[EvanPlaice]

Sounds like 'business as usual' to me.

Small company is granted preferential treatment on the contract reward because the company fits under a 'special class'. For example SDVOSB.

The company doesn't actually have the skill/ability to fulfill the contract requirements so they outsource a significant portion of the work; either by picking up one of the bidders who lost as a subprime or bynoutsourcing to a third-party. Passing off the responsibility violates the 'protected class' certification threshold but there's no oversight to verify compliance so the contractor is never held accountable.

Many/most small business defense contractors are simply administrative companies that work the 'special class' certification process, pocket a significant percentage of the funds, and either outsource most of the actual work or hire people and provide substandard pay and provide little/no resources to do the work.

Source: I used to work for one such company. Never again...