Petaluma, Calif. – On Wednesday, June 29, President Barack Obama addressed the American people regarding deficit reduction and job creation.  The American Small Business League (ASBL) maintains President Obama could meet these ends, and stimulate the economy, by issuing an executive order to stop the diversion of billions of dollars a year in federal small business contracts to corporate giants.

“Creating jobs and growing the economy help to reduce the deficit,” President Obama stated during his press conference.

The federal government has a congressionally mandated goal of awarding 23 percent of all government purchases to small businesses. Fraud, abuse, loopholes and a lack of oversight in small business programs have prevented the government from meeting this goal. The ASBL has estimated that during fiscal year (FY) 2010, federal agencies awarded less than 5 percent of government contracts to small businesses.

Since 2003, a series of federal investigations have uncovered the diversion of billions of dollars a year in federal small business contracts to Fortune 500 corporations and other large businesses.  In Report 5-15, the Small Business Administration Office of Inspector General referred to the 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)  

On Tuesday, the ASBL released an analysis of the top 100 recipients of federal small business contracts during FY 2010.  In total, the ASBL identified 61 large businesses in the top 100, receiving more than $8.8 billion in small business contracts.  Based on its analysis, and the government’s own data, the ASBL has estimated that every year more than $100 billion in federal small business contracts are diverted to some of the largest corporations in the world. (https://www.asbl.com/documents/asbl_2010_dataanalysis.pdf)  

In April 2010, Senator Mary Landrieu (D-LA), the Chair of the Committee on Small Business and Entrepreneurship estimated that, “increasing contracts to small businesses by just 1 percent,” would create more than 100,000 new jobs. Based on an ASBL examination of government contracting data, and Chairwoman Landrieu’s estimation, ending this abuse would create upwards of 1.8 million jobs.
(http://sbc.senate.gov/public/index.cfm?a=Files.Serve&File_id=bc065833-dafc-46c5-9e6f-21209a532de2)

“If President Obama is serious about spurring job growth and bringing this country out of recession, he must take action and end the diversion of federal small business contracts to corporate giants,” ASBL President Lloyd Chapman said. “This would direct billions of dollars a year in existing federal infrastructure spending to the middle class and our nation’s chief job creators, the small business community.”

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Petaluma, Calif. – On Friday, the U.S. Department of Labor (DOL) announced the national unemployment rate jumped to 9.1 percent in May.  The figure marks a high point for unemployment during 2011. Labor’s most comprehensive unemployment figures, U-6 unemployment, remained shockingly high at 15.8 percent in May. (http://www.bls.gov/news.release/empsit.t15.htm)  

“It’s no surprise that the Obama Administration’s economic policies are not working. It’s real simple; small businesses create over 90 percent of net new jobs, and yet the administration is giving billions in federal small business contracts to some of the largest companies in the world,” American Small Business League (ASBL) President Lloyd Chapman said.  The federal government is failing to hit its congressionally mandated small business goal by a long shot, Chapman added.

Labor’s statistics come in the wake of the eighth anniversary of the first congressional investigation into the diversion of federal small business contracts to corporate giants.

Since 2003 a series of federal investigations have uncovered billions of dollars a year in federal contracts intended for small businesses actually going to large businesses.  In Report 5-15, the Small Business Administration Office of Inspector General (SBA IG) referred to the issue as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.”  The SBA IG has named the issue as the agency’s top management challenge for the last six consecutive years. (https://www.asbl.com/documentlibrary.html#5-15)  

In February of 2008, President Obama recognized the magnitude of the problem with the statement, “It is time to end the diversion of federal small business contracts to corporate giants.”  To date, the Obama Administration has failed to end the abuse. (https://www.asbl.com/documents/20081007_Obama_Promise_Website.pdf)  

Data from the U.S. Bureau of Labor Statistics indicates that 98 percent of all American businesses have less than 100 employees.  Moreover, the U.S. Census Bureau reports small businesses are responsible for more than 50 percent of GDP, 50.2 percent of private sector employment, 90 percent of exports and 90 percent of innovations. (http://www.bls.gov/bdm/table_g.txt)  

“Since President Obama was elected, unemployment has jumped from 7.6 to 9.1 percent, the price of a gallon of gas has sky rocketed, and we have lost 2.5 million jobs,” Chapman said. “It is clear President Obama’s policies are not working.  Ending the diversion of federal small business contracts to corporate giants would redirect more existing federal infrastructure spending to the middle class, and create more jobs than anything he has proposed so far.”

Petaluma, Calif. – On Tuesday, April 19, the American Small Business League (ASBL) filed suit against the U.S. Department of Interior (DOI).  The ASBL was forced to file suit after the agency refused to release information on contracting officers referenced in a July 2008 Inspector General (IG) Report titled, “Interior Misstated Achievement of Small business Goals by Including Fortune 500 Companies.”  The case was filed under the Freedom of Information Act (FOIA) in United States District Court, Northern District of California. (https://www.asbl.com/documents/complaint_doi_contractingofficers_2008report.pdf)    

The DOI IG investigation found millions of dollars in contracts reported as going to small businesses actually wound up in the hands of some of the largest corporations in country. Additionally, the report found that contracting officers intentionally falsified information entered into the Federal Procurement Data System - Next Generation (FPDS-NG) as a means of inflating the DOI's small business contracting statistics.

The ASBL maintains that contracting officers who intentionally misrepresent large businesses as small should be prosecuted, and held accountable for their actions. Section 16 (d) of the Small Business Act states, “whoever misrepresents the status of any concern or person as a ‘small business concern,’” shall be subject to a fine of as much as $500,000, up to 10 years in prison, or both. ASBL attorneys believe contracting officers fall under the jurisdiction of section 16(d).

