Bechtel is a “small business”? DoE says “yes” (and gets sued for it)

Department of Energy Sued Over Bechtel Contract Data
Lloyd Chapman
Small business advocate

On Tuesday, April 20, the American Small Business League (ASBL) filed suit against the U.S. Department of Energy (DOE) in U.S. District Court, Northern District of California. The suit was filed under the Freedom of Information Act (FOIA). The DOE is refusing to release information about a $3.6 billion contract that was awarded to Bechtel, which listed the giant contractor as a small business under the socio-economic field. (http://www.asbl.com/documents/20100420_doe_bechtel.pdf)

Since 2003, over a dozen federal investigations have found fraud and abuse leading to the diversion of billions of dollars a month in federal small business contracts to corporate giants.

The ASBL is attempting to gather information in accordance with these federal investigations that would once again provide evidence of fraud; and refute government claims that the problem is the result of miscoding, computer glitches, and honest mistakes. (http://www.asbl.com/documentlibrary.html) Attorneys from the ASBL believe federal contracting officials, and possibly even employees of prime contractors could be sentenced to 10 years in prison for violating section 16(D) of the Small Business Act.

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3 thoughts on “Bechtel is a “small business”? DoE says “yes” (and gets sued for it)”

  1. Mark, this has been fairly common practice, at least since the `80s, when I was doing R&D that received some grant assistance from the Feds (I was only familiar with the Small Business Innovative Research (SBIR) grant program).

    Typically, the major corporation with create a new, separately named division and just move personnel and equipment over from some other division for a specific engineering project, or, as frequently, create a wholly-owned subsidiary.

    Either way, it wasn’t so much that the company greatly profited from doing so. The intent, at least with SBIRs, was to have the government underwrite their development costs and because their manpower, money and brainpower–and lobbying clout–could overwhelm that available to much smaller firms (for which the program was intended), they could, with the government underwriting their costs, enter new markets as the dominant leader, and drive out competing technologies.

    I still remember one DOE competition we entered in which this little company, no bigger than ours, revealed equipment that had to have cost, for design and construction alone, much more than we were going to get for the initial proposal writing, design, construction, testing and final report preparation combined. After a little digging, we found that the company was a wholly-owned subsidiary of Bechtel.

    It’s been going on for a long, long time, and a lot of it comes down to the Feds not checking the status of many bidders. Whether or not the contract auditors have been told not to check, or the links between the bidders and their parent companies are sufficiently obscure, I don’t know. I do know that it’s been common practice for decades.

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