Thursday 22nd of February 2024

Adelaide Defence Contractors In US "Small Business" Scam Probe


Several Adelaide-based US Defence Corporations are disguising themselves  as small businesses to "loophole" US Legislation, according to a US Survey. 

In the chase for Australian Defence contracts, some of the same companies have subsidiariaries mirroring the questionable US practices.

Defense Industry Daily reported yesterday that that the U.S. District Court for the Northern District of California has ordered the U.S. Small Business Administration (USSBA) to release to the American Small Business League (ASBL) a draft report on the awarding of government contracts.


The SBA report describes how large companies are improperly winning contracts in the Federal government's $60-plus billion small business contracting program.

The Small Business Act of 1953 directs that at least 23% of federal government prime contracts go to small business, but a host of abuses and loopholes have allowed large companies to pick up contracts in this category.

The SBA released an edited version of the report on December 28, 2004, acknowledging that small business contracts had gone to such "small businesses" as Raytheon Co., BAE Systems, Northrop Grumann Corp., Carlyle Group, Electronic Data Systems Corp., Booz Allen Hamilton Inc., Hewlett-Packard Co., and Buhrmann NV.

Raytheon, BAE, Northrop Grunman and Carlyle are involved in South Australian based Missile Shield and Unmanned Air Vehicle Projects. Both BAE and EDS have  major headquarters in Adelaide.

The situation is mirrored in Australia.  Here Australian (often wholly U.S. owned) subsidiaries masquerade as Australian contributors to the Joint Strike Fighter program.  

In 2002 Letters of Intent regarding the JSF program were sent to such small Australian companies as Boeing Australia, Halliburton ACT, CSC Nowra, DSTO Melbourne, Raytheon Australia Adelaide and Sydney,Tenix Adelaide and Melbourne,  and Thales Sydney and  Brisbane.

Trade Minister Ian MacFarlane said at the time that

"These Australian companies are now on a prestigious short-list. This project has been thrown open on an international scale, suppliers are being sourced on a best-value basis, it’s a level global playing field on which Australian companies are swinging for home runs," 

"The letters signal the proponents’ confidence in Australian companies to successfully nail down significant contracts. They’ve been invited to bid for work worth up to US $400 million following two scoping studies by Lockheed Martin. This is an auspicious first step."


Raytheon is also serving as the system-to-system integrator in the Missile Shield warship construction soon to commence in Adelaide, while Thales has recently earned a guernsey in assisting General Dynamics in the Battlespace Communications revamp.

Practices under question in the US include acquisition of small firms to use as applicants, misrepresentation of employee figures, and large companies passing of subsidiaries or divisions as an small business.

If such a situation is regarded as criminal activity in the US (in 1953 punishable by fines up to US$500,000, or up to 10 years imprisonment, or both) surely the ethicality of the "Australian" contract situation needs to be immediately examined.

 Then it will be a good time to look at "Australian small businesses" such as Halliburton participatiing in Australian international aid activities.. but that's another story.

Or is it?