THE BLOG

Congress Considers Two Bills to End Contracting Abuses

08/22/2009 05:12 am ET | Updated May 25, 2011

Congress is considering two separate bills written to halt the diversion of billions of dollars in federal small business contracts to many of the largest firms in the world.

Since 2003, over a dozen federal investigations have been released which found thousands of firms such as British Aerospace (BAE), Rolls-Royce, AT&T, Wal-Mart, Xerox, Home Depot, General Dynamics, Raytheon, John Deere, Dell Computer and Dutch conglomerate Buhrmann NV have all received federal small business contracts.

The American Small Business League (ASBL) estimates that over that $100 billion a year in federal small business contracts actually go to Fortune 500 firms and other clearly large businesses. (www.asbl.com)

In Report 5-15, the Small Business Administration Office of Inspector General (SBA OIG) referred to the diversion of federal small business contracts to large corporations as, "One of the most important challenges facing the Small Business Administration and the entire Federal government today." (http://www.asbl.com/documents/05-15.pdf)

In Report 5-16, the SBA OIG reported that in some cases large businesses received federal small business contracts because current policy allows large businesses to self certify their status as small businesses. The SBA OIG referred to the abuses as "False certifications." (http://www.asbl.com/documents/05-16.pdf)

In the Senate Committee on Small Business and Entrepreneurship, congressional leaders are considering S. 2300, the Small Business Contracting Revitalization Act, as a potential solution to longstanding abuses in federal small business contracting programs. That said, the bill would allow large businesses to continue to self certify, but would require them to do so annually.

In the House of Representatives, congressional leaders are considering H.R. 2568, the Fairness and Transparency in Contracting Act which eliminates self certification and puts the onus on federal contracting officials to ensure that Fortune 500 firms and other publicly traded firms no longer receive federal small business contracts. Current federal law stipulates that a small business must be "independently owned." Since publicly traded firms are publicly owned, they would not qualify as "independently owned" for the purpose of federal small business contracting programs. H.R. 2568 stipulates that federal contracting officials and prime contractors would no longer be able to report awards to publicly traded firms as small business awards.

The ASBL originally drafted H.R. 2568, which was introduced by Congressman Hank Johnson (D - GA) on May 21. To date, H.R. 2568 has received letters of support from more than 45 Chambers of Commerce and small business organizations around the country.

In a recent appearance on CNBC, U.S. Chamber of Commerce spokesman Giovanni Coratolo refused to back H.R. 2568. Fifteen Fortune 1000 firms represented on the U.S. Chamber of Commerce Board of Directors have received federal small business contracts.