By UPI.com
United Press International
October 9, 8000
PETALUMA, Calif., July 6 (UPI) -- United Technologies Corp. and other large corporations are being slammed for receiving U.S. government contracts meant for small businesses.
By Resources for Entrepreneurs Staff
Gaebler Resources for Entrepreneurs
October 9, 8000
SBA reports that the federal government awarded 21.7 percent of procurement dollars to small businesses, well short of its stated goal.
Each year, the U.S. government establishes a small business procurement goal for federal contracts. In 2011, the government failed to achieve its goal, continuing a multiyear trend of shorting the small business community in federal contract awards.
According to a report issued by the Small Business Administration (SBA), in 2011 the U.S. government awarded 21.7 percent ($91.5 billion) of its contracted dollars to small businesses despite an annual small business procurement goal of 23 percent. This year's percentage was also a full point lower than the 2010 small business procurement share of 22.7 percent.
Additionally, the federal government's small business spending failed to live up to its own goals in several other small business areas:
Getting federal contracts can make a big difference in the success or failure of certain types of small businesses. Yet many critics argue that the government's calculation of small business contract awards is inflated since the definition of "small" businesses is often expanded to include larger companies.
The American Small Business League and other watchdog groups claim that since 2003, billions of dollars in federal small business contracts have instead been channeled to large corporations. According to these groups, the most recent federal contract data shows that 72 of the top 100 federal "small" business contractors in 2011 were actually large companies like Lockheed Martin, Boeing, General Electric and Chevron.
"During his campaign, President Obama promised to end the diversion of federal small business contracts to corporate giants, but has done nothing since," said ASBL president Lloyd Chapman. "President Obama must force the SBA to stop fabricating these numbers. Ending the diversion of federal small business contracting to corporate giants around the world would create more jobs than anything President Obama has ever proposed."
By Steven D
Daily Kos
October 9, 8000
Do you know who creates ninety percent (that's 90% if you prefer numerals) of the net new jobs in America? Small businesses, and by small businesses I mean businesses with less than 100 employees. These small businesses represent 98% of all employers, and provide roughly one half of all the jobs in America. They also provide 90% of all of exports by the United States.
I'll bet a lot of small businesses are owned by people who vote for Republicans. Well, folks I have some news for you. Republicans are not your friends.
In 2008, the last year of the Bush Presidency the budget for the Small Business Administration (SBA) was $569 MILLION. That was a decline from the high water mark of the Clinton years when the SBA's budget was 1.1 BILLION. Bush spent his eight years in office cutting the SBA's budget by more than half, and running off its most best and most experienced employees. Bush even told his first SBA administrator that he intended to eliminate the SBA entirely by the end of his first term. Even though he wasn't able to accomplish that goal, he did plenty of damage to the SBA during his two terms in office. Under his "leadership" the SBA was involved in numerous instances of "waste, fraud and abuse" (sound familiar?). For example, investigations by the General Accounting Office (GAO) discovered one scandal where over $300 million in funds supposed to be allocated to legitimate small businesses were funneled illegally to large corporations:
GAO identified $325 million in set-aside and sole-source contracts given to firms not eligible for the 8(a) program. Most were obtained through fraudulent schemes. In the 14 cases GAO investigated, numerous instances were found where 8(a) firm presidents made false statements, such as underreporting income or assets, to either qualify for the program or retain certification.
This is what the leader of one small business advocacy and watchdog group had to say about what President Bush and Republicans in Congress did to the SBA (via Mother Jones report, dated March 27, 2009):
Chris Gunn, a spokesman for the American Small Business League, has been bird-dogging the SBA for years. He says that since the underfunded and overwhelmed agency was gutted by the Bush administration, "it's not necessarily surprising that we see this amount of fraud and abuse."
