Petaluma, Calif.- Yesterday, the House of Representatives passed Bill H.R. 1873 the “Small Business Fairness in Contracting Act.” Although the bill has some positive provisions for small businesses, it does not contain any provision that will stop the diversion of billions of dollars in Federal small business contracts to Fortune 500 firms that have existing Federal small business contracts.

 

Twelve Federal investigations since 2002 have all found billions of dollars in Federal small business contracts actually wound up in the hands of some of the largest firms in the United States and Europe.

 

In Report 5-15, the Small Business Administration Office of Inspector General referred to the diversion of Federal small business contracts to large businesses as one of the biggest challenges facing the Federal government today.

 

Under H.R. 1873, the Federal government would be allowed to continue to report contracts to corporate giants like Boeing, Lockheed Martin, Northrop-Grumman, Raytheon, Rolls Royce and L3 Communications as small business contracts.

 

As early as 2002, the SBA Office of the Inspector General, the SBA, the Office of Federal Procurement Policy, the Office of Management and Budget, the Government Accountability Office and the Senate Committee on Small Business and Entrepreneurship all recommended annual re-certification for all firms receiving Federal small business contracts. H.R. 1873 only requires firms receiving new small business contracts to recertify their status as legitimate small businesses. Firms with existing small business contracts are unaffected by H.R. 1873.

 

Beginning in 2002, the SBA acknowledged that large businesses had received small business contracts through miscoding, computer glitches and honest mistakes. Two separate investigations by the SBA Office of Advocacy and the SBA Office of the Inspector General found fraud was responsible for large businesses receiving Federal small business contracts.

 

H.R. 1873 will allow large businesses that currently have small business contracts to keep them regardless of how they originally obtained them. In its current form, the bill will allow firms that obtained small business contracts fraudulently to keep their contracts for at least five more years. 

 

The bill now goes to the Senate. Small business owners and advocates are hoping that Senator John Kerry will save the day for small businesses across America and add the annual re-certification provision for all firms holding Federal small business contracts. If he does, as much as $60 billion a year in Federal small business contracts could begin to flow to America’s 23 million small businesses.

 

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