When it comes to military defense contracts, it’s no secret that big companies often snag the majority of the deals. This can include everything from unmanned systems and security to logistics and more. But is this a good thing or a bad thing? Let’s take a closer look.
First off, it’s important to note that big corporations have some clear advantages when it comes to winning these types of contracts. They often have more resources and expertise to throw at a project, which can make them more efficient and effective at delivering on the government’s needs. Plus, their past performance record can give government agencies more confidence in their ability to get the job done.
On the other hand, small businesses can feel like they’re at a disadvantage when competing for these contracts. They may not have the same level of resources or know-how as the big players, and navigating the procurement process can be a real challenge. Additionally, small businesses may struggle to stay on an even footing during the bidding process, as larger companies may have better access to information and other resources that can help them win contracts.
One of the biggest issues is the use of “shell companies” by big corporations to win contracts that are meant for small businesses. By law, the federal government is supposed to award 23% of its contracts to small businesses. However, investigations have found that big companies are using these shell companies, which are disguised as small businesses, to win contracts that should be going to smaller companies. This is a violation of the Small Business Administration Act, which was put in place to level the playing field for small business owners.
The American Small Business League (ASBL) estimates that the federal government diverts more than $100 billion a year in federal small business contracts to big and international corporations, and then counts those contract awards to big businesses in annual federal small business procurement reports.
It’s against the law to misrepresent the size of a company in order to illegally receive federal contracts and subcontracts. In fact, it’s a felony with penalties of up to 10 years in prison, a fine of up to $500,000, cancellation of all contracts and debarment from selling to the government.
There is a bipartisan legislation called the Corporate Transparency Act, which would require businesses to list the real identity of their owners. This legislation would protect small businesses that compete for millions of dollars in government contracts or set-asides intended for small businesses.
All in all, while big corporations have some clear advantages when it comes to winning military defense contracts, it’s important to make sure that small businesses aren’t left in the dust. Using shell companies to win contracts meant for small businesses is a violation of the Small Business Administration Act and should be addressed through legislation like the Corporate Transparency Act. A fair and transparent procurement process that promotes competition and allows small businesses to thrive is crucial for the overall health of the economy.