Thirty-four firms improperly receiving federal aid for minority and disadvantaged businesses have been dropped from the controversial aid program since a government audit in September revealed abuses by some firms.
Of the 526 firms pinpointed by a special Small Business Administration insepctor general this summer as improperly receiving aid, 146 have been kept in the program with minor corrections.
Another 346, however, were sent letters beginning last September, ordering them to tell officials at the SBA field offices within 30 days why they were not in compliance with the agency's regulations for receiving the aid. They were also required to explain what they would do to remedy their situations, an SBA spokesman said last week.
Included in those firms sent "cure letters" are at least seven in the Washington area receiving government contracts amounting to between $114,995 and $6.8 million that were reserved for minority and disadvantaged firms, according to SBA documents obtained by The Washington Post.
Most of those firms had completed or were still working on contracts totaling more than $1.5 million, the documents disclosed.
In addition, one computer-related firm in the District that received $6.8 million in government contracts was dropped from the program on Sept. 26 when it was found to be self-sufficient didn't need further government aid.
Mostly consulting firms were involved, but there was also a maintenance service company.
Nationwide, noe of the firms has been cited for criminal activity in the program.
The inspector general's audit sid that one out of every five firms receiving federal aid under the SBA 8A program were serving as fronts for white contractors and that the SBA pumped millions of dollard worth of contracts into firms that either had no chance of succeeding or whose owners already were earning up to $1 million a year. The audit revelaed some SBA contracts went to at least one high-ranking federal employe and to convicted criminals.
The highest concentration of fronts, the report said, was in the region including the District, Maryland, Virginia, West Virginia and Pennsylvania. Of nine firms in the regions sent "cure letters" by the SBA, only two were outside of the D.C. area.