A new report from the Small Business Administration (SBA) Office of Inspector General found Blackwater Worldwide had received "at least 100 small business set-aside contracts, worth over $144 million, since 2000." Additionally, the report pointed to the SBA's highly controversial ruling regarding Blackwater's size as a major contributing factor to the inclusion of Blackwater in federal small business contracting statistics.
In November of 2006, the SBA ruled that Blackwater was a small business by considering a substantial number of the firm's employees to be independent contractors. According to the SBA Inspector General report, more than 1000 employees were considered independent contractors and were not counted towards the company's size determination by the SBA. As a result, Blackwater was able to avoid the 1,500-employee size threshold for their industry and qualify for federal small business contracts. The SBA's interpretation helped Blackwater circumvent normal federal small business size standards. Without the SBA's loophole specifically created for Blackwater, the company would exceed the small business size standard by more than 250 employees and would not be eligible for federal small business contracts.
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