A proposed rule from the U.S. Small Business Administration (SBA) will allow federal agencies to divert billions of dollars in federal small business funds to large businesses every year.

 

Due to fraud and abuse, federal agencies annually award tens of billions of dollars worth of federal funds to large businesses as “small business” awards. Federal agencies then count those awards toward their annual federal small business procurement goals.

SBA adopted regulations that could have addressed the issue in 2006
and are now issuing the proposed regulations to the same section of the federal code. However, the proposed regulations fail to address these existing problems in the federal marketplace and will also weaken small business programs so that large companies can “poach”billions in taxpayer-funded small business funds with less fear of prosecution.

 

Without taking the steps that the ASBL has recommended, the SBA’s proposed regulations will do nothing to address fraud and abuse in federal small business programs.

 

For over a decade, ASBL President Lloyd Chapman and small business advocates have fought to prevent large companies and their subsidiaries from receiving federal small business contracts.

 

 

Since 2003, a series of federal investigations have uncovered hundreds of billions of dollars in federal small business contracts being diverted to large businesses. These include Lockheed Martin, Apple, AT&T, BAE, Rolls-Royce, Finmeccanica and Russian arms company Rosoboronexport.

 

In 2008, Barack Obama issued the statement, “It is time to end the diversion of federal small business contracts to corporate giants.” After being elected, he never mentioned it again.

 

“It’s unconscionable that the Obama administration would propose giving more small business contracts to corporate giants at a time when our middle class economy is suffering one of the worst economic recessions in history,” Chapman said.

 

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