A bigger Voice for Small Business

New Obama Small Business Rescue Plan Ignores Abuses In Government Contracting Programs

by | Oct 13, 2008 | Press Release

Press Release

New Obama Small Business Rescue Plan Ignores Abuses In Government Contracting Programs

October 13, 2008

Petaluma, Calif. – Senator Barack Obama's new small business emergency rescue plan is being criticized for ignoring a series of federal investigations that found the government has diverted billions of dollars in federal small business contracts to many of the largest firms in the United States and Europe. (https://www.asbl.com/obamasmallbusinessrescueplan.pdf) 

In March of 2005, the Small Business Administration (SBA) Office of Inspector General issued Report 5-15, which stated, "One of the most important challenges facing the Small Business Administration (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." (http://www.sba.gov/IG/05-15.pdf)   

Since 2003, more than a dozen federal investigations have found hundreds of billions of dollars in federal small business contracts have been diverted to some of the largest corporations in the world. (https://www.asbl.com/documentlibrary.html) During that time, CBS, ABC, Associated Press and CNN have aired investigative stories which found federal small business contracts actually went to firms such as: Lockheed Martin, Boeing, Raytheon, Rolls-Royce, General Dynamics, John Deere, Microsoft, Wal-Mart, Hewlett-Packard, Buhrmann NV a Dutch conglomerate and British Aerospace Engineering (BAE).

The American Small Business League (ASBL) projects that middle-class firms are losing over $100 billion a year in federal small business contracts to Fortune 500 firms and other large businesses. Estimates from federal officials have ranged from $65 billion to over $100 billion a year.

In February of this year, Senator Obama issued the following statement, "98 percent of all American companies have fewer than 100 employees. Over half of all Americans work for a small business. Small businesses are the backbone of our nation's economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants." (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php) 

 In stark contrast to this bold statement, which was issued in February of 2008, Senator Obama is now refusing to even mention the diversion of billions of dollars in federal small business contracts to Fortune 500 firms. He has declined to discuss it publicly, or to mention the issue on his web site. He also refused to include the issue in any of his previous economic or small business plans.
Small business owners are concerned that pressure, and or political contributions from Fortune 500 firms, which are currently receiving a lion's share of federal small business contracts, may have contributed to Senator Obama's decision to distance himself from his pledge to end the diversion of small business contracts to corporate giants.

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Obama Middle Class Bailout Bill Passed 55-Years Ago

by | Oct 10, 2008 | Press Release

Press Release

Obama Middle Class Bailout Bill Passed 55-Years Ago

Middle Class Bailout Bill That Can Rescue The Economy Was Passed In 1953

October 10, 2008

Petaluma, Calif. - The following is a statement from ASBL President Lloyd Chapman:

In Tuesday's Presidential debate, Senator Barack Obama (D - IL) called for a bailout bill for the middle class. Yesterday, Senator Obama said he would also make sure that tax dollars are spent wisely. Today, there exists a great piece of legislation that would accomplish both of Senator Obama's goals. It would infuse billions of tax dollars back into the firms where most Americans work, create thousands of new jobs and help middle class families pay for their healthcare and mortgages. 

It's called the Small Business Act, and it became law in 1953. Today, based on the original Small Business Act, the federal government is supposed to insure that a minimum of 23 percent of the total value of all federal contracts and subcontracts are awarded to small businesses. Twenty-three percent of the federal government's total acquisition budget amounts to roughly $150 billion a year in federal contracts and subcontracts that should by law go to the middle class small businesses where approximately 56 percent of our nation's population is employed.

What better place to spend tax dollars than with the 27 million small businesses where most Americans work, and where most of our nation's tax revenue is generated?

The Small Business Act is the perfect vehicle to rescue our nation's middle class economy, and boost the segments of the American economy that were completely ignored by the $700 billion Wall Street bailout bill.

