Small biz advocates say change in disclosure process reduces transparency

A recent change to the Central Contractor Registry allows firms the option to list their annual revenue or number of employees in specific office locations when signing up as a potential federal contractor. Advocacy groups are criticizing the new policy, saying it reduces transparency and makes it harder to ensure large firms are not receiving procurement dollars reserved for small businesses.

The change officially occurred on July 30, when the CCR module was updated to no longer require firms to document the annual revenue or number of office employees at the location for which it is registering. Data on global size still will be mandatory. Various divisions of large firms often register separately on CCR. For example, a search for Lockheed Martin Corp. yielded 235 records for divisions based everywhere from Manassas, Va., to Cordoba, Argentina.

The location size category still is available, but the module now will allow contractors to continue with their registration even if they have left the line blank.

The American Small Business League commented Thursday on the change, saying the policy will make it easier for large businesses to land small business contracts: "Despite repeated statements from Bush administration officials about increasing transparency and improving the accuracy of reported data in federal small business contracting programs, the new policy is seen as another major step backwards in accuracy and transparency. It will now be even more difficult for federal officials, the public and watchdog groups to monitor the CCR database and uncover large businesses trying to masquerade as small businesses to illegally receive government small business contracts."

Small Business Administration spokeswoman Christine Mangi called ASBL's claims "baseless."

"The change simply eliminates the need to disclose the information about the local offices of a company," Mangi said. "The company is still required to disclose its total annual revenue and number of employees, which is information SBA uses to make size determinations."

As ASBL pointed out in its statement, a number of investigations in recent years have found large amounts of money designated for small business contracts actually have gone to big top contractors. For example, the Interior Department's inspector general released a report in July showing that the department had improperly received small business credit for $5.7 million, awarded to large firms in fiscal 2006 and 2007. Despite the fact that this money went to large well-known firms --including Dell, Home Depot, John Deere and Sherwin Williams -- these awards were included as accomplishments in the Small Business Administration's annual reports on the agency's goals.

The inspector general said large businesses were incorrectly coded as small business contracts because of data entry mistakes, reliance on faulty data and a failure on the part of contracting officials to verify business size reported in the CCR.

Scott Amey, general counsel for the Project on Government Oversight, said the government should focus on its own effort to verify contractor data.

"The government should turn its attention to making data more reliable rather than removing any transparency related to a contractor's size," Amey said. "You can fault the contractors here but in a lot of these reports, the emphasis is on the government for not verifying data."