is certainly an indicator,it does not represent a holistic and more accurate depiction of theindustrial base," said Rep. Chabot. "For example, there are over100,000 fewer contractors today than there were four years ago, andthe number of contract actions being awarded to small businesseshas fallen by nearly 60 percent. Furthermore, the Administration isstill not meeting its subcontracting goal, even though SBA loweredthe goal last year."

According to Rep. Chabot, the SBA, in its report, awarded the VAa "B." "However, based on testimony, it is clear that at least $6to $10 billion worth of contract dollars were not included in thistabulation," he said. "If it had been, using the SBA's ownmethodology, the percent of dollars awarded to small businesses bythe VA would drop from 34.42 percent to between 22 and 26 percent,and the VA would have earned a 'D' or an 'F.'"

According to Rep. Chabot, "The reason Congress asks for thesenumbers from the SBA is so we can use them, not so that theAdministration can pat itself on the back once a year. These[numbers] are supposed to provide insight to help Congress craftpolicies that strengthen our industrial base. This sort ofmisreporting doesn't help."

Earlier that week, the Small Business Subcommittee on Oversight,Investigations, and Regulations examined the issue of bonuses beingawarded based on fraudulent scorecard data at the VA. SubcommitteeChairman Cresent Hardy (R-NV) concluded: "It is evident to me thatthe VA and the Obama Administration have failed our veterans, smallbusiness owners, and the American taxpayer."

Rep. Chabot concluded, "The Administration can be proud when itis actually meeting the small business goals based on honestaccounting. Until then, our Committee will keep working oncommon-sense reforms that provide a more realistic picture of ourindustrial base."