Obama Regulatory Reforms Ignore Small Business Contracting Scandal

Press Release

Obama Regulatory Reforms Ignore Small Business Contracting Scandal

August 24, 2011

Petaluma, Calif. – Tuesday the Obama Administration announced plans to trim regulatory burdens, which it estimates will save businesses more than $10 billion over the next five years. According to the White House Blog, many of the reforms focus on small businesses, including a rule that will accelerate Department of Defense contract payments to as many as 60,000 small businesses.

“Although these seem like noble ideas,” said American Small Business League (ASBL) President Lloyd Chapman, “the Obama Administration continues to ignore the biggest challenge for small businesses: the diversion of federal small business contracts to large corporations.”

Federal law requires 23 percent of all contract dollars go to legitimate small businesses. U.S. Census Bureau data indicates that small businesses create 90 percent of net new jobs. Yet the Obama Administration’s 2010 federal contracting data indicates that most small business contracts actually went to large companies, including Lockheed Martin, General Electric, AT&T, Italian defense giant Finmeccanica and British Aerospace (BAE), among others.  An ASBL analysis of the top 100 small business contractors found that 61 were large businesses.

Since 2003, a series of federal investigations have uncovered hundreds of billions of dollars in fraud, abuse and loopholes in federal small business contracting programs.

In Report 5-15, the Small Business Administration Office of Inspector General (SBA IG) described the abuse as, "One of the most important challenges facing the Small Business Administration and the entire Federal government today."

In Report 5-16, the SBA IG found large businesses had illegally received federal small business contracts through "false certifications" and "improper certifications." The SBA Office of Advocacy found large businesses had received federal small business contracts fraudulently through "vendor deception.”

Based on information obtained through the Freedom of Information Act, the ASBL estimates that ending this abuse would redirect up to $1 trillion in federal infrastructure spending to the middle class over the next five years.

During his campaign, President Obamastated, “It is time to end the diversion of federal small business contracts to corporate giants.” Yet every day of his administration, hundreds of millions of dollars in existing federal infrastructure spending has been diverted from small businesses to large corporations.

“This latest move is just more smoke and mirrors,” said Chapman.




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