A House bill introduced Monday by U.S. Rep. Parker Griffith that’s meant to divert federally-mandated contracts to small businesses and away from multinational giants may have the opposite effect, according to critics.

The Small Business Act, approved during the Bush administration, was meant to boost small businesses and gives a government-wide mandate that 23 percent of all contract awards each fiscal year be awarded to small businesses. The 86,265-word bill passed into law in 2004.

However, an analysis from the American Small Business League showed that in 2008, much of the money earmarked for small businesses actually went to large multinational businesses with tens of thousands of employees.

Small businesses are defined by the Small Business Administration in a 44-page table that breaks down categories. For example, a lawyer’s office, book store and jeweler that makes $7 million annually or less is considered a small business – a bakery, mitten manufacturer or newspaper with 500 or more employees would be considered a large business.

Griffith, a member of the House Committee on Small Business, introduced the 283-word Small Business Fair Competition Act (H.R. 3558) that gives a framework of what companies would be eligible to re-compete for governmental contracts worth millions and billions of federal dollars.

The bill would allow businesses with current governmental contracts to compete as small businesses as long as they are currently small or “the incumbent contractor was a small business at the time of initial award of the current contract to the incumbent.”

The last stipulation is what bothers small business advocates.

“With H.R. 3558, Congressman Griffith has created a colossal, anti-small business loophole to divert federal small business funds to some of his largest campaign contributors,” American Small Business League President Lloyd Chapman said. “This is one of the most egregious examples I have ever seen of a member of Congress selling legislation to the highest bidder.”

Griffith, in a released statement, said “If passed, this bill will put an end to an outdated regulation on small business that punishes our entrepreneurs for their own success. This regulation puts a ceiling on motivation to grow small business, effectively putting a cap on how far our local economies can develop. That is the exact opposite of the American dream. This is a pro-small business bill that supports and promotes our men and women who build success stories from the ground up.”

Source:  http://www.timesdaily.com/article/20090917/NEWS/909179991/1011/NEWS?Title=Griffith-8217-s-small-business-bill-generates-debate