Petaluma, Calif., April 4, 2007- In 2002, the General Accounting Office in Washington uncovered information that found the Small Business Administration had allowed hundreds of Fortune 1000 firms to receive billions in federal small business contracts. The SBA responded by saying corporate giants like AT&T, Lockheed, Boeing, Nike, Sprint and Hewlett Packard had erroneously received federal small business contracts through "miscoding" and "computer glitches."

In 2006, new SBA Administrator Steven Preston passed a policy set to go into effect in June that will allow these Fortune 1000 firms and hundreds of others to continue receiving billions in federal contracts earmarked for small businesses until the year 2012.

The SBA's own Inspector General recommended an annual recertification policy in 2003 that would have stopped Fortune 1000 firms from receiving federal small business contracts. The SBA ignored the recommendation. In 2006 the Senate Committee on Small Business and Entrepreneurship voted unanimously to adopt an annual recertification policy for all firms claiming small business status. SBA Administrator Preston also ignored that recommendation.

If Congress allows the new SBA policy to stand, 10 years will have passed from the date the GAO first exposed this issue in 2002 before the SBA finally removes hundreds of large businesses from the government's database of small businesses in 2012.  

Small business advocates are hoping that the new Democratic Congress will step in and pass legislation to stop the diversion of federal small business contracts to Fortune 1000 firms and their subsidiaries.

"Democratic leaders like Henry Waxman, John Kerry, Nydia Velasquez and Nancy Pelosi have complained for years about corruption under the Bush administration," said Lloyd Chapman, president of the American Small Business League. "It's time for Congress to step up to the plate and pass legislation to solve this problem. Every day that they wait, it costs America's 23 million small businesses $200 million in lost small business contracts a day."

The ASBL estimates that if the new SBA policy is allowed to stand, American small businesses will have lost over $500 billion in federal small business contracts between 2002 and 2012.

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