Definition of 'Small Businesses' Under Investigation
Small businesses employ nearly half of the civilian workforce and produce half of the private sector's goods and services, according to reports from the Miami Herald and outlined on HispanicBusiness.com. But according to the article, there is little distinction as to what justifies a small business.
Reports emphasize that the U.S. Small Business Administration (SBA) needs to narrow its definition of 'small business' and end practices that allow companies to win contracts after they have outgrown the designation. For example, in Florida, it is required that at least 23 percent of all federal contracts be awarded to small businesses. Current contracts are under investigation.
According to the article, more than half of Florida's top 20 small-business contractors had more than 500 employees, the SBA's basic definition of a small business. Four of the firms had more than 1,000 employees; three exceeded $1 billion in annual revenue - although some may have been small firms when they won the contract.
Currently the SBA rules allow firms to keep their small business designation for the life of a contract, which has been known to extend for years. They also don't verify the size information that companies provide.
The SBA held hearings on this subject last year and expects to have new rules in place for small businesses in 2006.
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