GSA Scandal Underscores Need for Government Contracting Oversight

Press Release

GSA Scandal Underscores Need for Government Contracting Oversight

By American Small Business League
April 17, 2012

The American Small Business League (ASBL) is calling on Congress and federal watchdogs to investigate government contracting officers and federal agencies that repeatedly fail to follow procurement regulations. This follows a report from the General Services Administration Office of Inspector General that found the GSA awarded a contract earmarked for a small business to a large business.

The GSA awarded the contract to Royal Productions for “Audio Visual Services” at the GSA’s nowinfamous Las Vegas team building conference, the 2010 Western Regions Conference (WRC). A GSA OIG report, followed by the release of a series of videos of GSA employees at the WRC, has brought national attention to the unacceptable way the U.S. government spends taxpayer dollars.

The ASBL is requesting that the House Small Business Committee, the Senate Committee on Small Business and Entrepreneurship, the Department of Justice and the Government Accountability Office investigate why contracting officers and federal agencies continue to award contracts earmarked for small businesses to large companies.

During the past decade federal agencies have awarded federal small business contracts to companies such as Lockheed Martin, Raytheon, British Aerospace, Apple, Home Depot, Motorola, Xerox, Dell Computers and thousands of other large companies.

Since 2003, more than a dozen federal investigations have found that billions of dollars in federal small business contracts have been awarded to large companies. In October 2011, the Small Business Administration Office Inspector General released a report naming the issue of government agencies awarding small business contracts to large companies as the SBA’s #1 management challenge.

The U.S. government is the world’s largest buyer of goods and services, and small businesses are the nation’s engine of economic growth; according to U.S. Census Bureau data, small businesses create more than 90 percent of net new jobs. By failing to comply with procurement policies aimed at helping small businesses, federal agencies are doing severe damage to the U.S. economy.

“Federal spending is obviously out of control,” said ASBL President Lloyd Chapman. “And the diversion of federal small business contracts to large companies is a major problem for the economy. It is time for these abuses to end.”

Small Vendors Win Record Amount of Contracts: BGOV Barometer


Small Vendors Win Record Amount of Contracts: BGOV Barometer

By Nick Taborek
April 17, 2012

April 17 (Bloomberg) -- Small companies are winning a record share of business under the U.S. government¹s fastest- growing class of contracts.

The BGOV Barometer shows small businesses, generally those with less $7 million in annual revenue, received 24 percent of the $83.2 billion the government spent last year on so-called multiple-award contracts. That compares with 18 percent of $40.9 billion in fiscal 2006, according to the data compiled by Bloomberg. In total dollars, small-company contract revenue more than doubled in the five years to $19.7 billion from $7.38 billion.

Opportunities for small businesses have expanded as the federal government has more than doubled its spending on multiple-award contracts since 2006. The government favors such deals, under which many suppliers are picked in advance to compete against each other for orders, because they are faster and easier to administer than proceeding one contract at a time.

³Multiple-award contracts are a natural for small businesses,² said Dan Jacobs, chief executive officer of The Federal Market Group, a Warrenton, Virginia-based consulting company. ³They¹re quicker, they¹re more agile.²

The companies have succeeded with multiple-award deals even as the government has missed its goal of directing at least 23 percent of all prime, or direct, contract revenue to small businesses.

Federal agencies have failed to meet that target each year for at least the past decade, according to data compiled by Bloomberg. They awarded 21.8 percent of prime contracts to small businesses in fiscal 2011.

Small Business Ranks

The revenue from multiple-award contracts isn¹t being spread evenly among the ranks of small businesses.

In fiscal 2011, the top 10 percent of small companies received $14 billion under the contracts, or 71 percent of the total awarded to small firms, according to data compiled by Bloomberg. In fiscal 2006, by comparison, the top 10 percent received $4.97 billion, or 67 percent.

The number of small companies winning work under multiple- award contracts declined to 2,680 last fiscal year, from 2,733 the prior year, for the first year-over-year decline since at least 2007.

This analysis of small businesses¹ multiple-award agreements excluded ³schedule² contracts for basic supplies and services operated by the General Services Administration and the Veterans Administration. Spending on those contracts hasn¹t increased as quickly as spending on the non-schedule multiple- award contracts.

One issue is that some companies are being counted as small even though they¹ve been acquired by large firms, said Brian Reeder, a spokesman for the American Small Business League in Petaluma, California. That skews the data, he said.

A study by his organization found that of the top 100 contractors winning small business awards in fiscal 2011, 72 were large companies.

Mike Stamler, a spokesman for the U.S. Small Business Administration, declined to comment.

--With assistance from Paul Murphy and Brian Friel in Washington. Editors: Stephanie Stoughton, Joe Winski

To contact the reporter on this story:

Nick Taborek in Washington at +1-202-654-7359 or

To contact the editor responsible for this story:

Stephanie Stoughton at +1-202-654-7375 or

The case of President Obama's missing oil tax


The case of President Obama's missing oil tax

By Carrie Budoff Brown
April 17, 2012


Candidate Barack Obama pushed it hard in 2008: a tax on Big Oil company profits that would flow back to families in $1,000 rebate checks.

President Barack Obama acts as if the idea never existed.

With gas prices at record highs during the campaign, Obama backed the so-called windfall profits tax as the top item of his energy agenda, arguing it was needed once oil tops $80 per barrel. He ran TV ads in 18 states touting the idea and slammed GOP rival John McCain for taking oil company contributions “instead of taxing their windfall profits to help drivers.”

But four years later, as oil sits well above the $80 marker for the second year in a row and Republicans hammer Obama on energy policy, the idea is about as popular in the West Wing as $4-per-gallon gas.

