Government Accountability Office

Stop Small Business Set Asides and the 8(A) Program

In theory the programs work, but in practice there are too many flaws. Contractors know these flaws and capitalize on them. The government needs to fix these flaws or get rid of the programs altogether. The programs were intended to give opportunities to small businesses. For example, the 8(a) program gives qualified contractors the opportunity to receive "sole-source" contracts (not exceeding $3.5 million for goods and services. Participants can also bid for "set-aside" contracts of any size in competition with other participants in the 8(a) Program. As a Contracting Officer I see that what is really happening is the following:

1. Small Businesses become “brokers”. They bid on jobs because they qualify based on their size but then “subcontract” the job to LARGE companies. Large companies end up being the “subcontractor” of the small business.

2. Legit small businesses make so much money in the first few years that at the end of the program they “graduate” and no longer qualify for 8(a) opportunities. Instead of moving on new endeavors they open a “new company” (small business), usually “women owned” but the owner‘s of these new companies seem to be the wife, daughter, or colleague of the owner of the company.

3. The new “small company” uses the company that graduated from the program as their “subcontractor”. The money goes to the same people.

 

Outrageously this is NOT illegal! The government ends up paying MORE money for a job than if it was advertised as “full and open” on the open market. Let us get rid of all programs that only lead to fraud and instead streamline Government Contracting to LOWEST PRICE REGARDLESS OF THE SIZE OF YOUR COMPANY.

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Idea No. 6201