[pmorici]

"According to a report released by Public Citizen last May, the contracts the government counted toward its small business targets in 2013 "included some held by the largest companies with which the government does business."

The reason the above happens is because people start small businesses and then when they win lucrative contracts the large companies buy them. The article is a good overview of a dysfunctional system though.

[zaphar]

Yep. It's all about the contract vehicle. An existing contract with the government is worth it's weight in gold because it's easier to extend a contract than to get one.

If a company has an existing contract with the USG then they could get bought just for the contract.