Fortune 500s Awarded Contracts Tagged for Small Business

Washington Watchdogs, a periodic feature of the Post's investigations blog, wrote yesterday about investigators from the Department of the Interior discovering that $5.7 million in contracts earmarked for "small businesses" actually were given to several Fortune 500 companies.

Department Inspector General Earl Devaney launched the investigation after complaints came in about the reliability of data entered into the department's computer system.

The top five "small business" contract amounts given to ineligible Fortune 500 companies in 2006 and 2007 went to John Deere, Dell, Waste Management, GTSI and Xerox. It is unclear if those monies will be returned.

The amount of money incorrectly given to those companies -- nearly $6 million -- represents about .35 percent of the $1.6 billion in contracts awarded to small businesses last year. Investigators analyzed 472 contracts over a two-year period, representing about .3 percent of the contracts awarded.

Contractors told investigators that some government workers "often click through mindlessly when entering" contract info into the computer system and that if contract officers "did their job, (errors) wouldn't happen."

In other news about botched small business classifications, Government Executive online reported yesterday that a 22-year-old defense contractor pleaded not guilty to charges that he defrauded the federal government by delivering faulty, decades-old munitions to Afghan security forces. An investigation of AEY Inc. by GovExec in April showed that the company had been improperly designated as a small disadvantaged business less than a year before receiving the massive arms contract. Since being designated as a small business, AEY has earned more than $204 million in federal contracts.

By Sharon McLoone |  July 9, 2008; 2:51 PM ET Gov't Contracting
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