Petaluma, Calif. - The following is a statement by American Small Business League President, Lloyd Chapman

A recent Washington Post story about the diversion of billions in government small business contracts to Fortune 500 firms looks more like it was written by the White House press office than the newspaper that broke the story on Watergate. (https://www.asbl.com/showmedia.php?id=1179)

The story seems "un-Washington Post-like." Titled, "Agencies Counted Big Firms As Small," with a Bush Administration excuse for a subtitle - "SBA Says It Will Correct Data On Federal Contracts." The first sentence begins with "US government agencies make at least $5 billion in mistakes…"

Just $5 billion in mistakes; the SBA has it under control, no big deal.

Here's the truth. Federal investigators have released a series of investigations since 2003 that found the Bush Administration has diverted hundreds of billions of dollars in government small business contracts to Fortune 500 firms and thousands of other large businesses. (https://www.asbl.com/documentlibrary.html) Several investigations uncovered fraud. (http://www.sba.gov/IG/05-16.pdf) ABC, CBS, CNN (https://www.asbl.com/media2.php) and every major newspaper in the country have covered the issue. ( https://www.asbl.com/showmedia.php?id=1121) 

The Washington Post sampled $13 billion of the $89 billion in prime contracts the Bush Administration reported as going to small businesses during 2007. They found at least $5 billion or 38.5% of the $13 billion sample went to Fortune 500 firms.

Using the Washington Post's sample, 38.5% of the $89 billion equals $34.2 billion in small business contracts diverted to Fortune 500 firms for 2007.

Now consider this, the 38.5% number is just for Fortune 500 firms. What about the thousands of other large business? How much did they get, 30%, 40%, 50%?

Lets be conservative and say 30%. If these contracting officials can't tell Fortune 500 firms like Xerox, Home Depot and Rolls Royce from a small business they are certainly going to have trouble differentiating the average large business from small businesses.

What about subcontracts? The Washington Post did not even look at that. The SBA Office of Advocacy says the Bush Administration reports $135 billion a year in prime contracts and subcontracts go to small businesses. That's another $46 billion in subcontracts.

Add the 38.5% for Fortune 500 firms to the 30% for all other large businesses. That is 68.5% of the $135 billion, or $92.4 billion a year.

$92.4 billion a year for the eight years of the Bush Administration, equals $739.2 billion in small business contracts diverted to many of the largest contributors to George W. Bush and Congress, by mistake of course, year after year.

Senators McCain and Obama have never mentioned this staggering problem and no journalist has ever asked them a single question on this issue.

Petaluma, Calif. - The following is a letter from American Small Business League President Lloyd Chapman to Mr. Wolf Blitzer the Host of CNN's The Situation Room.

Dear Mr. Blitzer,

You will be interviewing Senator Barack Obama tomorrow on Friday, October 31, and I would like to ask you to consider asking him a question that is timely and could save thousands of small businesses across the country.

In February, Senator Obama released the statement, "It is time to end the diversion of federal small business contracts to corporate giants." No journalist has ever asked Senator Obama about this issue and Senator Obama has never mentioned the issue again. 

Please ask Senator Obama if he still believes Fortune 500 firms should not be allowed to receive federal small business contracts and exactly how he intends to stop it.

Since 2003, a series of federal investigations have been released, which have found federal agencies diverted billions of dollars in small business contracts to Fortune 500 firms. Thousands of legitimate middle class companies have been forced to close their doors as they have unknowingly competed head-to-head with many of the largest firms in the world for even the smallest government orders earmarked for small businesses. 

Just last week, a front-page story in the Washington Post found that 40 percent of government small business contracts sampled had actually gone to Fortune 500 firms. By using the 40 percent number and applying it to the Bush Administration's two terms, the American Small Business League has estimated that nearly $500 billion in small business contracts have been diverted to Fortune 500 corporations.

