Ina newly published reportoutlining the failure of the Small Business Administration (SBA) to properlymonitor or penalize Fortune 500 companies, like Verizon Communications Inc. (NYSE:VZ) and Raytheon Company(NYSE:RTN),who pilfer contracts otherwise promised to small businesses in America, CharlesTiefer, a Maryland Professor of law and a governmental contract specialist,says the system is broken and in need of overhaul.

Readprofessor Charles Tiefer's report at: asbl.com

Problems for SmallBusiness Administration

Thereport cites three major problems that plague the system, including:

·    The current practice of large contractors such as VerizonCommunications Inc. (NYSE:VZ), Citigroup Inc (NYSE:C) etc, acquiringsmall businesses to retain contracts.

·    Small businesses as they grow larger are not "early graduated" outof the small business category, thus retaining small business contracts.

·    Vast sums of Federal payments to businesses should be, but arenot, counted when figuring the 23% goal for small business.

Tieferbelieves that while the law calls for a 23% goal, in fact, the number actuallyrealized may be in the single digits. "By any objective standard ormeasurement," says Tiefer, "the real number may be well less of 10%. Worse, theSBA knows this and continues to obfuscate the real data. A simple question thatgoes unanswered is how can it be that more than 200 Fortune 500 companiescontinue to receive billions in SBA contracts?"

"Thisabuse of the contracting system has been going on for some time and the SBAseems unwilling to take corrective measures," says Professor Tiefer. "The factsare that federal law requires small businesses in the United States to receive23% of all contracts awarded by the federal government. In fact, because abuseis rampant, and unchecked by the SBA, barely a fraction of contracts actuallyend up with small business. We believe this [is] fraud, and there is no otherway to define it. Small businesses in America have been cheated out ofbillions, if not a trillion dollars. This abuse must stop."

To underscore the pernicious nature of federal contracts being awardedimproperly to Fortune 500 companies such as Verizon Communications Inc. (NYSE:VZ) in America, SBAInspector General, Peggy Gustafson testified, "The bottom line is that there isa real societal cost when ineligible companies improperly profit frompreferential contracting through fraud and illegal conduct…This fraud thwartscongressional intent behind these programs and deprives legitimate smallbusinesses of contracting opportunities."

Tiefer'sreport includes facts from a 2004 SBA Office of Advocacy study finding manycases of small business contracts going to large companies, including veryfamiliar names such as Verizon Communications Inc. (NYSE:VZ), Citigroup Inc (NYSE:C), The BoeingCompany (NYSE:BA)etc, on the federal procurement roster. "Billions of dollars are at stake forsmall businesses in America," says Tiefer. "They are, frankly, being cheatedout of their opportunity to provide goods and services to the American peoplebecause large companies such as Verizon, Citigroup, Boeing etc, have figuredout how to manipulate the system. Worse, when people such as Lloyd Chapman, thehead of the American Small Business League and a true champion in this fieldtry to expose these unsavory practices, they are held up to scorn andridicule."

Verizon tops2013′s small business revenue

Amonetary figure of $1.1 trillion dollars has been cited as the 23% goal forsmall business contracts from the federal government, yet, the actual number ofdollars going to small businesses in America is well short of that number andpercentage, says the report. "At the end of the day, there should be federaland public concern, and perhaps outrage, that a system can remain so brokenthrough numerous congressional hearings, many in-depth media reports and bothinternal and external investigations of the SBA." Tiefer concludes, "it is timeto take action."

CharlesTiefer is a nationally recognized expert in government contract law andco-author of, Government Contract Law in the Twenty-First Century, hehas also served as a Commissioner on the Commission on Wartime Contracting inIraq and Afghanistan.

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