When the Obama administration took office it found the SBA in shambles. However, by 2010, with the help of Democratic control of both house of Congress, it raised the budget 31% to $824 million and also provided a one time increase of $962 Million in supplemental stimulus funding for a total of 1.79 Billion dollars. Not surprisingly loans to small businesses increased dramatically in 2010 across the United States, even in Red States:
Loans in Georgia made through a U.S. Small Business Administration program offering 90 percent loan guarantees to lenders and eliminating fees for borrowing companies increased by nearly 52 percent. [...]
The higher loan percentage guarantees and fee elimination were continued for the last three months of 2010 after President Barack Obama signed the Small Business Jobs Act, which extended those incentives. [...]
The loans made under the SBA’s programs from February 2009, when the American Recovery and Reinvestment Act was signed, through the end of 2010 carried 90 percent loan guarantees, up from 75 to 85 percent guarantees, and no borrower fees, instead of 2 to 3 percent fees on the loan amount. [...]
Nationally, the SBA said it approved more than $10.3 billion in loan guarantees in the last three months of 2010, which supported more than $12 billion in loans. The guarantees were funded by $505 million in subsidy funds provided during the period.
Total business loans in 2010 to all companies regardless of size was $32.47 Billion. Thanks to Democrats and President Obama, a significant amount of those loans went to small businesses, with no fees and guaranteed up to 90% by the Federal Government. Even after the Republican sweep of the 2010 mid-term election, President Obama proposed an increase of 19.5% to the SBA's budget to $985 MILLION. Unfortunately, with Republicans in control of the House of Representatives and ever ready to filibuster in the Senate, the hope of more stimulus funding for small business is now dead.
In fact, Republicans still want to kill off the SBA and harm our nation;s true "Job Creators," small businesses. Need an example? How about the bill sponsored by North Carolina's Republican Senator, Senator Richard Burr and seven other of his Republican colleagues, the "Department of Commerce and Workforce Consolidation Act," which was proposed this summer:
The motivation behind this latest bill is to redirect the 23 percent of all federal contracts that should be going to small businesses into the hands of the nation's largest corporations. Furthermore, if the SBA is merged with the Commerce Department, the door will be shut on the decade long scandal of diverting small business contracts to Fortune 500 firms through "false" and "improper" certifications and "vendor deception".
Now, as a small business owner, you should be very concerned about a Republican takeover of the Presidency and the Congress? Why? Because the last time the controlled both Congress and the Presidency, government funds flowed like Canadian tar sands through existing pipelines to the largest corporations in America, and small businesses were shut out of most government assistance. That's what I like to refer to to as Fortune 500 Socialism. These firms are laying off American workers (i.e., your customers) and outsourcing their jobs overseas. In the meantime, as more of your customers will slip into poverty, the government will provide less and less services and assistance for your businesses. Services such as these:
If you’re looking for a way to finance your growth, an SBA loan might be what you need. The SBA doesn’t actually make the loans. Instead, we guarantee a percentage of each loan made by lenders who partner with us. Our guarantee reduces the risk, which means these SBA lending partners are more likely to help small businesses that can’t get access to conventional loans.
... The federal government spends $500 billion a year in contracts. We work with all federal agencies to put at least 23 percent of that money in the hands of small businesses. We also work with small business directly, through training and business development programs, to help them compete for and win contracts. [...]
[SBA] business experts offer counseling and training (nearly always free) to over 1 million small business owners each year. If you don’t have a counselor or mentor, you should. Our data shows that businesses that spend three hours or more with an SBA counselor have higher revenue and more employees as a result.
Of course, there’s a lot more to the SBA. From disaster assistance to surety bonds, we’re there with the tools you need.
You think Republicans want to help you when they get most of their bribes funding from the largest corporations in the world? If you do, you've been played my friends. The Republican party cares enough about your votes to keep lying to you about the evil socialistic plots of Democrats to destroy your livelihoods, but the truth is that Democrats have been far more reliable friends of small businesses than the Republicans. Just look at what happened the last tome the republicans were in complete control of our government. Mega-corporations made out like bandits, our deficit skyrocketed (deficits didn't matter to Republicans back then, remember?), and no one paid any attention to Wall Street as it ran the global economy off the cliff and then, with the million dollar lobbyists convince Congress ans the Fed to bail them out with unknown and unaccounted for TRILLIONS of dollars.