CNN has covered the story three times, and I have appeared on CNN twice talking about the issue. The Washington Post story is essentially the same story that the Associate Press published in 2003, and the New York Times published in 2006. Yet, nothing has been done to address the problem. Congress has not passed even a single piece of legislation to stop Fortune 500 firms from taking federal small business contracts.

Considering the state of our nation's economy, federal programs to direct a small portion of government contracts to America's 27 million small businesses makes good sense.

If you could ask Senator Obama about this issue and get his ideas on how he might specifically address the problem, it could shine a light on this issue that Congress could not ignore and hopefully lead to legislation to stop it.

No journalist has ever asked Senator Obama or Senator McCain about this issue.

One question could save thousands of hard working, American small businesses that could certainly use a little help as they struggle to deal with one of the most dramatic economic downturns in recent history.

Sincerely,

Lloyd Chapman
President, American Small Business League

Petaluma, Calif. - Washington Post reporter Carol Leonnig's story, "Agencies Counted Big Firms As Small," was excellent. Hopefully, the story was embarrassing enough to Congress, the Bush Administration and the Fortune 500 firms that were exposed for receiving federal small business contracts, that Congress will finally pass legislation to stop it.  

The Washington Post should consider doing a follow-up story to report on some of the key elements of this issue that were not covered by the original story.

Some of the points the Washington Post could cover in a follow up story are:

-  The American Small Business League (ASBL) is the only small business advocacy group in America that has consistently fought the Bush Administration to end the diversion of federal small business contracts to Fortune 500 firms.

-  The SBA removed over 600 large businesses from the government's small business database in 2003. Some of the Fortune 500 firms the Washington Post found that were still receiving small business contracts in 2007, were the same firms removed from the SBA's small business list in 2003. (www.asbl.com/documents/600Lfpronet.zip)

-  Since 2003, over a dozen federal investigations have been released, which found fraud, abuse, loopholes and a lack of oversight in federal small business contracting programs. (https://www.asbl.com/documentlibrary.html)  

-  Some of the federal investigations found that large businesses had made "false certifications," "improper certifications" and committed "vendor deception" to illegally receive government small business contracts. (http://www.sba.gov/IG/05-16.pdf) 

-  Congress has not passed a single piece of legislation to address this issue despite the numerous federal investigations and hundreds of stories in the main stream media regarding the diversion of federal small business contracts to Fortune 500 firms. 

-  The Small Business Administration (SBA) Office of Inspector General found the SBA itself had reported awards to large businesses as small business awards. The SBA reported contracts to a Dutch firm with over 16,000 employees worldwide as small business contracts. (http://www.sba.gov/IG/05-14.pdf) 

-  Although misrepresenting a firm's status as a small business is a felony with a penalty of up to 10-years in prison under section 16 (d) of the Small Business Act, no firms have been prosecuted for this crime. (http://www.smallbusinessnotes.com/fedgovernment/sba/sbact.html) 

-  In 2005, the SBA Office of Inspector General referred to the diversion of federal small business contracts to corporate giants as, "One of the most important challenges facing the Small Business Administration (SBA) and the entire Federal Government today."
(http://www.sba.gov/IG/05-15.pdf) 

-  The SBA has lost a series of Freedom on Information Act (FOIA) lawsuits filed by the ASBL, which has forced the release of information proving that Fortune 500 firms had received billions of dollars in government small business contracts.

-  The Bush Administration has alleged that the diversion of federal small business contracts to large corporations is the result of miscoding errors for seven consecutive years.  These miscoding errors are always the result of the reporting of awards to Fortune 500 firms as small business awards.

-  The Washington Post found no evidence of any awards to small businesses had been miscoded as large business awards.

-  This pattern clearly indicates that the miscoding of contracts to Fortune 500 firms is not a random occurrence or the result of human error, but an intentional campaign to divert government small business contracts to large businesses.

-  Based on the Washington Post sampling, the Bush Administration may have diverted well over $500 billion in federal small business contracts to Fortune 500 firms.

