September 13, 2011
Petaluma, Calif. - Friday the Obama Administration set a rule change in motion to eliminate federal contracting programs for minority-owned small businesses. A shocking move since, in the midst of one of the worst recessions in U.S. history, unemployment has hit minority groups especially hard. According the U.S. labor department, the jobless figure for African Americans is almost twice that of overall unemployment (16.7 percent).
The proposed rule change is aimed at ending federal programs that establish, for the Department of Defense (DOD), NASA and the U.S. Coast Guard, a five percent federal contracting goal with small socially and economically disadvantaged businesses.
Around 35 percent of the U.S. population is made up of ethnic minorities, and 5.8 million businesses are minority-owned. The American Small Business League (ASBL) estimates that if the policy is implemented, minority-owned small businesses could lose close to $50 billion in federal contracts annually, which could lead to the loss of millions of jobs.
This is the latest in several instances of abuse of federal small business contracting programs. In addition to attempts to eliminate minority-owned federal contracting programs, the Obama Administration has been criticized for diverting billions of dollars a month in federal small business contracts to Fortune 500 firms and other large businesses worldwide. Some large companies that have received federal small business contracts include Lockheed Martin, British Aerospace, Rolls-Royce and Italian defense giant Finmeccanica SpA.
In Report 5-15, the Small Business Administration Office of Inspector General (SBA IG) described this abuse as, “One of the most important challenges facing the Small Business Administration and the entire federal government today.” The SBA IG has named the issue as a top management challenge for six consecutive years.
“It is unbelievable that at a time when unemployment among minorities is at record levels, the President is going to eliminate the largest federal programs to help minority-owned businesses,” said ASBL President Lloyd Chapman. “It will no doubt destroy millions of jobs and minority businesses from coast to coast.”