Whereupon, those Too Big to Fail Banks stopped lending to you. That sure helped out your small business a bunch, didn't it?
By Charles Cooper
EzineArticles.com
October 9, 8000
We expect a fair degree of corruption, arrogance and drooling self-interest from our elected officials. After all, in the last 206 years, we have fallen a great distance from the days of the "virtuous republic" that existed-or was thought to exist-in that first decade after the Revolution. Yes, we expect it, but I would have more respect for the operatives, the party-men and the politicos themselves if they could be just a little intelligent about it. The current issue with the Bush Administration, Congress, the SBA and the awarding of a great deal of money earmarked for small business, is a case in point.
When Big Business Seems Small
It is illegal, a felony that comes with fines and a prison term, to try to pass your big business off as a small business to get one of the 23% of Federal contracts reserved for small businesses. Yet, it happens all the time. According to the American Small Business League, a non-partisan watchdog group, some $60 billion in Federal contracts go to major corporations each year. How it happens brings us to the question of how you decide that a business is truly small.
Counting Heads
What is a small business? How do you measure it? Is it revenue? Sales? Staff size? Any one of these could be a viable measure, but for the most part the matter is decided with staff size. Depending on the industry, you can have a maximum of 1,500 employees and still be considered a small business! (Federal Regulations Title 13, Part 121, Section 201)
These larger "small businesses," with 1,000 to 1,500 employees, deal in oil, aerospace, rail transportation, textiles, and chemical and rubber products. Wholesalers, regardless of their products, are capped at 100; information technology value-added resellers are capped at 150 (a very recent change) while the rest are capped at either 500 or 750. In 2005 (the most recent data available), there were 5,966,069 firms in the U.S. with 500 or fewer employees and they employed 58,644,585 people out of a total employment of 116,373,003. That is 50.3% of the working population working in what could easily be described as legitimately small businesses. If you add up the firms with larger numbers of employees, you find that there are 11,546 of them and that they employ 9,475,180 people, 8.14% of the workforce.
Call me crazy, but a firm with 1,000 employees doesn't seem to be very small to me! It may be small when compared to the giants in its industry, but it is a giant compared with the vast majority of small businesses. In 2004, there was an effort to bring the number of employees down from 500 to 100 for a business to be classified as small. In spite of a great deal of support for the measure-including U.S. Representative Lynn Woolsey (D-CA), who said: "By working to change the definition of a small business for government contracts from 500 to 100 employees, federal contracts specifically designed to ensure the success of American small business would go where they belong - to support Americans, not big companies dressed in sheep's clothing."-the effort was killed by the SBA itself. That, however, is only the beginning. Another has to do with how small businesses are certified.
Finding a Certified Small Business
The question of how many employees a small business can have is complicated even further when we see that the government has been rather lax in enforcing the contract award rules for small business. In fact, in 2005, some $49 billion in Federal contracts that were set aside for small business were actually awarded to the 13 largest government contractors. This lax enforcement has led to cases where the small business in question is actually a subsidiary of a much larger company, where businesses have outgrown their small business status, where big business misrepresents itself as a small business and where government procurement offices, such as with the military, simply disregard the rules and do business with who they like.
The Small Business Front
Two of the most prevalent ways that large companies can maintain a small business front are through the legal loopholes that allow a small business to retain its status throughout the life of its original contract-and bid on new business as a small business-no matter how large it grows and even after it is bought out by a large company.
