FOR IMMEDIATE RELEASE

Petaluma, Calif. – On Friday, May 22nd, Congressman Hank Johnson (D – GA) introduced the first bill to end the longstanding diversion of federal small business contracts to many of the nation’s largest corporations.

H.R. 2568, the Fairness and Transparency in Contracting Act, will stop the federal government and prime contractors from reporting awards to Fortune 500 corporations and other publicly traded firms as small business contracts. H.R. 2568 is based on the provision of the Small Business Act that defines a small business as a firm that is “independently owned.” Firms that are publicly traded do not qualify as “independently owned.”

Since 2003, a series of federal investigations found Fortune 1000 firms to have received billions of dollars a year in federal small business contracts. In Report 5-15, the Small Business Administration (SBA) Office of Inspector General described the diversion of government small business contracts to large business as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today...” (http://www.sba.gov/IG/05-15.pdf)

In February of 2008, President Barack Obama acknowledged the magnitude of the problem when he released the statement, “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)

H.R. 2568 will also require the government to report all small business awards in the name of the parent company. Currently, small business contracts can be reported in the name of subsidiaries of Fortune 500 firms. This practice makes it easier for large businesses to misrepresent subsidiaries as small businesses.

The Fairness and Transparency in Contracting Act will also improve access to data on the recipients of small business contracts. H.R. 2568 will require the SBA to release the names of all recipients of government small business contracts within 90 days of the end of the fiscal year. 

American Small Business League (ASBL) President Lloyd Chapman originally wrote the Fairness and Transparency in Contracting Act. Chapman estimates H.R. 2568 could redirect over $100 billion a year in federal small business contracts back to middle class firms.

“Every small business in America owes Congressman Hank Johnson a debt of gratitude for introducing this bill. Small businesses create over 97 percent of all net new jobs, and this bill will do more to help those firms than any stimulus plan proposed so far. It will create millions of new jobs and provide a dramatic boost to the middle class economy,” Chapman said.