Obama dropped the plan soon after winning office, when the economic crisis depressed oil demand worldwide, and he hasn’t talked about it since then. His aides also declined to address it on the record.

The arc of the tax from campaign cornerstone to administration dustbin illustrates the speed at which election-year promises can evaporate once the realities of governing set in. And it highlights Obama’s difficulty matching his get-tough rhetoric on oil companies with results, particularly as the Senate lost its moderate core, Republican allies on the issue turned into opponents and longtime Democratic sponsors retired.

“This is a campaign pledge that disappeared in 2008 and never made it back into the mix,” said Ben Schreiber, a climate and energy tax analyst with Friends of the Earth. “The truth of the matter is the president hasn’t used his megaphone to promote it.”

Within a week of Election Day, Obama’s transition team dropped the tax from its website, according to the American Small Business League, which tracked the changes. An unnamed transition official quoted in news reports at the time said the reason was that the price of oil per barrel had dipped to about $40. The abrupt shift infuriated progressives, who felt he’d abandoned the tax entirely and dubbed it Obama’s first broken campaign promise.

Instead, Obama focused on eliminating tax incentives for oil and gas companies, which the administration included in each of its four budgets.

“Ending unwarranted subsidies for Big Oil, which represent billions in taxpayer dollars each year that could be used more effectively, is clearly more achievable, and so it makes sense for us to put our focus there,” an administration aide said.

A second administration aide said the White House decided that it had a better chance at persuading Congress to repeal the tax subsidies than enact the tax on oil and gas company profits.


“Right now, the biggest oil companies are raking in record profits — profits that go up every time folks pull up into a gas station,” Obama said last month. “But on top of these record profits, oil companies are also getting billions a year — billions a year in taxpayer subsidies. … Think about that. It’s like hitting the American people twice. You’re already paying a premium at the pump right now. And on top of that, Congress, up until this point, has thought it was a good idea to send billions of dollars more in tax dollars to the oil industry.”

But even that proposal stalled in the Senate last month, as Obama struggled to win over voters to his response to high gas prices. A Washington Post/ABC News Poll released last week found 62 percent of adults disapprove of his handling of the issue.

Elgie Holstein, a senior campaign adviser on energy policy in 2008 and co-director of Obama’s energy transition team, said he could not recall any discussions during the transition on dropping one proposal in favor of another.

But he said the main reasons for doing so were likely the gyrating oil prices that would have made it difficult to structure the tax, an economic crisis that shifted priorities and a recognition that targeting the oil subsidies made more sense from a policy standpoint.

“In the big picture this is really all about how things in the course of a campaign season can change dramatically, so by the time a new president is inaugurated, the scale of the problems he or she has to confront changes dramatically and so do the solutions,” said Holstein, now senior director of strategic planning for the Environmental Defense Fund.

But critics, and even some allies, of the president say the White House made more of a cold political calculation in abandoning the windfall profits tax.

The tax made it too easy for Republicans to tag Obama as a liberal in the mold of former President Jimmy Carter, who enacted a windfall profits tax that Congress repealed eight years later, after it failed to produce a windfall for the government.

“Maybe they took some classes and realized it didn’t work,” said Peter Van Doren, a scholar at the libertarian Cato Institute who has studied the issue.

Hiking taxes on oil company profits won support from 55 percent of adults nationwide in an ABC News/Planet Green/Stanford University poll in July 2008. But repealing the tax incentives for oil companies has earned higher marks from the public in various polls over the past year.


Seventy-seven percent of Americans said redirecting the oil tax incentives to fund investments in alternative fuels would either help a lot or somewhat help in addressing high gas prices, according to a March survey conducted by Hart Research for the liberal Center for American Progress. Sixty-three percent said the same about taxing oil company profits.

And then there is the congressional math. The House is now controlled by Republicans. In the Senate, of the 12 Republicans who supported procedural votes on bills to tax oil profits at some point over the past seven years, only four are still in office.

Among the remaining group, the support has dissolved. Sen. Olympia Snowe (R-Maine) said in the “current economic climate,” she favors ending the tax subsidies rather than taxing oil company profits. A spokeswoman for Sen. Chuck Grassley (R-Iowa) said he only supported opening debate on the energy bill, not the tax itself. A spokesman for Sen. Susan Collins (R-Maine) could not say where she stood on the issue. A spokeswoman for Sen. John Thune (R-S.D.) could not be reached for comment.

The Democratic sponsors — Sen. Hillary Clinton of New York, Sen. Byron Dorgan of North Dakota and Sen. Chris Dodd of Connecticut — are gone, too.

The increasingly polarized Senate isn’t interested in repealing the tax subsidies, either. A bill to do so failed to advance last month on a 51-47 vote, short of the 60 votes needed to open debate.

If that bill can’t advance, then taxing the windfall profits stands no chance — which is why nobody is really expecting Obama to return to the proposal, even though the price of oil has been above that $80-per-barrel level that Obama identified in 2008 for five months. As of Monday, it was $102.

“No one is talking about it right now,” said Dan Weiss, director of climate strategy at the Center for American Progress.

That could change later in the month when the big five oil companies report their first-quarter profits, which could once again break records, Weiss said.

But even supporters of the proposal concede that prospects are dim. Not that they are happy about it.

“Barack Obama told the people of America that he would pass a windfall profits tax,” said Lloyd Chapman, president of the American Small Business League, which first drew attention to Obama’s shift away from the tax after his election. “Not doing so is one thing but to never explain why … is a staggering lack of integrity. Obama needs to do what he said he would do.”