In either case, what the company in question is doing is, in fact, legal. Their actions are also limited by the fact that the loophole is based on the length of the small business' initial contract. For example, if a small business wins a 10-year contract to provide computer hardware, it maintains its small business status for the full 10 years of the contract regardless of how large it grows or if some huge conglomerate buys it. This has been an issue for some time. Consider the following:
According to a 2006 report on the U.S. Government Accountability Office: Commerce Information Technology Solutions (COMMITS) Next Generation Governmentwide Acquisition Contract, "We found that many of the 55 COMMITS NexGen contractors have grown significantly or have been acquired by larger businesses and may no longer meet small business size standards. We also found that a significant portion of the task orders intended for the smallest contractors were issued to larger, incumbent contractors."
Incumbent contractors tend to get the lion's share of the government's business. A 2004 SBA Office of Advocacy: Eagle Eye Publishers' Report said that: "Of the top 1,000 small business contractors in FY 2002, Eagle Eye Publishers' analysis found 44 parent companies it identified as either large firms or 'other'. Contracts to these two groups taken together had a total value of $2 billion." The report continued, saying that: "The Department of Defense and the General Services Administration accounted for 79 percent of the contract awards found to have gone to large businesses." One of the conclusions drawn from the report was: "As a result of this lack of transparency, many awards that should be reserved for small firms go to large firms unchallenged."
Disregarding the Rules
Rules can be broken either directly, by a willful disregard on the part of those the rules were intended to regulate, such as a company that purposefully misidentifies itself as a small business in order to get a contract; or they can be broken indirectly by a lack of oversight and enforcement that creates an atmosphere in which the rules can be ignored. One of the problems sited against the SBA is oversight. "SBA did not review the majority of reported bundled contracts that we identified, though procuring activities must provide, and SBA must review proposed bundled acquisitions. As a result, 192 contracts identified by procuring agencies as bundled were awarded without SBA's review. If all of these are actually bundled contracts, a minimum of $384 million would be potentially lost to eligible small businesses, based on minimum dollar reporting requirements of $2 million." (SBA Office of Inspector General: Audit of the Contract Bundling Process, May 2005) And consider this from the SBA Office of Inspector General: Audit of Monitoring Compliance with 8(a) Business Development Contract Performance, March 2006:
"Though SBA delegated 8(a) BD contract execution authority to 26 procuring agencies, SBA did not ensure that procuring agencies monitored whether companies complied with 8(a) BD regulations when completing 8(a) BD contracts . . . SBA has ultimate responsibility for ensuring that companies comply with 8(a) BD regulations"
The SBA is the final oversight authority for these contract awards and yet through their lack of enforcement efforts, it is easy for large businesses to slip through. Why is this? There are two likely reasons. The first is that the Bush Administration, when it came into office, cut funding for the SBA. At the end of the Clinton Administration, the budget for the SBA was about $1.1 billion. By 2006 it was down to $456.5 million. Funding has increased since the 2006 low; for 2009, that number has increased to $657 million, mostly due to funding for disaster relief loans; but the agency has nowhere near the budget it used to have. Generally speaking, if you cut funds to an agency, certain things start to slip and that is not a message that the SBA, or the Bush Administration for that matter, want going public.
However, it already has.
An audit by the American Small Business League (ASBL) and two independent experts showed that even while the SBA was saying that it is a "myth that large companies, including large, multi-national corporations are taking away federal contracts specifically intended for small businesses," it was discovered that the Bush Administration had in fact included billions of dollars in awards to Fortune 500 corporations and other large businesses in the United States and Europe in its small business contracting statistics. Also, the Bush Administration failed to comply with the congressionally mandated 23% small business contracting goal by including such corporate giants as:
More than that, ASBL's research also found that the government was forced to systematically increase the volume of contracts awarded to small businesses in order to balance out those that were going to inappropriately large companies. In addition, awards to legitimate small businesses were systematically inflated to equalize the reduction of small business contract dollars awarded to Fortune 500 corporations. The ASBL found that according to SBA numbers, Circle B Enterprises Inc. received $887.5 million during 2005. However, the government's own figures indicate that Circle B Enterprises Inc. received $287.5 million during 2005, which represents a discrepancy of $600 million. The ASBL audit found several other instances where the contracting numbers of legitimate small businesses were also significantly inflated.
