Tuesday President Barack Obama delivered his third State of the Union address to an economically strained nation. At a time when the U.S. economy is in need of sweeping reforms, the President failed to mention rampant government contracting abuse that is costing the middle class upwards of $100 billion annually.

Despite promising in 2008 to end federal small business contracting abuse, some of the largest companies in the world turn up in the Obama administration's own federal contracting data. In fact, during FY 2009 and 2010 at least 60 of the top 100 companies that received federal small business contracts were actually large businesses.

According to U.S. Census Bureau data, small businesses create more than 90 percent of net new jobs. 98 percent of U.S. companies have less than 100 employees. Small businesses are suffering from a lack of demand, and yet President Obama refuses to acknowledge that large corporations hijack federal small business contracts.

Since 2003, a series of more than a dozen federal investigations have uncovered hundreds of billions of dollars in fraud, abuse, loopholes and lack of oversight of federal small business contracting programs. Moreover, the Small Business Administration Office of Inspector General (SBAOIG) has reported for seven consecutive years that a top challenge at the SBA is that agencies award federal small business contracts to large businesses.

The American Small Business League (ASBL) remains unsatisfied with President Obama and his complete failure to address the longstanding and well-documented abuse of federal small business contracting programs.

In addition to ignoring contracting abuse, President Obama has proposed to officially end the Pentagon's minority-owned small business contracting program, as well as close the SBA by combining it with the Department of Commerce.

"As President Obama is reading his speech, I would like to see a ticker on the bottom of the screen that mentions all of his anti-small business policies," said ASBL President Lloyd Chapman. "Barack Obama is giving billions of dollars a month in federal small business contracts to some of the biggest companies worldwide and the middle class is paying for it."

PETALUMA, Calif.,

The Obama administration is proposing to merge the Small Business Administration with the Department of Commerce, a move that small business advocates like the American Small Business League (ASBL) maintain is aimed at eliminating small business programs under the guise of saving money.

On November 25, 2008 ASBL President Lloyd Chapman issued a press release predicting that President Obama would attempt to close the SBA by combining it with the Department of Commerce. He made the same prediction in November 2010 and August 2011.

Chapman believes Obama's latest move is prompted by pressure from lobbyists of large corporations that want 100 percent of all federal contracting dollars. The federal government has a congressionally mandated goal of awarding 23 percent of federal contract dollars to small businesses. However, because of fraud and abuse of small business federal contracting programs, most contracts earmarked for small businesses are awarded to large corporations.

In May 2003, the GAO investigated the federal small business contracting program and found that billions of dollars in federal small business contracts were being awarded to large corporations. Since that landmark GAO investigation, a series of more than a dozen federal investigations have found that every year billions of dollars in federal small business contracts are diverted to some of the largest corporations in the United States and Europe. Some of the companies that have received federal small business contracts include Lockheed Martin, Boeing, AT&T, Raytheon, Dell Computers, British Aerospace (BAE) and Rolls-Royce.

"This is not a move to save money," said Chapman. "This is a move to eliminate federal small business contracting programs. The $3 billion Obama says he'll save over ten years is infinitesimal compared to the $6 trillion the Pentagon will spend in the same timeframe. This is going to harm our nation's economy and cost millions of jobs."

SOURCE: American Small Business League

  President Obama’s signature on the 2012 National Defense Authorization Act (NDAA) will reauthorize a Department of Defense program that allows the federal government to cheat small businesses out of billions of dollars a year.

 The DoD program – known as the Comprehensive Subcontracting Plan Test Program (CSPTP) – establishes anti-small business policies that exempt large defense contractors from disclosing whether they’ve met their small business subcontracting goals and also exempts large defense contractors from any penalties of non-compliance with congressionally mandated small business procurement goals.

 The American Small Business League (ASBL) has long maintained that the CSPTP allows large defense contractors to circumvent the Small Business Act, which requires that 23 percent of all federal contracts (including subcontracts) must be with small businesses.

 A three-year extension to the CSPTP was proposed in the 2012 NDAA. Obama recently announced his intentions to sign the 2012 NDAA, which will reauthorize the CSPTP.

 The CSPTP was established in 1990 as a test program with the stated mission of increasing the amount of federal contracts awarded to small businesses every year and reducing the administrative paperwork requirements imposed on large contractors by the DoD. This allowed the DoD to stop requiring large contractors to report which businesses received their subcontracts.

 In October 2010, five members of the House of Representatives, lead by Congresswoman Yvette D. Clarke (D-NY), sent a letter to the Government Accountability Office (GAO), demanding an investigation into the CSPTP program’s effectiveness. Their concern– that the 21-year-old program has never been evaluated for its effectiveness.

 “Federal contracting data calls into question whether … participants in the CSPTP are actually meeting their small business subcontracting goals,” the Representatives’ letter to the GAO said.

 As of yet, the Representatives’ request for an investigation has been not honored.

 The Obama administration is opting to continue the CPSTP, which will allow the Pentagon to prevent disclosure of federal subcontracting reports to the public, the media and Congress, as well as eliminate all penalties for contractors that are non-compliant with subcontracting goals.

 “If President Obama and Congress were serious about job creation, they would end programs like the Comprehensive Subcontracting Plan Test Program and ensure that federal contracts meant for small businesses actually go to middle class firms who create over 90 percent of all net new jobs,” ASBL President Lloyd Chapman said. “Instead, the President will reauthorize the CSPTP and allow Pentagon officials to use its loopholes to violate longstanding federal law. This is classic Barack Obama.”

Today American Small Business League (ASBL) President Lloyd Chapman called on national leaders and key members of the media to help end a ten-year-old federal contracting scandal that has cost the nation millions of jobs. 

According to Chapman, federal agencies frequently misreport their funding actions as contracts awarded to small businesses when, in reality, large corporations like Raytheon, Boeing, Lockheed Martin, AT&T, Italian defense giant Finmeccanica, Rolls Royce and British Aerospace— to name a few— are the true recipients of the majority of federal small business contracts. Over a dozen federal investigations conducted since 2003 support Chapman’s assertions.

Ending this fraudulent practice, Chapman said, is a fail-safe, permanent, deficit-neutral solution to job creation and economic stimulus. According to the U.S. Census Bureau, small businesses create more than 90 percent of all net new jobs. Moreover, The Kauffman Foundation found that small businesses have created virtually 100 percent of all net new jobs since 1980, meaning that Fortune 1000 companies have not created a single net new job in more than thirty years.

In Report 5-15 the SBA Office of Inspector General (SBA OIG) described the abuse as, “One of the most important challenges facing the Small Business Administration and the entire federal government today.” SBA Inspector General Peggy Gustafson recently testified before Congress and named the abuse as a top management challenge facing the SBA for the seventh consecutive year. While this blatant federal contracting abuse has been well documented for more than a decade, media coverage has been rare.

During his 2008 presidential campaign President Obama promised to address the issue stating, “It is time to end the diversion of federal small business contracts to corporate giants.”  But despite President Obama’s campaign promises, the federal government’s FY 2010 contracting data indicates that 60 of the top 100 small business contractors were actually large businesses.

Chapman provides irrefutable evidence to back up his claims but warns that the federal government will attempt to impugn his credibility in hopes of negating his criticisms.

“There is nothing that the government, or anyone, can say about me to change the fact that large businesses fraudulently receive small business contracts,” Chapman said. “We need to urge President Obama to issue an executive order to end this longstanding scandal.”