Navy Sued For Refusing to Release ManTech Contracting Data
May 19, 2010
Petaluma, Calif. – On Tuesday, May 18, the American Small Business League (ASBL) filed suit against the Navy in Federal District Court, Northern District of California. The case was filed under the Freedom of Information Act (FOIA) after the Navy refused to release quarterly sub-contracting reports for contracts awarded to ManTech Systems Engineering. (https://www.asbl.com/documents/litigation/Case_12.pdf)
This is the 5th lawsuit filed by the ASBL under FOIA since the beginning of April, and the organization's 12 lawsuit against the government since 2004. Through its legal efforts, the ASBL has forced the release of thousands of pages of documents proving that large corporations have received billions of dollars a year in federal small business contracts.
Since 2003, more than a dozen federal investigations have uncovered billions of dollars a month in federal small business contracts actually flowing into the hands of Fortune 500 corporations and even some of the largest firms in Europe. Report 5-15, from the Small Business Administration Office of Inspector General described this issue 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)
The Small Business Act requires that a minimum of 23 percent of the total value of all government contracts go to small businesses. The Obama administration has failed to meet that goal. The most recent information available indicates that the administration is diverting federal small business contracts to Fortune 500 firms like: Lockheed Martin, Boeing, Raytheon, Northrop Grumman, Dell Computer, British Aerospace (BAE), Rolls-Royce, French giant Thales Communications, Ssangyong Corporation headquartered in South Korea, and the Italian firm Finmeccanica SpA. (https://www.asbl.com/documents/20090825TopSmallBusinessContractors2008.pdf)
The ASBL plans to file a series of federal lawsuits against the Obama Administration for refusing to release documents under FOIA. The ASBL maintains that despite claims of increased transparency, the Obama Administration is refusing to release a wide range of data on small business contracting programs such as: prime contractor compliance with small business subcontracting goals, the actual names of the recipients of federal small business contracts, and the specific names of federal contracting officials that have awarded small business contracts to Fortune 500 firms.
"The information that the Obama Administration is refusing to release shows that they are diverting federal small business contracts to Fortune 500 firms. The fact that they are willing to go to federal court to withhold the data clearly shows that they have something damaging to hide. We will win like we always do," ASBL President Lloyd Chapman said.
Dear Pentagon and Defense Contractors: It's Not Patriotic To Cheat America
May 14, 2010
In 1961, President Dwight D. Eisenhower warned the American people about the potential for abuse by the defense industry. He stated, "In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes." (http://www.ourdocuments.gov/doc.php?doc=90&page=transcript)
It looks like he was right.
One area of abuse has been government small business contracting programs. Since 2003, a series of federal investigations have found that the U.S. Department of Defense (DoD) has consistently allowed dozens of the nation's largest defense contractors to hijack billions of dollars a year in federal contracts that by law have been earmarked for American small businesses.
In fact, it has become such a serious problem that in 2005 the Inspector General for the Small Business Administration (SBA) referred to the diversion of federal small business contracts to corporate giants 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)
Many of the nation's largest newspapers, television stations and radio networks have covered the story. (https://www.asbl.com/news.php)
During the 2008 presidential election cycle, even President Barack Obama recognized the severity of this issue. In February of 2008 he stated, "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)
The Small Business Act stipulates that a minimum of 23 percent of the "total value" of all government contracts shall be awarded to small businesses. In fact, this federal legislation created the largest program ever established to direct federal infrastructure spending to America's 27 million small businesses. It's a fantastic program, especially when you realize small businesses employ 50.2 percent of America's private sector workforce and create virtually 100 percent of the nation's net new jobs. (http://www.sba.gov/advo/research/profiles/)
Without the rampant fraud and abuse that has been uncovered by a slew of federal investigations, small businesses across the country should be receiving roughly $150 billion a year in federal contracts. Greedy DoD contractors don't seem to care about the best interests of our nation's economy or its people. They want the billions of dollars set-aside for small businesses every year, and they have shown they are willing to lie, cheat and commit blatant fraud to get it. Thousands of DoD officials and staff are helping defense giants cheat American small businesses out of billions of dollars in contracts year-after-year.
The American Small Business League (ASBL) has uncovered the DoD giving federal small business funds to corporate giants like: Lockheed Martin, Boeing, L-3 Communications, Raytheon, Northrop Grumman and General Dynamics. The DoD has even diverted U.S. Government small business contracts to some of the largest firms in Europe like British Aerospace (BAE), Rolls-Royce and French defense giant Thales Communications.