The Bottom Line
The government decided to play fast and loose with small business contract money and they got caught siphoning it off to some of the largest companies on Earth. There are those that will only see the damage that this will do to McCain in the fall, yet another Bush Administration failure/debacle/betrayal-whatever you like best. That, however, is not the point. The point is why was the SBA hamstrung and placed in the position it has been in by the Bush Administration? More than that, why has this abuse been allowed to go on for so long? Call me a political cynic-I am from Chicago so I come by it honestly-but the only thing that makes sense to me is that government officials are paying back the people with deep pockets who helped to get them elected and they are doing it at the expense of, well, YOU. True, paybacks are a time-honored political tradition, but by stealing the money from small business, the U.S. Government as a whole turned its back on the overwhelming number of U.S. employers and employees in favor of a handful of major corporations. I urge you, as a small business owner; and you as an employee of a small business, to write your senators and congressmen, and to write to each of the presidential candidates, McCain and Obama, and their respective party chairmen-Republican and Democrat alike, and tell them that you want this to stop. Remember, small business contract set-asides are for YOU, not major corporations. It is time to remind Washington of that.
|
Charles Cooper is the Web Editor and blogger for http://www.gowithabc.com - the Web site for America's Best Companies. He is also a staff writer for America's Best: The Magazine for Small Business Owners. Article Source: http://EzineArticles.com/?expert=Charles_Cooper |
By Paul Snell
Supply Management
October 9, 8000
As Barack Obama enters the Oval Office, following his inauguration as forty-fourth President of the United States on 20 January, there will be a packed in-tray of problems demanding his attention.
And among the challenges, including repairing an economy in recession, wars on two fronts in Iraq and Afghanistan, and reforming the country's healthcare system, will be the question of what
to do about government contracting and procurement.
US annual government procurement spend has risen from $203 billion (£135.4 billion) in 2000 to $412 billion (£270 billion) in 2006, and is estimated to be around $450 billion (£300 billion) in 2008. And according to figures released by the Obama campaign, the Bush years have also seen high-profile errors and growing criticism of waste and fraud in purchasing, often related to the war in Iraq or the aftermath of Hurricane Katrina.
Obama himself is no stranger to spending reform. As a senator he introduced legislation, with presidential rival John McCain, to set up a "spending google" website, usaspending.gov (News, 5 October 2006). And during the campaign he sponsored further reform to expand transparency on the site (Web news, 10 June).
THE POLICIES
While campaigning for the presidency, Obama and his vice-presidential candidate, Joe Biden, set out 11 pages of proposals outlining spending reform. Its title pulled no punches: Stop wasteful spending and curb influence of special interests so government can tackle our greatest challenges.
In the manifesto, Obama promised a "line-by-line" review of the federal budget and pledged to "fix government contracting". He swore to cut spending with suppliers by $40 billion, to hire more buyers and contract managers and improve their skills. He also said his administration would implement annual audits on a quarter of major contracts.
There were commitments requiring departments to defend their use of contracts awarded without open competition. The value of these deals rose from $67.5 billion (£44.3 billion) in 2000 to $206.9 billion (£135.8 billion) in 2006. Obama wants to end the "abusive" use of these agreements, and to limit the use of cost-plus contracts. He also vowed to stop the "tens of thousands" of suppliers that have unpaid tax bills from winning government contracts.
There was also a promise to save $4.5 billion (£3 billion) with improved use of technology, such as purchasing cards, in procurement. And he committed his administration to a number of ethics reforms to rein in the power of lobbyists in contracting.
Experts agree that the new president's top priority for reform should be his proposal to increase
the amount of buyers and their training. He outlined the core of the problem himself: "The government's ability to manage contracts has not kept up with the increase in [their] volume and complexity."