There are a couple of hurdles that need to be addressed before the Small Business Act can help lead our nation out of one of the worst economic disasters in modern history. First, since 2003, 15 federal investigations have found that Fortune 500 firms are the actual recipients of most federal small business contracts. It has been estimated that large businesses receive over $100 billion a year in federal small business contracts. ABC, CBS and CNN have all aired investigative reports which have found firms like: Rolls Royce, Wal-Mart, Microsoft, Raytheon, IBM, Xerox, Dell, John Deere, General Dynamics, GTSI, Home Depot, Titan Industries, Hewlett Packard, Battelle and British Aerospace Engineering (BAE) have all received millions of dollars in federal small business contracts.

Second, the Bush Administration has systematically dismantled virtually every single federal program the Small Business Act established to help small businesses, woman-owned firms, minority-owned firms and veteran-owned firms. The Small Business Act established the Small Business Administration (SBA), and during the past eight years President Bush has cut that agency's budget more than any other agency. Today, the SBA budget is less than half of what it was when President Bush took office.

Neither Barack Obama, nor John McCain have even mentioned any aspect of the Small Business Act in their small business plans. Neither candidate has pledged to restore the SBA's budget and staffing. Most surprising is that neither Obama, nor McCain have proposed any specific solutions to the diversion of up to $100 billion a year in government contracts that by law should be going to our nation's middle class, but instead are being diverted to Fortune 500 firms. Senator Obama even seems to be trying to distance himself from a statement he made in February of 2008, "It is time to end the diversion of federal small business contracts to corporate giants." I would guess that he received a call from the "corporate giants" the following day regarding some new fundraising ideas.

Senator Obama was right though; we definitely need a bailout bill for the middle class. The good news is it was passed in 1953. If Senator Obama and Senator McCain are serious about helping middle class families pay their health care and their mortgages, it's going to take more than just campaign rhetoric and pandering.

America's middle class deserves some help from the government in these difficult economic times, and the Small Business Act is a free and easy solution. It's time to fully implement the Small Business Act and restore the budget and staffing of the only federal agency established to assist America's 27 million small businesses, the SBA. It's also time to stop the diversion of federal small business contracts to corporate giants and get that money back into the hands of the small businesses that are the heart and soul of this nation's economy.

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Small business face big worries

by | Oct 4, 2008 | ASBL News

News

Small business face big worries

Bailout could compound loss of SDB program

By Aaron Nelsen
The Brownsville Herald
October 4, 2008

Passage of the $700 billion government bailout of Wall Street brought a measure of relief for languishing financial institutions, but small business advocates worry about the bill's implications for small businesses.

The American Small Business League, a nonpartisan group representing 100,000 small businesses nationwide, criticized the bill earlier this week for language it claimed could hinder small businesses from receiving federal contracts.

The ASBL highlighted a section of the bill that gives the Secretary of the Treasury leverage to waive any section of the Federal Acquisition Regulations.

"It is clearly not necessary to suspend federal acquisition law to bail out Wall Street and the financial industry," said Lloyd Chapman, president of the ASBL. "This is going to be a catastrophe for small businesses."

Detractors assert the financial-rescue bill paves the way for the administration to chip away at small business programs, such as the Small Disadvantaged Businesses program.

However, federal contracts set aside for small businesses pour millions of dollars into the middle class have deminished in recent years with many small-business procurements going to corporate giants, such as John Deere and Home Depot.

The Small Business Administration has also undergone significant changes, including budget cuts from $866 million in 2000 to just shy of $572 million in 2008.

Two weeks ago, the SBA announced the end of its certification program for Small Disadvantaged Businesses to qualify for the price evaluation adjustment, a tool some government agencies can use to help hire Small Disadvantaged Businesses.

With all eyes focused on the financial meltdown on Wall Street, the announcement garnered little attention.

SDBs will now rely on self-certification, a practice that has been widely criticized for inviting fraud.

Absent the certification, the SDB program has forfeited its legitimacy, according to Belinda Guadarrama, president of G.C. Mirco, a supplier of computer software and hardware.

Worse still, Guadarrama believes the end of the current certification could be a first step down a slipper slope.