Not only does the Pentagon and its largest contractors defraud the American people out of billions of dollars in small business prime contracts, but Pentagon officials have allowed major defense contractors to cheat taxpayers out of billions more in subcontracts. The Pentagon has created programs like the "Comprehensive Subcontracting Plan Test Program," which allows many of the largest prime contractors in the world to falsify compliance with small business subcontracting goals, and avoid any penalties for noncompliance. The program has been in place for over 20-years, has never been evaluated, and is up for re-authorization this year.
According to the most recent data released by the Obama Administration, the largest recipient of federal small business contracts last year was Textron, Inc. Textron is a Fortune 500 defense contractor with 43,000 employees and over $14 billion in annual revenue. The giant received over $775 million in federal small business contracts in a single year.
Big defense contractors run a constant flow of advertisements on national television. If you spend any time watching any of the major news channels, you have no doubt seen their well-produced propaganda. These ads all have the same patriotic tone with slogans like, "We never forget who we're working for." I am sure the majority of Pentagon officials and defense contractor's executives actually see themselves as American heroes and patriots.
I have a news flash for the Pentagon and its prime contractors; you've done more damage to America and our nation's economy than Osama bin Laden, Al-Qaeda and the Taliban combined. During the last decade, more than $1 trillion has been diverted away from the small businesses where most Americans work, and into the hands of greedy and unscrupulous defense contractors. Your unrelenting opposition and sabotage of this country's small business programs is self-serving, unpatriotic and clearly not in the best interests of the American people. Ask your self this... what percentage of the American people would agree that Fortune 500 defense contractors should not be getting federal small business contracts? My guess is 99.9 percent would be close.
The Pentagon officials, corporate executives and employees of defense giants that have cheated the American people are not heroes... they're liars, crooks and con men. These individuals have damaged our nation's economy and defrauded the very people they are supposed to protect.
So the next time you see an advertisement on national television from a Fortune 500 defense contractor with patriotic slogans and flag waving propaganda, remember, these are the very same greedy and self serving corporate giants that have cheated the American people out of countless billions to fill their own pockets. They are not heroes or patriots.
Federal Oversight Panel Slams Obama's Small Business Plans, Says Administration Not Doing Enough
By Shahien Nasiripour Huffington Post May 13, 2010
A federal oversight panel criticized the Obama administration's attempts to boost small business lending, expressing doubts on everything from the plan's promised success to whether the administration is taking the right approach.
The administration has proposed a host of programs fuel small business loans, which have nosedived over the last 20 months. However, the bulk of the money is centered on a TARP-like program that would invest up to $30 billion in taxpayer money into banks. The cost of the funds would decrease as banks increase their lending to small businesses.
"[S]mall business credit remains severely constricted," according to the Thursday report issued by the Congressional Oversight Panel, the bailout watchdog. Lending "plummeted during the 2008 financial crisis and remained sharply restricted throughout 2009." With Wall Street banks cutting lending and smaller banks "strained by their exposure to commercial real estate and other liabilities," many small businesses "have had to shut their doors, and some of the survivors are still struggling to find adequate financing."
"Small businesses have long been an engine of economic growth and job creation in America," the report states. "More than 99 percent of American businesses employ 500 or fewer employees, and together these companies employ half of the private workforce and create two out of every three new jobs. If the Troubled Asset Relief Program (TARP) is to meet its Congressional mandate to promote growth and create jobs, then it clearly must address the needs of small businesses.
"If credit is unavailable, small businesses may be unable to meet current business demands or to take advantage of opportunities for growth, potentially choking off any incipient economic recovery," the report states.
But the administration's approach may be based on a flawed diagnosis of the program, the report notes.There are open questions as to whether the reason for the decline in credit available to small businesses is due to demand or supply, according to the report.
There is less demand for loans, the report states, and the creditworthiness of borrowers also has declined -- a consequence of the worst economic downturn since the Great Depression.
Story continues below
"[O]ur community banks [that have sufficient capital] clearly want to lend, but the demand is not there from the creditworthy borrowers," Stan Ivie, the San Francisco regional director of the Federal Deposit Insurance Corporation, told the Panel last month. "It seems like the healthy borrowers who could borrow are not interested in borrowing at this time."
There's also a lack of supply. Banks, predictably, are more risk-averse, chastened by losses on loans stemming from years of lax underwriting and the toll of the recession. Lending slid as banks sought to rebuild their depleted capital levels. Small businesses receive more than 90 percent of their funding from banks, according to the Panel's report.