A recent study into acquisition by vendors' group the Professional Services Council (PSC) found a lack of resources remains the biggest concern for government buyers. While the spend under management increased rapidly, the number of government buyers remained the same or, in some cases, shrunk. It prompted one senior official to compare the situation to an "extinction" of acquisition staff, "like they're as rare as white Siberian tigers".
The report cited the need to reform the "broken" hiring system, to offer better salaries and the importance of providing more training.
GREATER PROFESSIONALISM
But bringing about these changes will present huge problems. Robert Burton, a partner at law firm Venable who spent seven years as deputy administrator at the Office of Federal Procurement Policy (OFPP), which sets policies and practices for purchasers, said improving their professionalism was a focus for the previous administration. He was optimistic it would have an effect, but this would take time. "There is no question the workforce is understaffed, but realistically that is not going to change. There are budget challenges, so the priority must be training the [buyers] we have."
Larry Allen, president of the Coalition for Government Procurement, which represents contractors, added Obama's focus should be to make buyers more flexible and adaptable to immediate challenges, and ensure more attention is paid to contract management.
Another obstacle is that acquisition [procurement and contract management] jobs suffer from a low profile and are not perceived to be glamorous. According to Angela Styles, who held a number of senior procurement roles in the Bush administration and is now a partner at law firm Crowell & Moring, Obama could help here, by selecting high-profile people and putting them in charge of procurement. Stan Soloway, president and CEO of the PSC, agreed. "Buyers need strong leadership to feel empowered and important."
The plan to reduce spending has also been welcomed as a balanced approach. He has not, as candidates have in the past, demanded an arbitrary cull in the number of government suppliers.
'EASILY SAVE 10 PER CENT'
Allen said the incoming administration has been supportive of suppliers, who suffer a "negative perception" in political circles because of high-profile cases of fraud and waste. And Soloway believes the plan to cut "at least" $40 billion in spending should be straightforward. "Most people would say if we were better at [procurement] we could easily save 10 per cent."
Obama has also called for increased transparency. Burton believes the US has the most transparent contracting process in the world, but warned more legislation could mean increased costs and push suppliers into the arms of the private sector, a sentiment shared by respondents to the PSC study.
But Lloyd Chapman, president of the American Small Business League, said the need for transparency outweighs any extra costs for buyers and suppliers.
However, President Obama needs to overcome a number of hurdles if he is to embed his reform programme. Styles said he will have little control over departmental budgets in the first year, which were confirmed a long time ahead, and will only be able to "tweak around the edges".
Burton added reforming the law can be a long process, with up to a year before implementation. He believes Obama would influence buyer behaviour more by reforming the OFPP regulations they follow.
And there were calls for Obama to approach reform cautiously. Allen believes it could act as "rocks on a garden hose". He also urged the president to treat the supply market with care.
While, as Styles pointed out, the stability of government business is attractive when the economy is weak, excessive regulation and targets could push suppliers away when it recovers.
But there is one aspect of an Obama presidency that all of the experts agree on - the responsibility and expectation on buyers to perform is only going to increase.
At a glance: the key Obama procurement issues
Reduce the amount of federal spending on suppliers by "at least" 10 per cent, saving $40 billion a year.
* Hire more and improve training for contract managers.
* Ensure oversight of contracts remains with the government, and is not outsourced to other suppliers.
* Audit 25 per cent of large contracts annually to check performance, cost savings, whether the work should have been contracted originally, whether tendering was fair, and whether the supplier treats its workers fairly.
* Stop "abusive" no-bid contracts and limit the use
of cost-plus deals.
* Stop contractors with unpaid tax bills winning government deals.
* Improve the government's use of technology to reduce payment errors, increased use of purchasing cards and better property management, to save $4.5 billion.
* Strengthen whistleblower laws to protect employees willing to speak out about waste, fraud and abuse.
* A ban on purchasers serving as lobbyists for suppliers for two years after they leave public service.
* Build on the "Google for Government" spending website, to cover subcontracts as well as contracts.
Source: http://www.supplymanagement.com/EDIT/Featured_articles_item.asp?id=19038