On Wednesday, President Barack Obama’s Small Business Task force released a series of 13 recommendations to “remove barriers to participation by small businesses in the federal market place.” (http://www.whitehouse.gov/blog/2010/09/15/new-plans-underway-increase-contracts-small-business)  

As predicted by the American Small Business League (ASBL) in an April 27 press release titled, “Obama Small Business Task Force May Ignore #1 Problem,” the task force made no recommendations to end the diversion of federal small business contracts to many of the largest companies in the United States and Europe. (https://www.asbl.com/showmedia.php?id=1605)  

Since 2003, a series of over a dozen federal investigations have found billions of dollars a month in federal small business contracts actually going to corporate giants around the world. Some of the firms the Obama Administration has awarded small business contracts to include: Lockheed Martin, Boeing, Raytheon, L-3 Communications, British Aerospace (BAE), Northrop Grumman, Dell Computer, Ssangyong Corporation headquartered in Seoul, South Korea and Finmeccanica SpA, which is located in Italy and has 73,000 employees. (https://www.asbl.com/documentlibrary.html)

Every year since 2005, the Small Business Administration Office of Inspector General (SBA IG) has referred to the diversion of billions of dollars in federal small business contracts to large business as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.” (https://www.asbl.com/documents/05-15.pdf)

President Obama promised to end the widely reported abuses when he released the statement, “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) To date, President Obama has refused to offer any policies or legislation that would halt the diversion of over $100 billion a year in federal small business contracts to large businesses.

“The fact that President Obama has broken his campaign promise to end these abuses against legitimate small businesses is an excellent example of who he really is. This issue clearly shows Barack Obama is not the man the nation thought he was when he was elected. President Obama has lied to the American people and his record low approval ratings indicate the majority of voters realize it,” ASBL President Lloyd Chapman said.

The ASBL is preparing to file suit in Federal District Court Northern District of California to stop the Obama Administration from continuing to divert small business contracts to corporate giants. The ASBL currently has 6 federal lawsuits pending against the federal government, and plans to file six more before the end of 2010.     

Petaluma, Calif. – President Barack Obama’s small business jobs bill contains a dangerous loophole that could encourage billions of dollars in fraud in small business contracting programs, and protect fraudulent companies from prosecution.  The bill is currently pending in the U.S. Senate.

Section 1341 of H.R. 5297, the Small Business Jobs Act, contains provisions that would allow the Small Business Administration (SBA) to develop policies and procedures that would protect large businesses that have misrepresented themselves as small businesses from prosecution for felony contracting fraud. 

Since 2003, over a dozen federal investigations have found billions of dollars a month in federal small business contracts have been diverted to Fortune 500 firms, large businesses throughout the U.S. and some of the largest companies in Europe. 

In 2005, the SBA Office of Inspector General (SBA IG) referred to the diversion of federal small business contracts to large businesses as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.” (https://www.asbl.com/documents/05-15.pdf)

In Report 5-16, the SBA IG found that large businesses had received federal small business contracts fraudulently by making “false certifications” and “improper certifications.” (https://www.asbl.com/documents/05-16.pdf)

Section 1341 of President Obama’s jobs bill would give the SBA a blank check to develop policies that could protect large corporations from prosecution under the law.  Section 16(d) of the Small Business Act prescribes a penalty of up to ten years in prison and a fine of not more than $500,000 per occurrence for firms that have misrepresented themselves as small businesses.

For over a decade, the SBA has attempted to cover-up flagrant abuses in the program by claiming they were the result of miscoding and computer glitches.  In one case, Pevco, a Baltimore based small business began losing small business contracts to one of the largest companies in Switzerland. Pevco Chairman Fred Valerino Sr. contacted his congressman, and the SBA responded by claiming that Translogic Corporation received 147 small business contracts over a six-year period “accidentally.”

“The harm done to small businesses by Section 1341, would greatly outweigh any minor benefit the other provisions of the bill might provide,” ASBL President Lloyd Chapman said. “This paragraph could legalize billions of dollars in federal contracting fraud and be tantamount to repealing the small business act.  We are going to do everything we can to block this section of the bill.  It would only encourage fraud and abuse, divert more federal funds away from legitimate small businesses, and cost America jobs.”

Petaluma, Calif. – On Wednesday, President Barack Obama proposed a new economic plan aimed at creating jobs and stimulating the economy. As predicted, the plan fails to address the simplest, most logical and effective means of creating jobs and stimulating the nation’s failing economy; bringing an end to the diversion of federal small business contracts to corporate giants.

The Small Business Act requires 23 percent of the total value of all government purchases to go to small businesses. The government is not currently meeting that goal as a result of to the diversion of billions of dollars a year in small business contracts to corporate giants. With the annual federal acquisition budget for foreign, domestic, classified and unclassified acquisitions hovering around $1 trillion, small businesses should be receiving roughly $230 billion a year in federal contracts.   The Obama Administration is only claiming to have awarded $96.8 billion to small business, and over half of those funds actually went to large businesses.  (https://www.asbl.com/documents/ASBL_2009_dataanalysis.pdf)  

Since 2003, over a dozen investigations have found most federal small business contracts actually go to Fortune 500 firms and corporate giants around the world. (https://www.asbl.com/documentlibrary.html)  

The Obama Administration’s new stimulus plan calls for $300 billion in accelerated or expanded tax breaks for businesses, and $50 billion in federal spending to repair roads, railways and runways.  The American Small Business League (ASBL) maintains that the administration’s proposal is not an efficient and effective means of creating jobs.  Research by the Economic Policy Institute, and Princeton University's Center for Economic Policy Studies indicates that tax cuts do not effectively create jobs or stimulate the economy. In order to create jobs, the government needs to direct existing federal spending to small businesses.  (http://www.huffingtonpost.com/2010/07/28/bush-tax-cuts-extending_n_662743.html; http://www.epi.org/analysis_and_opinion/entry/tax_cuts_wont_create_jobs/)  

The ASBL recommends that the administration take the following steps to immediately provide a significant boost to America’s middle class:

1. Pass H.R. 2568, the Fairness and Transparency in Contracting Act, which would stop the diversion of over $100 billion a year in federal small business contracts to large corporations.
2. Enforce the existing $100,000 set-aside for small businesses on all government contracts, including contracts on the GSA schedule.
3. End the Comprehensive Subcontracting Plan Test Program.

“If President Obama really wants to stimulate the economy and create jobs he needs to make good on his campaign promise when he said, ‘It is time to end the diversion of federal small business contracts to corporate giants,’ ” ASBL President Lloyd Chapman said. (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php)  

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