But while community banks focus much of their lending on businesses, particularly small businesses, they're not the biggest source of small business loans, the Panel's report notes. Large banks, defined as those with more than $100 billion in assets, are the biggest providers of small business loans. But they're also the banks that cut their lending -- particularly commercial loans -- the most, federal banking data show. (See Chart)
*Source: Congressional Oversight Panel
Despite the supply-or-demand debate, the administration is intent on providing a supply-based solution, the report notes.
"TARP had focused in its early months on bailing out Wall Street," the Panel's chair Elizabeth Warren said during a Wednesday evening conference call with reporters. Late last year the Treasury Department announced a change. "And now [Treasury Secretary Timothy Geithner] said it was time to focus on Main Street. Now that Treasury has made small business a priority, how well is it doing?" she asked rhetorically. "The results are not encouraging," Warren answered.
According to her panel's report:
"The largest TARP program, the Capital Purchase Program (CPP), provided hundreds of billions of dollars in new capital to banks, but Treasury did not require recipients to use the money to improve credit access. In fact, after receiving the money, most recipients decreased their lending."
"The Term Asset-Backed Securities Loan Facility helped to restore liquidity to the securitized lending market, but because relatively few small business loans are securitized, the program had little impact on small business lending."
"[T]he Public-Private Investment Partnership program remains in its early stages, it has not targeted and will likely not target the smaller financial institutions that often serve small businesses."
"Two programs, the Community Development Capital Initiative (CDCI) and the Small Business Administration Securities Purchase Program, are proceeding under Treasury‟s existing TARP authority, but their effects are likely to be limited. The CDCI will serve only a limited number of very small institutions, while the Securities Purchase Program would affect only loans guaranteed by the Small Business Administration, which make up a small percentage of the small business lending market."
And the proposed $30 billion fund, which first needs the approval of Congress, "may not be fully operational for some time. It could arrive too late to contribute meaningfully to economic recovery," the report notes. "Moreover, banks may shun the program for fear of being stigmatized by its association with the TARP, or they may wish to avoid taking on...liabilities at a time when their existing assets, such as commercial real estate, remain in jeopardy."
Also, the Panel states, the fund "raises questions about whether, in light of [TARP's] poor performance in improving credit access, any capital infusion program can successfully jump-start small business lending.
"Supply-side solutions that rely on bank balance sheets...may not increase lending," the report notes.
The Treasury Department counters that the fund forms a key component in its arsenal of programs to increase the flow of credit and create jobs. Jobs can't be created without increasing credit.
Treasury notes that the fund focuses on smaller banks because they nearly maintained pre-crisis lending levels, in comparison to their much-larger competitors.
*Source: Congressional Oversight Panel
"[O]ur proposal focuses on the lenders that did the most to maintain lending to small businesses during the crisis," Gene Sperling, a top adviser to Geithner, wrote in an e-mailed statement. The fund "is targeted only to smaller and community banks, with incentives targeted only to those that are increasing their lending to the small businesses our economy needs to expand and create jobs."
"The [$30 billion fund] will help prevent viable community banks that are worried about their commercial real estate portfolios from responding by cutting back on lending to the small businesses we need to support job creation and a strong recovery," Sperling wrote. He added that the program, "created completely outside of and separate from TARP," will help community banks "feel more comfortable" participating in the program.
The Independent Community Bankers of America, community banks' main lobby, supported the proposal when it was announced.
Finally, Sperling added that the fund is one part of its overall response, noting that the administration is also proposing "small business tax relief, expansions of SBA programs and new lending initiatives."
The oversight panel, knowing the administration's response, was unmoved.
"Because small businesses play such a critical role in the American economy, there is little doubt that they must be a part of any sustainable recovery," it noted in its report. "It remains unclear, however, whether Treasury's programs can or will play a major role in putting small businesses on the path to growth."
No Explanation from Schwarzenegger on Opposition to Pro Small Business Bill
May 11, 2010
On May 4th I issued a press release and a Huffington Post blog titled "Schwarzenegger Won't Back Bill to Bring Jobs and Contracts to California." I was complaining about the fact that Governor Schwarzenegger's office promised they would support a bill I wrote once it was introduced to Congress, and now they have gone back on that promise. The bill, H.R. 2568, the Fairness and Transparency in Contracting Act, would bring over $12 billion a year in new federal small business contracts to California and create nearly 500,000 new jobs in the state.
Yesterday the Governor's office responded on the Huffington Post through Marty Keller. Mr. Keller is the Deputy Director of the Governor's Office of Economic Development.