"First, they say they are doing away with the certification, then they say we don't have any control over the SDB program and then one day it's gone," Guadarrama said.

To help federal agencies meet their 5 percent SDB contracting goal, Congress created the price evaluation adjustment tool and the SBA certification process to ensure the tool was applied to legitimate SDBs.

From 1999 through 2004, nearly 3,000 businesses were certified under the SBA certification, including G.C. Micro.

In 2004, Congress allowed the price evaluation adjustment authority for SDBs to expire for all but three federal procuring agencies, including the Department of Defense.

Calvin Jenkins, deputy associate administrator for Government Contracting and Business Development, said the tool was used sparingly during its five years.

Jenkins acknowledged the potential for fraud under self-certification. However, because most government agencies no longer use the tool and many are meeting their hiring goals without assistance, the certification had become an added expense without benefit, Jenkins concluded.

"The cost of using that tool meant you had to be certified," Jenkins explained, "But, the feeling was it was unnecessary."

The close of the SDB certification and the bailout policy decisions ultimately undermine small businesses, Chapman said.

"Today, it's hard to fathom the consequences of what might happen," Chapman said. "I couldn't be more disappointed."

More Groups React to Bailout Bill

by | Oct 3, 2008 | ASBL News

News

More Groups React to Bailout Bill

By Irene Jones
HispanicBusiness.com
October 3, 2008

While it was no secret that senators Barrack Obama and John McCain announced weeks ago that they would vote for the $700 billion so-called "bailout bill," signed by President George W. Bush earlier today, some national Hispanic and commerce groups are weighing in with their opinions about how the financial-market rescue plan should have been handled.

The Wall Street bailout vote was a "bitter pill" for small businesses to swallow, according to Todd Stottlemyer, president of the National Federation of Independent Business. He added that the need for credit to keep small businesses running is the only reason why there was support from his group.

Adding the tax incentive provision to the bill helped leaders in the tech industry push for passage. Solar industry groups also saw the advantage of the tax incentives for their market and lobbied approximately 80 House opponents in an effort to convince them of the advantages of passing the bill.

The American Small Business League expressed disappointment that Sen. Obama voted for the latest Senate version of the Wall Street bailout bill due to language that organization claims could be used by government to limit contracting opportunities for minority and woman-owned businesses.

Christopher Gunn, communications director for the ASBL, cited Section 107 of the new law, which will give Treasury Secretary Henry Paulson the power to waive any provisions of the Federal Acquisition Regulations. Mr. Gunn explained to the media that Paragraph 9 (b) of the bill specifically mentions the waiver of "any provision of the Federal Acquisition Regulations pertaining to minority contracting" and wavier of provisions pertaining to "woman-owned businesses."

Mr. Gunn explained, "In summary, the language states that Secretary Paulson may waive existing federal law and provisions of the Federal Acquisition Regulations, establishing specific numerical contracting goals for minority and woman-owned firms and replace it with a completely unenforceable statement of intent to use minority and woman-owned firms 'to the maximum extent practicable.'" And because there are no time limits on these possible waivers, he added, they possibly could continue indefinitely, which has many industry leaders concerned.

Mr. Gunn said the budget and staff for the SBA has been reduced and a federal law established seven years ago to encourage woman-owned firms has yet to be implemented. He also pointed to recent findings by a federal government audit showing contractor options have been reduced for minority-owned firms. As of last week, the SBA suspended taking applications for its small disadvantaged business contracting program after a Bush administration commission issued a report that said the federal government should cut back contracting opportunities for minority-owned firms.

Referring to the Web site, www.barrackobama.com, media officials for the candidate's campaign said Sen. Obama encourages investors to support women-owned businesses. Current statistics show less than 4 percent of venture-capital-backed firms are headed by women, while more than 28 percent of U.S. businesses are owned by women.

Campaign officials said Sen. Obama's strategy is to bolster small businesses in the future by cutting health care costs, providing tax relief and improving access to capital and investment development, including creation of high-tech jobs and fostering a supportive environment for minority-owned small businesses, which face unique challenges in rural areas.