Petaluma, Calif. - The Obama Administration has diverted more than $190 million in U.S. federal small business contracts to Italian defense giant Finmeccanica SpA. Based in Rome, the defense conglomerate has more than 75,000 employees and $25 billion in annual revenue.

According to the U.S. Small Business Administration (SBA), a small business must be independently owned and operate primarily within the U.S. Moreover, to be considered a small business in any U.S. industry, a company cannot have more than 1,500 employees and more than $38 million in annual revenue.

Finmeccanica is just one of several multinational corporations to receive U.S. federal small business contracts from the Obama Administration. British Aerospace (BAE), Rolls-Royce and Thales Communications Inc. have all received federal small business contracts since President Obama took office. The American Small Business League (ASBL) estimates every year as much as $200 billion in small business contracts is diverted to some of the largest companies in the world.

The diversion of federal small business contracts to multinational corporations is part of a decade-long small business contracting scandal. The Small Business Act mandates that 23 percent of all federal contract dollars go to legitimate small businesses. Yet since 2003, a series of federal investigations have found that most of those dollars are diverted to some of the largest companies worldwide.

During his 2008 presidential campaign, Barack Obama stated, "It is time to end the diversion of federal small business contracts to corporate giants." Yet every day his administration diverts hundreds of millions of dollars in small business contracts to large corporations.

In Report 5-15, the SBA Office of Inspector General described the diversion of federal small business contracts to large businesses as, "One of the most important challenges facing the Small Business Administration and the entire federal government today."

According to the U.S. Census Bureau, America's 28 million small businesses create 90 percent of net new jobs. Small businesses are responsible for half of GDP, half the private sector workforce and 90 percent of all U.S. exports. Based on this data, the ASBL estimates that ending the diversion of federal small business contracts to large multinational corporations would create millions of jobs for Americans.

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Petaluma, Calif. - Let’s discuss “conspiracy theories” and “wild exaggerations.” Is the fact that Fortune 500 firms receive small business contracts a “wild exaggeration?” Read Reports 5-14, 5-15 and 5-16 from the SBA’s Office of Inspector General (SBA IG), which describe this ongoing abuse.

The SBA Office of Advocacy found large corporations received small business contracts through “vendor deception.”

As early as 2003, the Government Accountability Office (GAO) launched an investigation based on information I provided, finding over 5,000 large businesses receiving small business contracts.

The SBA IG, SBA Office of Advocacy and the GAO agree with me. The federal courts have ruled in my favor in dozens of lawsuits against various federal agencies. Is it also a conspiracy theory that Republicans have long tried to close the SBA?

Reagan tried it twice. His 1985 budget proposed abolishing the SBA. His budget director David Stockman tried to convince the Senate to close the agency. In 1996, House Republicans authored a bill to combine the SBA with the Department of Treasury. The Bush Administration cut the SBA budget by more than 60 percent.

The SBA’s main mission is to ensure small businesses receive 23 percent of federal contracts. Small businesses create more than 90 percent of all net new jobs. They are responsible for more than half of GDP, half the private sector workforce and more than 90 percent of all US exports.

Why focus on closing the only agency that ensures small businesses get a fair share of federal contracts? Fortune 500 firms that fund the CATO Institute and the GOP (Phillip Morris, Exxon, Citibank, Prudential, Pfizer, and your founder Charles Koch, co-owner of the second largest private company in America) pushed the deregulation of the financial industry that is directly responsible for the recession. You advocate closing the SBA not to save money or to end the loan program, but to hijack all federal contracts.

The Kauffman Foundation found that companies less than five years old have created virtually all net new jobs since 1980. Your corporate funders haven’t created one net new job in 30 years.

The next time you call me a conspiracy theorist, be ready to back it up with facts. You just might find yourself in court.

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

Senator Richard Burr (R-NC) has introduced legislation that could devastate small businesses nationwide and in his home state of North Carolina. S. 1116, the “Department of Commerce and the Workforce Consolidation Act,” could eliminate all federal programs to assist small businesses, costing the nation millions of jobs.

Senator Burr’s bill puts North Carolina’s more than 172,000 small businesses at risk of losing access to the Small Business Administration’s (SBA) assistance programs.  In 2008, these businesses accounted for 47.9 percent of the state’s private sector workforce. More than 3,500 small businesses in North Carolina received more than $2 billion in federal contracts during FY 2009. This bill could eliminate programs designed to help those businesses land federal contracts, a problem small businesses already face as the majority of small business contracts go to large businesses.

