The Issues

In 2005, the Small Business Administration Office of Inspector General released Report 5-15 that best summarized the rampant fraud and abuse in federal small business programs. It stated,

“One of the most important challenges facing the Small Business Administration (SBA) and the entire Federal Government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards.”

The SBA Office of Inspector General continued to reiterate the diversion of billions of dollars in federal small business contracts to Fortune 500 firms, their subsidiaries and thousands of large businesses for several years.

President Obama stated, “…. It is time to end the diversion of federal small business contracts to corporate giants.”

Another issue that has cheated legitimate small businesses out of trillions of dollars in federal contracts and subcontracts is the long standing SBA policy of falsifying the federal government’s compliance with the 23% small business contracting goal. The SBA does this in two ways. First, by excluding the vast majority of federal acquisitions from their calculations. Second, by including billions of dollars of federal awards to Fortune 500 firms, their subsidiaries and thousands of recognizable large businesses, in the volume of contracts they claim were awarded to small businesses.

In 2019, the total federal acquisition budget was over $1.5 trillion. To falsify compliance with the 23% goal, the SBA excluded over $1 trillion in federal acquisitions and used an acquisition budget of less than $500 billion. In reality, in FY 2019, legitimate small businesses likely received no more than 3% of the $1.5 trillion in federal acquisitions. This fraudulent practice has taken place at the SBA for well over two decades.

Another issue that might surprise most people is that the SBA has essentially been closed by successive administrations that have slashed the annual operating budget of the SBA and have laid off most the staff. For 2021, the SBA’s annual operating budget is approximate $700 million. Over the last 30 years, the SBA’s budget has been cut more than any other agency in government.

In comparison, for 2021 the annual budget for the Commerce Department is over $10 billion. The Commerce Department represents less than 1% of all U.S. firms.

According to U.S. Census Bureau data, 99% of all U.S firms have less than 500 employees. That means only 1% of all U.S. firms have more than 500 employees. According to all available data from the federal government, approximately 97% of all federal acquisitions are awarded to less than 1% of all U.S. firms. While small businesses are responsible for over 99% of all net new jobs, the top 1% of all U.S. firms has not created even one net new job since 1980.

One of the most significant issues that has cheated American small businesses out of trillions of dollars in federal subcontracts is the Pentagon’s Comprehensive Subcontracting Plan Test Program (CSPTP). The Pentagon’s CSPTP was adopted in 1989 under the guise of “increasing subcontracting opportunities for small businesses. The CSPTP has only two provisions.” (1.) The elimination of all penalties for the Pentagon’s largest prime contractors for non-compliance with federal small business subcontracting goals. (2.) The elimination of all transparency on the specific goals and all information on the compliance with those goals.

The Pentagon has been “testing” whether or not the elimination of all transparency and all penalties for non-compliance with small business subcontracting goals will “increase subcontracting opportunities for small businesses” for over 32 years.

The Pentagon’s CSPTP is the most blatant example of the anti-small business attitude that the federal government has demonstrated against the 30+ million small businesses. These small businesses are responsible for over 50% of the private sector work force, over 50% of the GDP, over 90% of all U.S. exports and over 99% of all net new jobs in America.

The ASBL has been the one and only organization in American that has consistently opposed the diversion of federal small business contracts to large businesses, the SBA’s fabrication of compliance with the government’s 23% small business contracting goal, cuts to the SBA’s budget and staff and the Pentagon’s blatant anti-small business Comprehensive Subcontracting Plan Test Program.