Big firms pretending to be small
In a recent Wall Street Journal article ("Small Firms Shortchanged On Federal Contracts " , 12/28/04), columnist Wendy Bounds digs up yet another way in which oligopolies manages to wangle federal largesse originally intended for small businesses. The original idea was that the government encourage smaller businesses to get a portion of government contracts, which would be otherwise dominated by only the biggest companies.
According to the story, a report from the U.S. Small Business Administration's Office of Advocacy, says billions in government contracts in defense, homeland security, and other areas earmarked for small business were instead given to large corporations. There's a government-wide mandated goal that 23% of all contract dollars from the US government are intended for small businesses. According to an earlier investigation, said that 30% of all defense-contract money reported as going to small businesses and special minority-owned businesses ended up with top defense companies from 1998 to 2003.
Among the big companies noted in the report were Titan Corp., Raytheon Co. General Dynamics Corp., and Hewlett-Packard Co., among others. The way they managed to get these contracts was by acquiring control of small companies that already held long-term government contracts. There has been no requirement for certified small businesses to report when they are acquired by a larger one. In addition, size standard fro "small" are defined differently across agencies.
This is yet another example of how large companies use their market power to subvert even well-intentioned attempts to use government purchase power to encourage competition, new enterprise, and diversity. It's an instructive lesson in the way major oligopolies are adept at redefining the rules to suit their purposes, whether directly or indirectly. If a comfortably off individual were to practice welfare fraud in this way, there would be a public furor.
10:49:18 AM 
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