The federal government has a congressionally mandated goal of awarding 23 percent of contract dollars to small businesses. However, according to the Federal Procurement Data System, in FY 2010, only about five percent of total federal contract dollars went to small businesses.

According to the U.S. Census Bureau, small businesses create 90 percent of net new jobs. Ninety eight percent of all U.S. firms have less than 100 employees. These firms employ more than half of the private sector workforce, are responsible for half of GDP and more than 90 percent of all U.S. exports. http://www.sba.gov/advocacy/7495/8420

Senator Burr’s bill is just the latest attempt by GOP lawmakers to close the SBA and end programs to assist the nation’s chief job creators.

President Ronald Reagan tried to shut the agency down on two separate occasions, reported in Time Magazine and on ABC News. In 1996, the Republican controlled House of Representatives attempted to eliminate the agency.

Republican President George W. Bush removed the SBA Administrator from a Cabinet-level position and slashed the SBA budget by more than 60 percent.
 
“Senator Burr’s bill is designed to direct 100 percent of federal contracts to Fortune 500 corporations,” said ASBL President Lloyd Chapman. “If the bill passes, small businesses that create virtually all net new jobs will be excluded from federal contract programs.”

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Petaluma, Calif. - The Dow Jones Industrial Average plummeted 513 points Thursday, a 4.3 percent drop and the worst single day drop since October 22, 2008. The S&P 500 and NASDAQ dropped 4.8 and 5.1 percent respectively.

The stock market’s drastic plunge indicates a complete lack of investor confidence, due in large part to uncertainty surrounding the debt ceiling compromise and painfully low unemployment. The Obama Administration has offered no plan for reducing the jobs deficit.

America’s chief job creators continue to be ignored in Washington’s ongoing debate on spurring job growth. According to the US Census Bureau small businesses create 90 percent of net new jobs in America. (http://archive.sba.gov/advo/research/rs359.pdf)

Yet these chief job creators are losing millions of dollars daily in federal contracts that are illegally diverted to mega-corporations like Lockheed Martin, Boeing, Raytheon, AT&T, Motorola, Xerox, Northrop Grumman and General Electric.

Large corporations like these have created virtually no net new jobs in three decades. (http://www.kauffman.org/research-and-policy/where-will-the-jobs-come-from.aspx)

In fiscal year (FY) 2010, 61 of the top 100 federal small business contractors were large companies. These large firms received 62.5 percent of the contracting dollars awarded to the top 100, or $8.8 billion.  (https://www.asbl.com/documents/asbl_2010_dataanalysis.pdf) 

In Report 5-15, the Small Business Administration’s 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 diversion of federal small business contracts to corporate giants as the number one challenge facing the agency for six consecutive years. (https://www.asbl.com/documents/05-15.pdf) 

The President himself acknowledged the plight of small businesses on the 2008 campaign trail stating, “Small businesses are the backbone of our nation’s economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants.”  (https://www.asbl.com/documents/20081007_Obama_Promise_Website.pdf)

To date no legislative action has been taken to end the diversion of federal small business contracts to corporate giants.

ASBL President Lloyd Chapman said of the continued economic failures, “I would like people in the media and around the country to remember one thing when President Obama is on television talking about his efforts to create jobs. Every day the Obama Administration diverts millions of dollars in federal small business contracts away from small businesses, where all net new jobs are created, into the hands of large corporations, which have not created one net new job in three decades.”

Petaluma, Calif. – The Labor Department reported Friday that June unemployment grew to 9.2 percent, and job growth hit a wall, capping at 18,000 jobs. This comes after the American Small Business League (ASBL) discovered 61 of the top 100 businesses that received small business contracts during fiscal year (FY) 2010 were actually large firms.

According to the U.S. Census Bureau, small businesses create 90 percent of all net new jobs. 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.

The federal government has a congressionally mandated goal of awarding 23 percent of the total value of all contract dollars to small businesses. However, the government’s database of federal small business contractors is crowded with names like Raytheon, Lockheed Martin and General Electric. Giant foreign corporations like British Aerospace (BAE), Rolls-Royce and Thales are also among firms that received small business contracts.

Because of the diversion of billions of dollars in small business contracts to large firms, the ASBL estimates that legitimate small businesses actually received about five percent of federal contract dollars.

In 2008, President Obama said, “It is time to end the diversion of 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. (https://www.asbl.com/documents/20081007_Obama_Promise_Website.pdf)

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)

“Nothing would create more jobs than if Obama would stop diverting small business procurement funds to Fortune 500 corporations,” said ASBL President Lloyd Chapman.

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