Petaluma, Calif. – The Small Business Administration Office of Inspector General (SBA IG) has released the latest in a series of investigations, which found billions in federal small business contracts have been diverted to corporate giants. The SBA IG investigation found that the SBA itself awarded federal small business contracts to large businesses. (http://www.sba.gov/idc/groups/public/documents/sba_homepage/oig_report_10-08.pdf)   

Report 10-08 uncovered that during fiscal year (FY) 2008 the SBA awarded more than 30 percent of its contracts to large businesses, and 92 percent of the contract actions contained blatant errors.  Additionally, the report found that during FY 2009 the percentage of misleading data jumped to a record 97 percent.

Since 2003, more than a dozen federal investigations have found the SBA played a key role in the diversion of billions of dollars a month in federal small business contracts to large businesses around the world.

- In Report 5-14, the SBA IG found that the SBA itself awarded small business contracts to large corporations. The report stated, "The SBA awarded four of the six high dollar procurements, reported as small business procurements, to large companies at the time of the procurements." (https://www.asbl.com/documents/05-14.pdf)  

- In Report 5-16, the SBA IG found that federal agencies had allowed large businesses to illegally receive federal small business contracts by making "false certifications," and "improper certifications." (https://www.asbl.com/documents/05-16.pdf)  

- In Report 5-15, the SBA IG 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)  

President Barack Obama recognized the magnitude of the problem and promised to stop it during the 2008 presidential campaign. (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php)  

Despite this series of federal investigations, the SBA has simultaneously claimed that the diversion of federal small business contracts to large corporations was a "myth" and the result of "miscoding." (https://www.asbl.com/documents/sbamythvfact.pdf) The SBA has never been able to explain why, for over a decade, 100 percent of the time the "miscoding" always reports awards to large businesses as small business awards.

"There have now been over two dozen investigations, over the last eight years, which have found a clear pattern of blatant fraud and abuse in SBA managed programs," American Small Business League President Lloyd Chapman said.  "It is time for the FBI to step in and get to the bottom of this. To date, the Obama Administration has done nothing to halt these abuses."

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Petaluma, Calif. – President Barack Obama signed the new jobs bill today.  Both the House of Representatives and the Senate failed to include provisions in the bill that would halt the diversion of up to $120 billion a year in federal small business contracts to Fortune 500 firms and other large businesses.

Small business advocates had hoped that President Obama would include a provision in the bill to make good on his February 2008 campaign promise 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  

Since 2003, over a dozen federal investigations have found that every month billions of dollars in federal small business contracts are diverted to large businesses around the world.  For five consecutive years, the Small Business Administration Office of Inspector General (SBA IG) has referred to the diversion of federal small business contracts to large businesses as the #1 management challenge facing the agency. (https://www.asbl.com/documentlibrary.html ; http://www.sba.gov/idc/groups/public/documents/sba_homepage/oig_reports_tmc_fy10.pdf)  

The American Small Business League (ASBL) estimates that over $10 billion a month in federal small business funds are diverted to large corporations. 

"I don't think this jobs bill is going to work.  It's too little, too late. I think it's important to realize that while President Obama signed the jobs bill this morning, he'll allow over $400 million in federal small business funds to be diverted to large businesses today alone.  This diversion has gone on every day that he has been in office, and apparently it's going to continue throughout the remainder of his presidency," ASBL President Lloyd Chapman said. "Ending the diversion of federal small business contracts to large businesses would put more money into the middle class and create more jobs than anything President Obama or Congress have ever proposed."

The ASBL does not believe this jobs bill is going to work long term. The provisions of this bill will be a temporary boost at best, while at the same time increasing the national deficit.

In May of 2009, Congressman Hank Johnson (D-4-GA) introduced H.R. 2568, the Fairness and Transparency in Contracting Act.  If passed, the bill would create millions of jobs by halting the flow of federal small business contracts to large businesses and redirecting more than $120 billion a year in federal infrastructure spending to legitimate small businesses.  Although the bill has bipartisan support with 23 co-sponsors, to date President Obama has refused to endorse the legislation. (https://www.asbl.com/documents/hr2568.pdf)