After reading Mr. Keller's rebuttal to my press release and Huffington Post blog, I had to laugh. They completely ignored the fact that Governor Schwarzenegger promised to back the bill and then broke that promise. Nowhere in their response do they even mention the Fairness and Transparency in Contracting Act. They don't deny Governor Schwarzenegger promised to back the bill. They didn't try to deny the fact that Governor Schwarzenegger now refuses to support a simple bill that could bring billions of dollars in additional federal contracts and jobs to California, which would help to solve the state's financial crisis.
That must mean, "Schwarzenegger Won't Back Bill to Bring Jobs and Contracts to California."
The most glaring exclusion from Mr. Keller's defense of the governor's record on small business is any explanation of why, "Schwarzenegger Won't Back Bill to Bring Jobs and Contracts to California." So it looks to me like they are clearly not even trying to deny (in any way) my accusation that, "Schwarzenegger Won't Back Bill to Bring Jobs and Contracts to California."
Since 2003, over a dozen federal investigations have found billions of dollars a month in federal small business contracts diverted to Fortune 500 firms. The investigations have been covered by most of the major newspapers in the country including the Los Angeles Times, the San Diego Union Tribune, the San Francisco Chronicle and the Sacramento Bee. Research by the American Small Business League (ASBL) estimates that California firms are losing over a billion dollars a month in federal small business contracts because of these abuses. I have been fighting to stop the rampant abuses and I wrote a simple bill, H.R. 2568, which would halt the diversion of federal small business contracts to corporate giants. The bill currently has the support of 25 members in the U.S. House of Representatives.
I would imagine that 99.9 percent of people in California, and every other state would agree that Fortune 500 firms should not be allowed to hijack federal funds, which by law should be going to legitimate small businesses.
So why is Governor Schwarzenegger refusing to back the legislation? Our state is suffering a dire financial crisis. Ten to twelve billion dollars a year in additional federal small business contracts would create between 400,000 and 500,000 new jobs in California. In February, Governor Schwarzenegger stated that we must, "do everything that we can to do -- to create jobs, jobs, jobs. To get the economy back and to create those jobs, because that is the important thing." (http://abcnews.go.com/ThisWeek/week-transcript-gov-arnold-schwarzenegger-gov-edward-rendell/story?id=9887630)
So what's the problem? Everyone agrees, Fortune 500 firms should not be hijacking federal small business contracts, and California desperately needs the contracts and the jobs. I don't think anyone from the mainstream media has even asked the governor why he is refusing to back the bill.
I think the governor owes every Californian an answer to the question, why is it that "Schwarzenegger Won't Back Bill to Bring Jobs and Contracts to California."
Schwarzenegger Won't Back Bill to Bring Jobs and Contracts to California
May 5, 2010
Petaluma, Calif. – Governor Arnold Schwarzenegger has refused to back H.R. 2568, the Fairness and Transparency in Contracting Act, which would bring billions of dollars in additional federal contracts and thousands of jobs to the State of California. The Governor's office originally pledged to back the bill once it was introduced into Congress, but has since broken its promise.
The bill was originally drafted by the Petaluma, California based American Small Business League (ASBL) to stop the diversion of federal small business contracts to Fortune 500 firms and other large businesses. H.R. 2568 was introduced into the U.S. House of Representatives in May of 2009. It currently has 24 co-sponsors, including 5 members of the California delegation, as well as the support of major chambers of commerce and business organizations across the state and nation.
Since 2003, over a dozen federal investigations have found billions of dollars a month in federal contracts earmarked for small businesses have actually been diverted to Fortune 500 firms and even some of the largest firms in Europe and Asia. Large recipients of federal small business contracts have included: Lockheed Martin, Boeing, Raytheon, Northrop Grumman, Dell Computer, British Aerospace (BAE), Rolls-Royce, French giant Thales Communications, Ssangyong Corporation headquartered in South Korea, and the Italian firm Finmeccanica SpA. (https://www.asbl.com/documents/20090825TopSmallBusinessContractors2008.pdf)
In March of 2005, the Small Business Administration (SBA) Office of Inspector General referred to the diversion of federal small business contracts to large corporations 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)
H.R. 2568 would prevent federal agencies from continuing to divert small business contracts to Fortune 500 firms. The ASBL estimates that the bill's passage could create between 400,000 and 500,000 new jobs and provide California's small businesses with over $50 billion in additional contracts over the next 5 years.
"I am really disappointed in Governor Schwarzenegger's refusal to back this bill. This legislation would do more to direct federal infrastructure spending to small businesses in California than any other legislation proposed to date," ASBL President Lloyd Chapman said. "I would be willing to bet that 99.99% of Californians would agree that Fortune 500 firms should not be allowed to hijack federal contracts intended for small businesses. California is having serious financial problems and this is a great solution that would bring money and jobs to the state. "
