Large Corporations Continue to Grab Contracts Meant for Small Businesses

Thursday, April 25, 2013
Phobe Novakovic, CEO of General Dynamics (photo: Stephanie Green, Bloomberg)

Small business advocates have complained for years about large corporations winning federal government contracts intended for the little guys. These complaints have apparently fallen on deaf ears, because as of last year, Fortune 500 companies were still raking in small-business contracts.

 

In fiscal year 2012, 47 of the top 100 Fortune 500 companies received small business contracts, according to figures compiled by the American Small Business League.

 

The total amount of these contracts was nearly $423 million—with one company, General Dynamics, collecting more than half of this total ($216 million).

 

Some of the other “big” winners of small-business opportunities were Lockheed Martin ($111 million), Verizon ($34.8 million), Abbott Laboratories ($15 million), Boeing ($9.8 million) and PepsiCo ($5.7 million).

 

U.S. government procurement data for 2012 reveals that, of the top 100 companies receiving the highest dollar amount in federal small business contracts, only 27 were legitimate small businesses. Seventy-one of the companies were large firms that greatly exceeded the Small Business Administration’s defining standards.

 

The total value of the top 100 small business contracts last year was more than $16.9 billion, yet large companies earned nearly $9.5 billion of that total.

 

The Small Business Act of 1953 (pdf) requires that, on an annual basis, the federal government must spend 23% of all federal prime contracts dollars with small business. Each year the government announces that it has met, or nearly achieved, that goal. However, this is never true, given that such a large portion of that 23% actually goes to large businesses.

- Danny Biederman, Noel Brinkerhoff

 

To Learn More:

How and Why Large Corporations Receive the Majority of U.S. Federal Small Business Contracts Every Year (American Small Business League)

Big Businesses Still Winning Small Business Contracts (by David Wallechinsky, AllGov)

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