Petaluma, Calif. – In December, Congress is expected to consider legislation that may allow senior Department of Defense (DoD) officials to create a secret “blacklist,” authorizing the exclusion of any business from federal contracting programs.  If passed, the bill could lead to “de facto” debarments of small businesses across DoD federal contracting programs, with potential for these “de facto” debarments to touch every corner of the federal government’s contracting programs.  

Section 815 of S. 3454, the National Defense Authorization Act for Fiscal Year 2011, would allow a small coalition of defense agency heads to secretly “blacklist” specific contractors.  Small business advocates are concerned that DoD’s determination will be shared with each agency where the company competes as a prime contractor or subcontractor.  This could lead to the broad based exclusion of contractors from federal contracting programs without due process.

Section 815 does not require DoD to notify excluded parties, and protects DoD’s secret “blacklist” from disclosure under the Freedom of Information Act (FOIA), protest at the Government Accountability Office (GAO), or action brought in the federal court system.

“This blatant power grab by the Pentagon puts America’s 27 million small businesses directly in the line of fire.  We should be protecting the nation’s small businesses by building more government accountability, not chipping away at it,” American Small Business League (ASBL) President Lloyd Chapman said.  “This is yet another move by the federal government to exclude small businesses from the federal government’s contracting processes.”

The federal government has a congressionally mandated goal of awarding 23 percent of its purchases to small businesses.  The ASBL has estimated that the federal government is missing its goal by more than 18 percent due to the continued diversion of federal small business contracts to corporate giants.

Since 2003, more than a dozen federal investigations have uncovered billions of dollars in federal contracts intended for small businesses actually flowing into the hands of Fortune 500 corporations and other large businesses.  The ASBL estimates that every year more than $100 billion in federal small business contracts are diverted away from the nation’s small business community.

The most recent information released by the Obama Administration shows there were large recipients of small business contracts such as Boeing, Lockheed Martin, Northrop Grumman, Raytheon, Dell Computer, Xerox, SAIC, General Dynamics, Bechtel and John Deere.

The ASBL is the only national small business advocate fighting to stop billions of dollars in fraud and abuse in federal small business contracting programs.