Outgrowing Your Small-Biz Contract
By Ian Mount

(FORTUNE Small Business) – FOR YEARS THE TERM "FEDERAL SMALL-BUSINESS CONTRACT" has contained an internal contradiction: Many firms receiving the deals had outgrown the designation or been acquired by large corporations. According to data from Eagle Eye, a Fairfax, Va., publisher of federal-procurement intelligence, giant corporations such as General Dynamics pulled in more than $2.3 billion in money earmarked for small businesses in 2005. In November, SBA officials introduced a new rule that they say will rectify the situation: As of June 30, companies receiving small-business contracts must recertify their small-business status every five years and must report mergers and acquisitions within 30 days. "It's correcting a big hole in the regulations," says Karen Hontz, counselor to the SBA administrator, Steven Preston.

But Hontz's enthusiasm is not shared by John Kerry (D-Massachusetts), the new chairman of the Senate Committee on Small Business and Entrepreneurship. "Five years is a long time and takes away opportunities for oversight and checks and balances," he says. "This is an issue I plan to take a serious look at."

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.