New Bill Could Divert Billions in Small Business Contracts to Corporate Giants

Press Release

New Bill Could Divert Billions in Small Business Contracts to Corporate Giants

June 29, 2009

PETALUMA, Calif., - For the second time in the last year, the House of Representatives Small Business Committee has passed legislation that will change the definition of a small business to give some of the nation's wealthiest investors billions of dollars in federal small business contracts.

The bill, H.R. 2965, the Enhancing Small Business Research and Innovation Act of 2009, was introduced to reauthorize the Small Business Innovation Research (SBIR) program, which is set to expire on July 31st of this year. However, language in H.R. 2965 will change the definition of a small business from the current definition of "independently owned" to include businesses owned up to 49.9 percent by a single venture capital firm, or 100 percent owned and controlled by multiple venture capital firms or syndicates. (

H.R. 2965 is almost identical to similar legislation introduced last year to reauthorize the SBIR program, and again is being quarterbacked by House Small Business Committee Chair, Nydia Velazquez (D-NY). (

The legislation is being supported and pushed by groups like the Biotechnology Industry Organization (BIO) and the National Venture Capital Association (NVCA), but for the second time, not one single small business organization supports this legislation. Small business groups like the American Small Business League (ASBL) are outraged that the committee has again ignored the voice of small businesses and passed legislation that will divert billions of dollars from small businesses and the middle class economy. (

Critics of Chairwoman Velazquez point to the fact that since 2003, a series of over a dozen federal investigations have shown that Fortune 500 and other clearly large firms are the actual recipients of billions of dollars in small business contracts, yet she has never introduced and pushed for legislation to address the ongoing abuses in small business contracting programs. (

"H.R. 2965 is the most disgusting example of what is wrong with our government today," said ASBL President Lloyd Chapman. "Groups like the NVCA and BIO give large campaign contributions to members of Congress, like Velazquez, and now we see them being paid back with legislation that will give them billions of dollars in small business contracts. I have never seen a more blatant example of Congress selling legislation."

When the Going Gets Tough...Start a Business


When the Going Gets Tough...Start a Business

By Tim Devaney and Tom Stein
June 25, 2009

A new study by the Ewing Marion Kauffman Foundation suggests that the best of times really are the worst of times. Or vice versa. Titled "The Economic Future Just Happened" (whatever that means), the Kauffman report found that half the companies in the 2009 Fortune 500 and half of 2008’s fastest-growing companies were started in a recession or bear market. "New firms create new jobs and fuel our economy," says Kauffman CEO Carl Schramm. "Policies that support entrepreneurship support recovery."

Big business gets stimulus, small business gets the shaft. So is the Obama administration doing what Kauffman CEO Schramm suggests, fueling entrepreurship? Hardly. As noted in this segment from CNBC, of the $800 billion in taxpayer money pumped into the economy, a paltry $1 billion is going to small businesses (which create 95 percent of new jobs in the U.S.). Kinda scalds your coffee, doesn’t it? It sure makes Lloyd Chapman bitter. Chapman is president of the American Small Business League. Watch him in the video linked above, going at it with U.S. Chamber of Commerce (i.e. big business) mouthpiece Giovanni Coratolo. Chapman wants to stop Small Business Administration contracts from going to Fortune 1000 firms. Coratolo wants to keeping the gravy train on track. Or, as Chapman puts it: "The Chamber doesn’t represent small businesses any more than McDonald’s represents cows." (You go, Lloyd!)

Check out the SCORE Community. No, it’s not a social network for swingers. It’s a new online community for small-business people. SCORE Community is run by the organization of the same name--the nationwide group of executives and business owners who donate wisdom to entreperneurs. SCORE Community is free to join. Once you do, you can ask for advice, search space for lease, connect with business partners, find businesses for sale and more. Who knows? You might even meet the love of your life. Anything’s possible.

Adult stars laid off? People have long said pornography is one of the two ironclad recession-proof businesses, the other being food. It’s not true. As San Fernando Valley blogger Wyatt Shev reports, the bottom has dropped out of the adult film industry, forcing a lot of adult "actresses" and "actors" to go out and find real work. (Ouch. See you at Del Taco.)


Less Than 1% of Stimulus Funds Allocated to Middle Class Firms

Press Release

Less Than 1% of Stimulus Funds Allocated to Middle Class Firms

June 25, 2009

Petaluma, Calif. – According to the U.S. Census Bureau, 98% of all U.S. firms have less than 100 employees. Approximately 25 million firms fall into that category. These firms employ over 55% of the private sector workforce and are responsible for over 95% of all new jobs created in America. (

The American Small Business League (ASBL) has found of the $2.7 trillion that has been allocated so far to stimulate the national economy, only $21 billion, or less than 1% of the funds have directly gone to small businesses. (

The remainder of the funds that were allocated to businesses wound up in the hands of the top 1% of U.S. firms. President Obama has promised to create up to 4.1 million jobs. Census data indicates the top 1% of U.S. firms have not created one net new job since 1977.

There is evidence to suggest the economic stimulus plan is actually harming small businesses. The Wall Street bailout bills were touted as being essential to increasing access to capital for small businesses. Some of the firms that received billions in federal tax dollars are actually cutting access to capital for small businesses. A story in BusinessWeek reported that JPMorgan Chase, one of the largest recipients of the bailout funds, reduced the flow of credit lines for small businesses. (

Section 107 of the original Wall Street bailout bill gave the Treasury Secretary the power to waive any provisions of the Federal Acquisition Regulations (FAR) he chooses. Paragraph 9 (b) of the bill specifically mentions the waiver of "any provision of the Federal Acquisition Regulations pertaining to minority contracting" and the waiver of provisions pertaining to "woman-owned businesses."

