Petaluma, Calif. – Despite national unemployment above 9 percent, and a continued jobless recovery, the Obama Administration has refused to make good on a campaign promise to end the diversion of billions of dollars a month in federal small business contracts to corporate giants.  As a result, the nation’s chief job creators, small businesses, are forced to compete head-to-head against Fortune 500 firms and other large businesses for even the smallest orders for goods and services.

Federal law requires the U.S. government to direct 23 percent of its purchases to small businesses.  Yet every year, a vast majority of federal small business contracts go to some of the biggest companies around the world.

According to the U.S. Census Bureau, small businesses create more than 90 percent of net new jobs, are responsible for 50 percent of the gross domestic product, 50.2 percent of the private sector workforce, and 90 percent of exports and innovations. Given the clear impact of small businesses on the nation’s economy, the American Small Business League (ASBL) maintains that it is unreasonable for the Obama Administration to continue ignoring this damaging widespread abuse. (http://www.sba.gov/advo/research/re359.pdf)  

Since 2003, a series of federal investigations have shown that an overwhelming majority of federal small business contracts actually go to Fortune 500 firms and even some of the largest corporations on earth. The most recent data released by the Obama Administration shows recipients of federal small business contracts including: Boeing, Lockheed Martin, Northrop Grumman, Raytheon, Dell Computer, Xerox, SAIC, General Dynamics, Bechtel and John Deere. (https://www.asbl.com/documents/05-15.pdf; www.asbl.com/documents/ASBL_2009_dataanalysis.pdf)

The ASBL maintains that the most effective way to supercharge job creation and stimulate the economy is to pass the Fairness and Transparency in Contracting Act.  If passed, the bill would end widespread abuse in small business programs and direct billions of dollars in existing federal spending to the nation’s 27 million small businesses.  The ASBL expects the bill to be reintroduced into the U.S. House of Representatives by Congressman Hank Johnson (D-GA) shortly.  (http://www.opencongress.org/bill/111-h2568/show )

“Passing the Fairness and Transparency in Contracting Act would create more jobs than anything proposed by the Obama Administration to date.  It’s simple, easy, deficit neutral and would provide the nation’s chief job creators with significantly increased access to federal contracting opportunities,” ASBL President Lloyd Chapman said. “It is time for President Obama to keep his promise and ‘end the diversion of federal small business contracts to corporate giants.’ ”

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Petaluma, Calif. – The following is a statement by the American Small Business League:

On Friday, February 11, the Society of Professional Journalists Northern California Chapter announced that it would award its prestigious James Madison Award for contribution to the Freedom of Information Act (FOIA) by an organization, to Lloyd Chapman and the American Small Business League (ASBL).  The organization was chosen for wresting government documents under FOIA from federal agencies to reveal the diversion of billions of dollars a year in federal small business contracts to Fortune 500 firms and other large businesses.  SPJ NorCal’s Freedom of Information Committee selects the James Madison Award winners. (http://www.spjnorcal.org/blog/2011/02/11/norcal-spj-chapter-announces-james-madison-award-winners/)

“It is an honor to have even been selected for this award, and we feel privileged and thrilled to receive recognition from an organization as prestigious as the Society of Professional Journalists,” ASBL President Lloyd Chapman said.  “I have been suing the government under the Freedom of Information Act for over 20 years. I hope the information that we have forced the government to release regarding federal contracts has been beneficial for small businesses across the country, as it has resulted in billions of dollars in federal contracts being directed to legitimate small businesses.”

The award will be presented to Chapman and the American Small Business League at the 26^th Annual James Madison Awards to be held on March 16^th.

“Sometimes suing the government is not fun, it can be extremely stressful and difficult, but it is also very gratifying to receive recognition for our work using FOIA to positively benefit America’s small businesses,” Chapman said. “Everyone at the ASBL has worked very hard and put in long hours for each and every one of our Freedom of Information Act cases, and it is rewarding to not only win legal battles that benefit the public, but now to also receive acknowledgment and appreciation from a group as esteemed as the Society of Professional Journalists.”

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In the face of sluggish job growth and a growing deficit, the Obama Administration and Congress are focusing on solutions that may hurt the nation’s chief job creators, while ignoring a simple, effective, and deficit neutral solution to job creation and economic stimulus.  Every year, billions of dollars in federal contracts intended for small businesses, are diverted to Fortune 500 firms and other large businesses.  Ending this abuse, would invigorate the nation’s 27 million small businesses, supercharge job creation, and slash America’s growing deficit.