Petaluma, Calif. - This Friday CNN's Wolf Blitzer will interview Senator Barack Obama (D - IL). CNN is accepting questions from the public. In nearly two years of campaigning, Senator Obama has answered thousands of questions from the public and the media. It will be difficult for Wolf Blitzer to come up with questions Senator Obama has not answered before.

However, there is one question Senator Obama has not answered and has apparently even tried to distance himself from. During this campaign, Barack Obama has successfully been able to avoid any questions on the subject of the diversion of government small business contracts to Fortune 500 firms.

Wolf Blitzer should ask Senator Obama, "What would you do to stop Fortune 500 firms from receiving billions in government small business contracts?"

As recently as last Wednesday, the Washington Post published a story that found the Bush Administration had diverted 40 percent of all government small business contracts to Fortune 500 firms. Based on the Washington Post's statistical sampling, approximately $450 billion in government contracts earmarked for middle class firms actually went to Fortune 500 firms. The Washington Post sampling was only looking for Fortune 500 and other clearly large firms; what about other large businesses that are not household names? If all of those firms were considered, the percentage of those contracts could even be 60, 70, or 80 percent.

The Washington Post only looked at prime contracts from federal agencies; what about all the subcontracts from prime contractors? How many billions in small business subcontracts are actually going to Fortune 500 firms and other large businesses?

As the saying goes, "a billion here, a billion there, pretty soon you're talking about some real money." It is highly likely the Bush Administration has intentionally diverted over a half a trillion dollars in federal small business contracts to Fortune 500 firms and hundreds of other large businesses.

It is extremely unusual for a Democratic candidate for President to miss an opportunity to respond to a major story in the Washington Post that would provide a legitimate justification to criticize the current Republican administration. Why has Senator Obama avoided this issue? 

Neither Senator Obama nor Senator McCain have been asked even a single question on this issue. Wolf Blitzer could rectify that situation on Friday.

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Petaluma, Calif. - A recent Washington Post story found the Bush Administration has diverted over 40 percent of all federal small business contracts to Fortune 500 firms. (https://www.asbl.com/showmedia.php?id=1179) Based on the Washington Post's sampling of federal contracts, during the eight years of the Bush Administration, nearly $500 billon in federal small business contracts have been diverted to Fortune 500 firms, their subsidiaries, and hundreds of other clearly large businesses.

The Washington Post found that firms such as Lockheed Martin, Dell, General Dynamics, Northrop Grumman, SAIC, L-3 Communications, CACI and British Aerospace (BAE) received billions of dollars in government small business contracts.

In February, Senator Barack Obama said, "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) However, since February Senator Obama has not commented publicly regarding the issue.  Additionally, he has not released any specific plans to stop the diversion of federal small business contracts to large businesses in either his small business plan or his small business emergency rescue plan. The Obama campaign has not issued any statements in response to the Washington Post story.

Recently, CNN's American Morning ran a story criticizing Senator Obama's small business rescue plan for ignoring the issue, as well as more than a dozen federal investigations that have found Fortune 500 firms as the actual recipients of government small business contracts. Again, the Obama campaign has not issued any statements in response to the CNN story.

Since 2003, over a dozen federal investigations have found fraud and abuse in virtually every federal program designed to assist small businesses, including firms owned by women, minorities and veterans. (https://www.asbl.com/documentlibrary.html) In addition to finding that the Bush Administration has diverted billions of dollars in federal small business contracts to Fortune 500 firms, several of the investigations found large businesses had committed fraud in order to illegally receive federal small business contracts. (http://www.sba.gov/IG/05-16.pdf) 

Major networks such as ABC, CBS and CNN have all released investigative stories on this issue. (https://www.asbl.com/media2.php) 

To date, no journalist has asked Senator Obama about the diversion of billons of dollars in government small business contracts to Fortune 500 firms. Based on recent polls, it is likely Senator Obama will become President Obama without ever addressing what the Small Business Administration Office of Inspector General referred to as, "One of the most important challenges facing the Small Business Administration (SBA) and the entire Federal Government today."
(http://www.sba.gov/IG/05-15.pdf) 

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