Petaluma, Calif.- Four years ago on May 7, 2003, the House Committee on Small Business held the first hearing on the diversion of billions of dollars in federal small business contracts to Fortune 1000 firms.

 

The Committee heard testimony from several witnesses including Dave Cooper, Director of the Acquisition and Sourcing Management at the General Accounting Office, and Lloyd Chapman, President of the American Small Business League. In a February 2003 interview with Washington Technology magazine, Cooper acknowledged the GAO’s first investigation was based on information Chapman provided.

 

 Since that first GAO investigation, there have been twelve other federal investigations that found large businesses had received billions of dollars in federal small business awards. Firms like Rolls Royce, General Dynamics, Titan, Northrop Grumman, BAE, AT&T, Raytheon, Lockheed Martin, L3 Communications and Boeing all received millions of dollars in federal small business contracts. Shortly after the hearing, the SBA was forced to remove over 600 corporate giants from their small business database.

 

 In September 2004, a report by the Center for Public Integrity found the Defense Department had awarded over $47 billion in small business contracts to the nation’s top defense contractors.

 

In March of 2005, in Report 5-15 titled, “Large Businesses receive Small Business Awards,” the SBA Office of Inspector General stated, “One of the most important challenges facing the SBA and the entire federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards.”

 

 The ASBL sued the SBA in November of 2005 and forced the release of an investigation by the SBA Office of Advocacy that found “vendor deception” was one of the reasons why large businesses received federal small business contracts. In Report 5-16, the SBA Office of Inspector General found more large businesses had committed fraud to receive federal small business contracts by making “false certifications.”

 

The initial solution proposed by the SBA, the SBA Office of Inspector General and the Office of Federal Procurement policy was annual re-certification of all firms currently holding federal small business contracts. Recently, annual re-certification was also endorsed by the Office of Management and Budget and the Senate Small Business Committee.

 

Despite these significant endorsements for annual re-certification, in April the House Small Business Committee passed a new bill titled H.R. 1873 the, “Small Business Fairness in Contracting Act.” It does not contain the annual re-certification policy for all firms currently holding federal small business contracts. If passed, this law will allow hundreds of Fortune 1000 firms that currently have small business contracts to continue to receive federal small business awards for years to come.

 

About the American Small Business League: ASBL has won a series of Freedom of Information Act cases that have forced the disclosure of information on the diversion of federal small business contracts to hundreds of large businesses.

 

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