Congressional Leaders Ignore Job Killing Contracting Abuse

In a recent letter to the administrator of the U.S. Small Business Administration (SBA), Senators Mary Landrieu (D-LA) and Olympia Snowe (R-ME) used strong rhetoric to describe a wide variety of problems facing federal small business programs, but failed to mention the job killing diversion of small business contracts to large corporations. Senators Landrieu and Snowe are the chair and ranking member of the Senate Committee on Small Business and Entrepreneurship respectively.

For the last five years, the SBA Office of Inspector General (SBA IG) has named the issue as the top management challenge facing the agency. In Report 5-15, the SBA IG went as far as to state, "One of the most important challenges facing the Small Business Administration and the entire Federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards."

In addition to Report 5-15, a series of federal investigations have uncovered billions of dollars in small business funds flowing into the hands of large businesses.

The most recent information released by the Obama administration shows large recipients of small business contracts such as Boeing, Lockheed Martin, Northrop Grumman, Raytheon, Dell Computer, Xerox, SAIC, General Dynamics, Bechtel and John Deere.

The Small Business Act requires that a minimum of 23 percent of the total value of all prime contracts be awarded to small businesses. As a result of this flagrant abuse, the American Small Business League (ASBL) has estimated that less than 5 percent is awarded to small businesses every year. This figure equates to the diversion of more than $100 billion a year in small business contracts to some of the largest corporations in the world, and millions of lost jobs.

In April of 2010, Chairwoman Landrieu estimated that increasing contracts to small businesses by just 1 percent would create more than 100,000 new jobs. Based on this estimate, ending the flow of federal small business contracts to corporate giants could create more than 1.8 million new jobs. Despite these figures, Chairwoman Landrieu has not passed legislation to end the abuse.

This is nothing more than meaningless posturing. During their years at the helm of the Senate small business committee, Senators Landrieu and Snowe have done nothing to stop the diversion of federal small business contracts to large corporations. If they really wanted to help America's 27 million small businesses they would pass legislation to end this abuse immediately.

 

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Comments

[oilfield]

02:47 PM on 01/12/2011

small businesses cant afford to bid on a lot of the government contracts....i read some of the stimulus wording for contracts and couldnt really see how any small business could get a contract.

[rlcapps]

04:24 AM on 01/11/2011

I may be pessimistic but I have felt for a long time that, in a general view, the corporate world and small business will never be compatible. Corporations will allow small businesses only so much room for growth before they must be assimilated. IF this is true then the only hope is for a real grassroots movement; People must be taught to understand that regulation is useful within the institution of business to help and not to hinder. This has to start very early not at the college level, I'm talking middle school through high school. When I talk to my conservative and non-political friends the impression I get is that if this country put this issue up to vote tomorrow that most people would vote small business out in favor of large conglomerates. To me this is not a symptom of the problem but the problem itself. If you are against corporations you are against business and you are considered some sort of anarchist. Kids coming out of community colleges I have personally spoken to see nothing wrong with credit cards and 30% interest charges and wall street gambling and etc blah blah all of that, they think THIS is business. People who see otherwise are pushed to the fringe and this is not an accident in my eyes, If this is all true then legislation in this country is no surprise. The old school talking points being pro little guy will continue to be just talk.

[charlesbaratta01]

04:03 PM on 01/06/2011

The small businesses are getting ignored in these issues, especially when looking for small business loans or financing.
The big corporations don’t seem to have an issue raising money by selling bonds, big bank loans. Small business loans aren’t getting approved that’s why so many are looking to business cash advances to leverage their credit card receipts.

Charles Baratta
http://www.merchantloans.com

[Chris Gunn]

01:22 PM on 01/06/2011

Given the state of the economy, it is more than reasonable to believe that ending fraud and abuse in federal small business contracting programs should be a major jumping off point. In fact, the abuses described above could be a major contributing factor to our current economic problems.