Petaluma, Calif. - A recent story by the Washington Post concluded that over 40 percent of the contracts federal agencies were supposed to give to small businesses actually were diverted to Fortune 500 firms.

The Washington Post reviewed a sample of $13 billion in federal contracts that were reported as going to small businesses. In that sample, the Washington Post found over $5 billion or approximately 40 percent had actually been awarded to Fortune 500 firms such as Lockheed Martin, Dell Computer, L-3 Communications, SAIC, Northrop Grumman, General Dynamics and British Aerospace (BAE).

The information reviewed by the Washington Post was the most accurate data the government has produced since 2000. In 2002, the General Accounting Office (GAO) launched an investigation based on information provided by American Small Business League (ASBL) President Lloyd Chapman (https://www.asbl.com/showmedia.php?id=10), which found thousands of large businesses were receiving federal small business contracts.

The ASBL projects that the volume of federal small business contracts that were diverted to Fortune 500 firms was much larger in the earlier years of the Bush Administration, before the problem was exposed in investigative stories by CBS, ABC and CNN. (https://www.asbl.com/media2.php) 

The most recent estimates from the Small Business Administration (SBA) Office of Advocacy reported that approximately $140 billion in government contracts and subcontracts had been reported as going to small businesses each year.

The 40 percent figure uncovered by the Washington Post was just for Fortune 500 firms and other clearly large businesses. The Washington Post did not look at other large businesses that were not household names, but still would not qualify as small businesses. If all firms that did not qualify as legitimate small businesses were considered, the percentage could be much higher.

Several government officials have put the percentage of federal small business contracts that were diverted to large businesses between 50 percent and 86 percent.

Using the conservative 40 percent number uncovered by the Washington Post, during the eight years of the Bush Administration, approximately $448 billion in federal small business contracts would have been diverted to Fortune 500 firms and other large businesses.

Based on information obtained in a series of successful Freedom of Information Act (FOIA) law suits the ASBL has won against the Bush Administration, the ASBL projects that during the eight years of the Bush Administration over $600 billion and possibly as much as $800 billion in government small business contracts were diverted to corporate giants in the United States and Europe.

In February, Senator Obama stated, "Small businesses are the backbone of our nation's economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants." (https://www.asbl.com/showmedia.php?id=1002)  

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