No Hearings From Senator John Kerry On Multi Billion Dollar Small Business Contracting Scandal
Press Release
No Hearings From Senator John Kerry On Multi Billion Dollar Small Business Contracting Scandal
May 8, 2007
Petaluma, Calif.- Despite years of complaints about the Bush Administration policies that have allowed Fortune 1000 firms to receive billions of dollars in Federal small business contracts, Senate Small Business and Entrepreneurship Committee Chairman John Kerry has disappointed small business owners across America by declining to schedule hearings to investigate the abuses.
In January of 2005, Kerry accused the Small Business Administration of, “Fostering an atmosphere that encourages widespread fraud and abuse in small business contracting.” Yet, he has failed to draft legislation to resolve the issue or schedule oversight hearings.
In Report 5-15, the SBA’s Office of Inspector General referred to the diversion of federal small business contracts to large businesses as one of the biggest challenges facing the nation today. They also found large businesses that had illegally received federal small business contracts by fraudulently representing themselves as small businesses.
Investigative stories by ABC, CBS and CNN have uncovered firms like Boeing, IBM, BAE, Northrop Grumman, L3 Communications, Rolls Royce, Raytheon, and Lockheed Martin have all received millions in U.S. Government small business contracts.
Since 2002, over a dozen federal investigations have found that fraud, a lack of oversight, regulatory loopholes and bureaucratic error have allowed hundreds of large businesses to receive billions of dollars in government contracts earmarked for small businesses. To date, no legislation has been passed to address the issue.
Small business owners and advocates point out that Senator Kerry’s Small Business and Entrepreneurship Committee website seems to completely ignore the diversion of billions of dollars in small business contracts to Fortune 1000 firms.
Instead of focusing his attention on an issue that small business advocates believe has diverted over $60 billion a year in federal small business contracts to many of the largest firms in the country, Kerry has focused the Committee’s attention on issues small business owners feel are significantly less critical to their immediate survival.
A Bush Administration policy set to go into effect in June will allow Fortune 1000 firms to receive federal small business contracts until the year 2012. So far, congress has not passed legislation to stop the policy from taking effect.
Small business advocates are hoping that Senator Kerry will draft legislation that will once and for all remove Fortune 1000 companies from all federal small business contracting programs.
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Lloyd Chapman rejoins Jay Marvin
SMALL BUSINESS CONTRACTING SCANDAL HAS FOUR-YEAR ANNIVERSARY ON MAY 7th
Press Release
SMALL BUSINESS CONTRACTING SCANDAL HAS FOUR-YEAR ANNIVERSARY ON MAY 7th
May 7, 2007 represents the four- year anniversary of the first House hearing on small business contracting issues.
May 7, 2007
Petaluma, Calif.- Four years ago on May 7, 2003, the House Committee on Small Business held the first hearing on the diversion of billions of dollars in federal small business contracts to Fortune 1000 firms.
The Committee heard testimony from several witnesses including Dave Cooper, Director of the Acquisition and Sourcing Management at the General Accounting Office, and Lloyd Chapman, President of the American Small Business League. In a February 2003 interview with Washington Technology magazine, Cooper acknowledged the GAO’s first investigation was based on information Chapman provided.
Since that first GAO investigation, there have been twelve other federal investigations that found large businesses had received billions of dollars in federal small business awards. Firms like Rolls Royce, General Dynamics, Titan, Northrop Grumman, BAE, AT&T, Raytheon, Lockheed Martin, L3 Communications and Boeing all received millions of dollars in federal small business contracts. Shortly after the hearing, the SBA was forced to remove over 600 corporate giants from their small business database.
In September 2004, a report by the Center for Public Integrity found the Defense Department had awarded over $47 billion in small business contracts to the nation’s top defense contractors.
In March of 2005, in Report 5-15 titled, “Large Businesses receive Small Business Awards,” the SBA Office of Inspector General stated, “One of the most important challenges facing the SBA and the entire federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards.”
The ASBL sued the SBA in November of 2005 and forced the release of an investigation by the SBA Office of Advocacy that found “vendor deception” was one of the reasons why large businesses received federal small business contracts. In Report 5-16, the SBA Office of Inspector General found more large businesses had committed fraud to receive federal small business contracts by making “false certifications.”
The initial solution proposed by the SBA, the SBA Office of Inspector General and the Office of Federal Procurement policy was annual re-certification of all firms currently holding federal small business contracts. Recently, annual re-certification was also endorsed by the Office of Management and Budget and the Senate Small Business Committee.
Despite these significant endorsements for annual re-certification, in April the House Small Business Committee passed a new bill titled H.R. 1873 the, “Small Business Fairness in Contracting Act.” It does not contain the annual re-certification policy for all firms currently holding federal small business contracts. If passed, this law will allow hundreds of Fortune 1000 firms that currently have small business contracts to continue to receive federal small business awards for years to come.
About the American Small Business League: ASBL has won a series of Freedom of Information Act cases that have forced the disclosure of information on the diversion of federal small business contracts to hundreds of large businesses.
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Fraudulent Firms Can Keep Small Business Contracts Under New House Bill, Says American Small Business League
Press Release
Fraudulent Firms Can Keep Small Business Contracts Under New House Bill, Says American Small Business League
Bill H.R. 1873 does nothing to stop large firms with existing small business contracts from keeping them for five more years.
May 7, 2007
Petaluma, Calif.- The House Committee on Small Business, chaired by New York Congresswoman Nydia Velázquez has passed a bill that will allow large businesses that received federal small business contracts illegally to keep them for at least five more years.
Congresswoman Velázquez recently appeared on an investigative report produced by CNN's, Lou Dobbs Tonight, which also found fraud was one of the reasons why large businesses had received contracts Congress intended to go to small businesses.
Investigations by the Small Business Administration Office of Inspector General and the SBA Office of Advocacy found fraud was one of the reasons why large businesses received millions in federal small business contracts.
Under section 16D of the Small Business Act, firms that misrepresent themselves as small businesses to illegally receive government small business contracts can face up to ten-years in prison, permanent debarment from doing business with the federal government and a $500,000 fine per occurrence.
H.R. 1873 allows the fraudulent firms to keep their illegal contracts.
The House Fairness in Contracting Act does not contain the “annual recertification” provision, which was endorsed by the SBA, the SBA Office of inspector general, the Office of Federal Procurement Policy, the Office of Management and Budget and the Senate Committee on Small Business and Entrepreneurship.
An annual re-certification provision would require all firms with existing federal small business contracts to recertify their status as legitimate small business each year and update their information in the Federal Central Contractor Registration database.
Congressman Henry Waxman of California, Chairman of the House Committee on Oversight and Government Reform did not amend H.R. 1873 to include annual re-certification while it passed through committee. The bill, which passed out of the Committee on Oversight and Government Reform last week, could come before the house as early as this week. If the bill is passed in its current form it could divert as much as $300 billion to the top two percent of U.S. firms over the next five years.
Under H.R. 1873 the, “Small Business Fairness In Contracting Act,” fraudulent firms will be allowed to keep their illegally won small business contracts for at least five more years.
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