WASHINGTON -- A small business recently under fire for delivering faulty munitions to Afghan security forces may have fraudulently obtained as many as 50 contracts with the Defense and State Departments by claiming to be a Small Disadvantaged Business. Senator John Kerry (D-Mass.) today called on the Departments of Defense and State to explain how Miami-based AEY Inc. was erroneously labeled as a Small Disadvantaged Business, which helps companies access the federal contracting arena, and if this mistaken designation helped the company secure $298 million in defense contracts in 2007.

“Faulty contracting procedures and deficient safeguards are no excuse for putting troops in Afghanistan and Iraq in greater danger,” said Senator Kerry, Chairman of the Committee on Small Business and Entrepreneurship. “The Bush Administration needs to explain how and why this mistake occurred not once, but 50 times, and what steps they are taking to make sure that it never happens again.”

Senator Kerry called for greater oversight of the contracting process by the Defense Department, State Department, and Small Business Administration. Under contracting guidelines, federal agencies receive credit for meeting Congressionally mandated small business goals when they contract with a Small Disadvantaged Business.

According to a recent news article, AEY was reportedly designated as a Small Disadvantaged Business on June 8, 2006 by the State Department, despite the fact that they had never filed an application or been designated as a Small Disadvantaged Business by the Small Business Administration. AEY went on to obtain 49 additional contracts despite not being designated as a Small Disadvantaged Business in the Central Contractor Registry, a database that lists firms eligible for contracts and their designation status.

To read the letter that Senator Kerry sent to the Department of Defense, please click here.  For the letter to the State Department, please click here.  For the letter to the Small Business Administration, please click here.