IG: “A Huge Problem” in Monitoring Contractors It’s their job, not ours. That’s the answer from some officials at SBA and other agencies when it comes to guarding against waste, fraud and abuse in small business contracting programs, according to SBA’s inspector general. “I don’t think it’s being done, and it’s not being done well,” IG Peggy Gustafson said. She said some SBA officials believe it’s up to agencies to police their own contracts, while some agency officials point to SBA’s responsibility for monitoring small business preference programs. “It’s a huge problem in government contracting,” she testified at a June 16 hearing of the Senate Small Business Committee. She said such buck-passing opens the door to ineligible contractors and those who abuse subcontracting rules. SBA Administrator Karen Mills acknowledged that monitoring small business contracting is her agency’s responsibility under the law, but said she lacks the resources to cover 30,000 federal contracting shops. SBA has requested funds to hire 24 additional people in 2012 to strengthen its oversight. Mills said SBA has tightened certification requirements for 8(a), HUBZone and service-disabled veteran-owned businesses after the Government Accountability Office found instances of fraud in those programs. Gustafson said SBA has “a strong plan” to become a more effective enforcement agency, but it is still in its early stages, with people undergoing training. “The agency needs to send a strong message that they’re serious and hold people accountable,” she testified. An additional roadblock to effective enforcement is the Justice Department’s reluctance to prosecute small business fraud cases. Sen. Olympia Snowe, the committee’s ranking Republican, said Justice refused to prosecute more than 20 identified cases of theft, conspiracy, corruption, embezzlement and other criminal acts in the first half of this fiscal year. “I recognize that a cost-benefit analysis takes place when determining whether to try certain cases,” she said, “but if the department continues to let incidents of corruption and fraud go unanswered, deterrence will be at an all time low.” She wrote to Attorney General Eric Holder asking for an explanation. Snowe, committee chair Mary Landrieu, D-LA, and others have introduced legislation to strengthen enforcement. The Small Business Contracting Fraud Prevention Act, S. 633, would give prosecutors a new tool to use against companies that falsely claim eligibility for socioeconomic programs: When a company is convicted, the government could recover civil penalties under the False Claims Act equal to three times the amount of the contract that was fraudulently obtained.