The Obama Administration is supporting a new bill in Congress that could dismantle existing federal economic stimulus programs for small businesses by changing the federal definition of a small business. The new definition will allow many of the nations wealthiest venture capitalists to take billions of dollars in federal contracts previously earmarked for small businesses.

In February of 2008 President Obama stated, "It is time to end the diversion of federal small business contracts to corporate giants." To date, the President has refused to adopt any policy to honor that campaign promise. A series of federal investigations discovered that billions of dollars in federal small business contracts are being diverted to Fortune 1000 firms.


Increase in Native corporation contracts brings Senate scrutiny


Increase in Native corporation contracts brings Senate scrutiny

CONTRACTS: Analysis reveals only a fifth were done in Alaska.

By Erika Bolstad
Anchorage Daily News
June 24, 2009

WASHINGTON -- An investigation into how Alaska Native corporations are landing billions in federal contracts found the companies have seen dramatic growth over the past eight years and said the contracting has totaled nearly $24 billion during that period.

The Senate Subcommittee on Contracting Oversight, headed by Sen. Claire McCaskill, D-Mo., released some of its early findings Tuesday, in advance of a July 16 hearing she plans to hold on Native contracting. From 2000 to 2008, only one-fifth of all contracts awarded to Alaska Native corporations were performed in Alaska, McCaskill's committee found.

The total amount of Alaska Native contracting has grown from $508 million in 2000 to $5.2 billion last year, the committee said.

It also found that last year Alaska Native corporations received 19 percent of all federal contracts awarded to small businesses.

Special contracting rules for Native corporations have allowed them to "qualify for large contracts while circumventing the normal competition process," McCaskill's office wrote in its report. About 70 percent of those contracts were awarded through the Department of Defense, which gave Native corporations contracts for security and maintenance at military bases, among other services.

McCaskill's subcommittee asked for and now is studying eight years' worth of internal records covering how much executives are paid, how many employees are Native and other business matters. However, the figures released Tuesday came from public records on contracts.

McCaskill at the July hearing is likely to zero in on rules inserted into federal law years ago by then-Sen. Ted Stevens. Those rules allow Native corporations to be eligible for no-bid federal contracts of any size, unlike other small businesses, which are capped at $5.5 million for contracts under the program. One of the Native corporations under scrutiny, Cook Inlet Region Inc. in Anchorage, said it has never received money from no-bid contracts.

Jana Turvey, vice president of corporate affairs for Afognak Native Corp. in Anchorage, defended the federal program.

"Collectively, ANCs (Alaska Native corporations) serve 130,000 disadvantaged individuals and are responsible for providing entire Native communities economic, social and cultural benefits in perpetuity," she said. "All other 8(a) companies received, combined, 81 percent of prime contract awards and serve their owners -- approximately 10,000 disadvantaged individuals. In addition, data collected by the Native American Contractors Association in 2007 clearly showed that tribes, Alaska Native corporations, and Native Hawaiian organizations combined garner only 1.2 percent of federal contract dollars, disproportionately smaller than our population.

"It is also noteworthy that the subcommittee repeatedly references where ANCs are doing business, with a particular focus on Virginia. We are unaware of any geographic restrictions on Alaska Native corporations, or any other 8(a) companies, where business can be conducted," she said. "In fact, other large companies who are awarded federal contracts outside of the 8(a) program are not restricted to where they can conduct business or perform contracts. It should come as no surprise that ANCs do business in Virginia, as that is where a great deal of federal spending takes place."

Alaska's congressional delegation on Tuesday jumped to the defense of the Native corporations, created by Congress in the 1971 Alaska Native Claims Settlement Act to settle Native claims to ownership of most Alaska land.

"We look forward to telling the entire story during the full hearing," said Sen. Mark Begich, D-Alaska. "It is really inappropriate to release and comment on partial information when all of the facts have not been gathered."

But Alaska's Native corporations have their critics too. A 2006 investigation by the Government Accountability Office recommended the U.S. Small Business Administration tighten its oversight of the contracting, although that report did not suggest changes in federal law or find abuses by Native companies. The SBA's inspector general is auditing the companies' contracting practices, including how much of the revenue reaches Natives as shareholder dividends.

The special rules have allowed big defense contractors to use Native corporations as subcontractors, making it look as though smaller companies are benefiting, said Lloyd Chapman of the California-based American Small Business League, which lobbies Congress for small-business owners seeking fairer contracting rules.

"The Pentagon gets to give contracts to the top defense contractors and report it as a small business," Chapman said.

Sen. Lisa Murkowski, R-Alaska, countered that the criticism is "largely economically motivated" by competitors who've come to believe that "a dollar to an Indian business is a dollar lost to them."

The program has brought "economic opportunity to some of the most poverty-stricken regions of our nation, and provides solid value for our government," said Rep. Don Young, R-Alaska. "I will continue working to ensure that this hearing does not turn into a political witch hunt."

Federal contracts

Alaska Native corporation federal contracts: Federal contract awards grew from $508.4 million to $5.2 billion a year from 2000 to 2008.During the same years, 21 percent of all federal contracts awarded to Alaska Native corporations went toward work completed in Alaska. Virginia and Maryland received another 25 percent, followed by roughly 10 percent split between Florida and California.About 70 percent of contracts awarded to Native corporations from 2000 to 2008 were from the Defense Department. Source: U.S. Senate Subcommittee on Contracting Oversight