Despite strong rhetoric, to date the Obama Administration’s economic policies have failed to substantially aid small businesses or cut unemployment.  

In January, the national unemployment rate remained above 9 percent, according to the U.S. Department of Labor.  (http://www.bls.gov/news.release/empsit.nr0.htm) Moreover, the Department of Labor’s 9 percent figure is exclusive of job seekers who have stopped looking, and workers who are underemployed.  These groups are accounted for in the Department of Labor’s U-6 unemployment figures, which remained above 16 percent in January. (http://www.bls.gov/news.release/empsit.t15.htm)
 
According to the U.S. Census Bureau, small businesses create more than 90 percent of net new jobs, are responsible for 50 percent of the gross domestic product, 50.2 percent of the private sector workforce, and 90 percent of exports and innovations.  It is unreasonable for the Obama Administration to spend more than $1.6 trillion on economic stimulus, while failing to make small businesses a priority. (http://www.sba.gov/advo/research/rs359.pdf)

Since 2003, a series of investigations have shown that the overwhelming majority of federal small business contracts actually go to Fortune 500 firms. The American Small Business League (ASBL) maintains ending the diversion of small business contracts to corporate giants would be the simplest, deficit neutral solution to America’s economic problems.  The ASBL has estimated that ending this abuse would direct more than $200 billion a year to the nation’s middle class, save thousands of businesses every year and create more than 1.8 million jobs.

“You don’t have to be a Nobel Prize winning economist to figure this out.  Small businesses are the nation’s chief job creators, and the most effective way to create jobs is to send federal spending their way,” ASBL President Lloyd Chapman said. “There is one major bill that would accomplish that goal, the Fairness and transparency in Contracting Act.  It is time for President Obama to keep his promise to end the diversion of federal small business contracts to corporate giants by passing this legislation.”

The American Small Business League (ASBL) has won a legal battle against the U.S. General Services Administration (GSA) forcing the agency to restore a decade’s worth of incriminating federal contracting data.  The ASBL originally filed suit against the GSA in March of 2010 after the agency removed information from the federal government’s contracting database which indicated that Fortune 500 firms in the U.S. and some of the largest firms in Europe and Asia had received billions of dollars in federal small business contracts.  The suit was filed in United States District Court, Northern District of California. (https://www.fpds.gov/fpdsng_cms/index.php/archives)

On March 12, 2010, the Obama Administration implemented changes to the Federal Procurement Data System-Next Generation (FPDS-NG), which eliminated the socio-economic field, "isSmallBusiness."  In past years, Congress, federal agencies, watchdog groups, and the general public have used the field to identify large firms who fraudulently misrepresented themselves as small businesses to illegally receive billions of dollars in small business contracts.

Since 2003, a series of federal investigations have used the information stored in the field to uncover billions of dollars a month in federal small business contracts flowing into the hands of Fortune 500 firms, European conglomerates and other large businesses. 

In Report 5-15, the Small Business Administration Office of Inspector General (SBA IG) described the abuses as, "One of the most important challenges facing the Small Business Administration and the entire Federal government today." Another investigation from the SBA Office of Advocacy found large businesses had received federal small business contracts fraudulently through what they referred to as "vendor deception." (https://www.asbl.com/documents/05-15.pdf, https://www.asbl.com/documents/eagkeeye_report%202002.pdf)     

Despite continuing denials by the SBA and other senior Obama Administration officials, corporate giants in the U.S. and Europe continue to receive billions of dollars in federal small business contracts. The recipients of federal small business contracts include Lockheed Martin, Boeing, Raytheon, General Dynamics, and Italian firm Finmeccanica SpA. (https://www.asbl.com/documents/20090825TopSmallBusinessContractors2008.pdf)

The ASBL plans to use the restored data to take legal action against fraudulent contractors and recover damages for small businesses.

“Prior to taking office President Obama promised the most transparent administration in history and an end to the diversion of federal small business contracts to corporate giants.  To date he has destroyed contracting data, forced the ASBL into the federal courts to uncover incriminating documents, and failed to honor his promises to small businesses,” ASBL President Lloyd Chapman said. “This is another major legal victory for small businesses and transparency.  This data will be instrumental in holding firms accountable for fraud and abuse.”