“According to the DOI Inspector General these people knowingly, willfully and intentionally reported awards to corporate giants as small business awards.  They need to be prosecuted for their actions,” ASBL President Lloyd Chapman said.

Since 2003, a series of federal investigations have found Fortune 500 firms and other corporate giants are the actual recipients of most federal small business contracts. In February of 2008, President Barack Obama promised to end the abuse. Despite thousands of business closures and countless lost jobs, the Obama Administration has failed to honor its promise, and end the diversion of federal small business contracts to corporate giants. (https://www.asbl.com/documentlibrary.html, https://www.asbl.com/documents/20081007_Obama_Promise_Website.pdf)  
 
“It is curious that the government is refusing to release the names of contracting officers that may have broken the law.  These people have inflicted serious damage on the nation’s economy.  As opposed to being transparent, once again the Obama Administration is covering-up evidence of fraud and abuse in federal small business contracting programs,” Chapman said. “This is another prime example of President Obama doing the opposite of what he said he would do. Actions speak louder than words, and people need to remember his failure to act during the next election.”

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Petaluma, Calif. - For the fifth consecutive year the Small Business Administration Office of Inspector General (SBA OIG) has described the diversion of federal small business contracts to Fortune 500 firms and other clearly large businesses as the #1 problem facing the SBA.

Since 2003, over 24 federal investigations have found that every year billions of dollars in federal small business contracts are diverted away from legitimate small businesses and into the hands of Fortune 500 firms.  According to the latest information released by the Obama Administration the top recipient of federal small business contracts was Textron, a Fortune 500 corporation with 43,000 employees, and $14 billion in annual revenue.  Other firms that are receiving federal small business contracts include: Lockheed Martin, Boeing, Raytheon, Northrop Grumman, British Aerospace (BAE), Ssangyong Corporation headquartered in Seoul, South Korea and Finmeccanica SpA, which is located in Italy with 73,000 employees.

In 2005, the SBA OIG released Report 5-15, which 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    

Even President Obama acknowledged the magnitude of the issue when in February of 2008 he promised to end the abuses by stating, "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  

To date, the Obama Administration has failed to honor that promise.  The American Small Business League (ASBL) estimates that every year over $100 billion in federal small business contracts are diverted to corporate giants.

On May 21, 2009, Congressman Hank Johnson (D - GA) introduced H.R. 2568, the Fairness and Transparency in Contracting Act, to address this issue. The bill was originally drafted by the ASBL, and currently has 17 co-sponsors as well as the support of more than 50 business organizations and chambers of commerce across the country.

To date, the Obama Administration and both the House and Senate small business committees have refused to address this issue or endorse H.R. 2568.

"The fact that the SBA Inspector General has found this issue to be the agency's #1 problem for the fifth consecutive year, yet the SBA has done nothing to address it, goes way beyond incompetence," ASBL President Lloyd Chapman said.  "This is by design, and this issue is not going to stop until journalists start asking President Obama why his administration talks about helping small businesses, and then gives hundreds of millions of dollars in small business contracts to corporate giants every day."

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Please click here to watch a short clip about the ASBL's concerns: http://www.youtube.com/watch?v=cX34LddPtHE

PETALUMA, Calif. - The Obama Administration will hold a Small Business Forum today with Treasury Secretary Timothy Geithner and Small Business Administration (SBA) Administrator Karen Mills. While many subjects will be covered, the American Small Business League (ASBL) predicts the one subject not discussed will be the diversion of federal small business contracts to corporate giants.

Every year since 2006, including the current fiscal year, the SBA Office of Inspector General (OIG) has listed the number-one management challenge facing the SBA as, "Procurement flaws allow large firms to obtain small business awards and agencies to count contracts performed by large firms towards their small business goals." (http://bit.ly/4nmRkt)

In 2005, the SBA OIG released Report 5-15, which stated, "One of the most important challenges facing the Small Business Administration and the entire Federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards." (https://www.asbl.com/documents/05-15.pdf)

President Obama recognized the gravity of the situation in February of 2008 when he released the statement, "It is time to end the diversion of federal small business contracts to corporate giants." (http://bit.ly/4fRrGq)

Since 2003, more than 15 federal investigations have found that billions of dollars in federal small business contracts have been diverted to Fortune 500 firms in the U.S. and some of the largest firms in Europe and Asia. (https://www.asbl.com/documentlibrary.html)

In the most recent data released by the Obama Administration, Textron, a Fortune 500 firm with more than 43,000 employees, was the top recipient of federal small business contracts getting over $775 million. Other firms such as Lockheed Martin, Boeing, Raytheon, Northrop Grumman, British Aerospace (BAE), Rolls-Royce, French giant Thales Communications, Ssangyong Corporation headquartered in Seoul, South Korea and Finmeccanica SpA which is located in Italy with 73,000 employees, were included in the Obama Administration's small business contracting data. (http://bit.ly/W0EB1)

The ASBL estimates that since President Obama took office, over $100 billion in federal small business contracts have been diverted to corporate giants around the world. The ASBL helped draft H.R. 2568, the Fairness and Transparency in Contracting Act, which if passed, will immediately stop the flow of small business contracts to corporate giants.

"If President Obama were really sincere about helping small businesses, then he would immediately stop the flow of federal small business contracts to Fortune 500 firms," ASBL President Lloyd Chapman said.