Obama Budget Ignores Fraud and Abuse in Small Business Contracting Programs

Press Release

Obama Budget Ignores Fraud and Abuse in Small Business Contracting Programs

February 27, 2009

Petaluma, Calif. - President Barack Obama's new fiscal 2010 budget proposal does not contain any specific funding for, or mention of the Small Business Administration's (SBA) biggest challenge, the diversion of federal small business contracts to large corporations.

Since 2003, more than 15 federal investigations have found fraud, abuse, loopholes and a lack of oversight in federal small business contracting programs that have allowed Fortune 500 firms to take billions of dollars in federal contracts earmarked for small businesses. (https://www.asbl.com/documentlibrary.html) ABC, CBS and CNN have aired stories on the investigations. (ABC, https://www.asbl.com/abc_evening_news.wmv; CBS, https://www.asbl.com/cbs.wmv; CNN, https://www.asbl.com/showmedia.php?id=1170)

Report 5-15 from the SBA Office of Inspector General (OIG) stated, "One of the most important challenges facing the Small Business Administration 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)

In Report 5-16, the SBA OIG found large businesses had committed felony federal contracting fraud by making "false certifications" and "improper certifications." (http://www.sba.gov/IG/05-16.pdf)  

A report from the SBA Office of Advocacy found a number of large businesses had illegally received federal small business contracts through, "vendor deception." (https://www.asbl.com/documents/eagkeeye_report 2002.pdf)

In February of 2008, President Obama stated, "It is time to end the diversion of federal small business contracts to corporate giants." While President Obama's budget mentions a number of specific small business programs; the proposal contains no mention of this issue, which small business advocates maintain is responsible for pulling up to $100 billion in federal small business contracts out of the middle class economy every year.     (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php)

In the last year, President Obama has consistently refused to offer a solution to the diversion of billions of dollars in federal small business contracts to Fortune 500 corporations, their subsidiaries and other clearly large firms.  President Obama's fiscal 2010 budget proposal represents his 6th opportunity to mention solutions to this devastating problem.

"I would like a member of the White House Press Corps to ask President Obama one question for America's 27 million small businesses," ASBL President Lloyd Chapman said. "Why are you allowing Fortune 500 firms to take federal contracts that have been legally set-aside for small businesses?"


Entrepreneurs Not Feeling Stimulated


Entrepreneurs Not Feeling Stimulated

By Dennis Romero
February 18, 2009

The $787 billion economic stimulus package signed into law by President Barack Obama this week contains $116 billion in tax cuts for individuals, more than $53 billion for education and job training, and north of $10 billion for health, science and research.

But there's nary a penny explicitly set aside for startups and entrepreneurs. In fact, the closest you'll come to finding a any such stimulus is the package's extension of an existing small-business deduction that allows owners to write off $250,000--double the amount set in 2007--worth of office equipment, manufacturing gear and vehicles.

To advocates who say American small businesses employ and create the majority of job positions nationwide, the stimulus is more of a drag--and is possibly even short-sighted.
During his campaign last year, Obama acknowledged the economic power of entrepreneurs, promised to boost small business owners, and proposed to seed new business incubators with $250 million in federal funds. "Small businesses employ half of the workers in the private sector in this country and account for the majority of the job growth," he acknowledged at a campaign stop in October.

At the time Obama had just released his "Small Business Emergency Rescue Plan" (PDF) and called for the U.S. Small Business Administration to administer more loans through its disaster lending program. But so far, he hasn't walked the walk, observers say.

Bill Rys, tax counsel for the National Federation of Independent Business, says even the stimulus bill's main lifeline to entrepreneurs--its Section 179 business gear deductions--could be of limited value at a time when owners are cutting their equipment expenses. "We're seeing those types of investments really slowing down," he says.

"We certainly would have liked to have seen more provisions directly targeted to small business, especially mom-and-pop operations," he says. "There's little in the bill that speaks directly to them."

Job creation is a key to economic recovery, and there's little in the package that will inspire the nation's biggest employment sector--smaller businesses--to hire, argues American Small Business League president Lloyd Chapman. "A stimulus bill with no provision for companies that create most new jobs," he says. "That's a problem."

The bill does put billions of dollars into repairing and upgrading infrastructure such as roads and bridges, and related projects will likely trickle down to some smaller contractors. And its tax provisions will give individuals, including most average entrepreneurs, more than $100 billion in total breaks. But Chapman maintains that the stimulus is "insignificant" when it comes to small business.

"Most Americans work for small businesses," he says. "We must protect this great resource."

Source:  http://blog.entrepreneur.com/2009/02/entrepreneurs-not-feeling-stimulated.php

Stimulus Act - A Small Impact on Small Business Owners and Even Smaller for Women in Business


Stimulus Act - A Small Impact on Small Business Owners and Even Smaller for Women in Business

By Lahle Wolfe
February 18, 2009

According to the Small Business Administration (SBA), only $730 million out of the $787 billion economic stimulus package (not even 1% of the spending) is being spent to stimulate small businesses. How? By "enhancing" loan access.

Jan Norman (OC Register) reports: "The benefits for small-business borrowers are a reduction in loan fees, higher guarantees in some cases and incentives to encourage the secondary market, which experts say is the real problem." But I am not impressed with the "solution." Of the $730 million the SBA is only allocating $375 million for these "benefits."

While SBA Administrator Darryl K. Hairston believes that this will "truly help small-business owners affected by the crunch," when I look at where the SBA is proposing to allocate the $730 million, I remain skeptical that the impact will be significant - especially for women-owned businesses:

  • $20 million for technology systems to streamline the SBA’s lending and oversight
  • $15 million to expand the SBA’s Surety Bond Guarantee program for builders (not much going to women there!)
  • $25 million for jobs to meet new-program demands
  • $10 million for the Office of Inspector General

$30 million will go towards expanding the SBA's microloan program. This may sound great on the surface because most of the microloans (loans less than $35,000) go to low-income individuals, minorities, and women, but the SBA has also said that some of this $30 million will actually go towards "technical assistance to help owners learn to run their businesses successfully." In other words, the SBA has not said how much of the $30 million is even going for loans.

The American Small Business League in Petaluma points out the American Recovery and Reinvestment Act does not require that any of the billions of dollars in contracts be awarded to America’s 26 million small businesses, and as for women and minority business owners, they will certainly get the smallest share of any small business contracts awarded.

Source:  http://womeninbusiness.about.com