A year-long investigation into a federal contracting program revealed that the government owes over 1,000 small businesses millions of dollars from unpaid contract obligations.
The House Committee on Small Business investigated the General Services Administration (GSA) Multiple Award Schedule program, which oversees 19,000 current and cancelled government contracts. They discovered that over 1,000 cases where businesses with cancelled contracts had not received their minimum guaranteed payment.
“Contracting with small businesses is good for the economy and it’s good for the taxpayer because small companies bring cost-savings to the federal government,” committee Chairman Sam Graves said in a statement. “But when federal agencies don’t live up to their end of the bargain, small businesses are discouraged from competing and taxpayers lose the benefits of government efficiency.”
Between 2008 and 2012, 3,300 contracts were cancelled. A total of 1,334 of these companies were eligible for a minimum guaranteed payment of $2,500, which they did not receive, including 1,281 small businesses.
Because of a clerical error, the GSA owes these companies a total exceeding $3.1 million.
“Although we’re extremely disappointed that this error has occurred, the General Services Administration has owned up to their mistake and will distribute payment this year,” Graves stated.
Acquiring contracts can be expensive for small businesses. The House Committee on Small Business noted in a statement that a standard GSA proposal could cost between $6,000 and $40,0000.
While the government has set a goal of awarding 23 percent of all federal contracts to small businesses, they have failed to reach this goal the last six years.
Last year, contract reform legislation was signed into law in the National Defense Authorization Act. The objective was to create more contracting opportunities for small businesses, as well as guarding against fraud.
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