In late June, the Subcommittee on Investigations, Oversight and Regulations, of the U.S. House of Representatives' Committee on Small Business, in conjunction with the Veterans Affairs Subcommittee on Oversight & Investigations, held a joint hearing on "Manipulation and Fraud in the Reporting of VA Small Business Goals."

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

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

According to Rep. Chabot, "The numbers reported by the SBA are incorrect, because the SBA continues to exclude nearly $78 billion in federal contract dollars reported into the federal procurement data system, plus at least $6 billion to $10 billon that the Department of Veterans Affairs illegally excluded from the database." He went on to add that these are dollars being spent by the federal government that should be subject to small business contracting 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 the industrial base," said Rep. Chabot. "For example, there are over 100,000 fewer contractors today than there were four years ago, and the number of contract actions being awarded to small businesses has fallen by nearly 60 percent. Furthermore, the Administration is still not meeting its subcontracting goal, even though SBA lowered the goal last year."

According to Rep. Chabot, the SBA, in its report, awarded the VA a "B." "However, based on testimony, it is clear that at least $6 to $10 billion worth of contract dollars were not included in this tabulation," he said. "If it had been, using the SBA's own methodology, the percent of dollars awarded to small businesses by the 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 these numbers from the SBA is so we can use them, not so that the Administration can pat itself on the back once a year. These [numbers] are supposed to provide insight to help Congress craft policies that strengthen our industrial base. This sort of misreporting doesn't help."

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

Rep. Chabot concluded, "The Administration can be proud when it is actually meeting the small business goals based on honest accounting. Until then, our Committee will keep working on common-sense reforms that provide a more realistic picture of our industrial base."

Instant Insights /

Incorrect numbers negatively impact small business contracts

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