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SBA: $428M in Contracts Awarded to Ineligible Firms

The Small Business Administration's inspector general says awarding 8(a) and Hubzone contracts to ineligible firms not only inflates the numbers for those programs, it also takes work away from eligible businesses. Photo credit: Phoenix Business Journal

The Small Business Administration’s inspector general says awarding 8(a) and Hubzone contracts to ineligible firms not only inflates the numbers for those programs, it also takes work away from eligible businesses. Photo credit: Phoenix Business Journal

Original headline: SBA watchdog just blew a hole in small business contracting ‘achievement’

By Kent Hoover for Phoenix Business Journal

Think the federal government’s small business contracting numbers are inflated? The Small Business Administration’s inspector general just confirmed your suspicions.

The agency’s internal watchdog identified $428M in contracts that federal agencies awarded to ineligible firms in two programs for small businesses: the 8(a) program, which benefits minority-owned businesses; and the Hubzone program, which benefits firms located in low-income areas. Even more contracts could have been awarded to ineligible businesses; the inspector general only looked at contracts worth more than $3 million.

These improperly awarded contracts not only inflated the numbers reported by the SBA for these programs, they also took opportunities away from legitimate participants in these two programs.

The inspector general also identified more than $1.5B in 8(a) and Hubzone contracts that were performed by businesses that no longer were in these programs. That’s legal under SBA regulations, but including them makes it look as though 8(a) firms and Hubzone businesses got more work than they actually did.

Read more at Phoenix Business Journal