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Lloyd Chapman

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Could a Simple Bill Save the World Economy?

Posted: 09/24/11 11:46 AM ET

The indications that we are heading toward another recession are crystal clear. Markets are plunging, unemployment is soaring and investors, businesses and the general public are losing faith in Washington's ability to stimulate the economy. However, a bill aimed at directing federal infrastructure spending to the middle class could change everything.

The Fairness and Transparency in Contracting Act is a very simple bill that will close loopholes and end fraud and abuse in federal small business contracting programs. The legislation focuses on ending the diversion of federal small business contracts to large businesses, a problem preventing the creation of upwards of 1.8 million new jobs. Specifically, the bill targets ambiguous provisions within the Small Business Act of 1953 that have allowed large publicly traded and foreign-owned companies to qualify as small businesses and receive federal small business contracts. Representative Hank Johnson (D-GA-04) is expected to introduce the bill this year.

The reason this bill is so powerful is because of the job creating potential of the small business community. According to the U.S. Census Bureau, small businesses create 90 percent of all net new jobs. If passed, this bill would redirect existing federal infrastructure spending to our nation's chief job creators, providing them with the needed demand to hire employees and expand business. Existing federal infrastructure spending means deficit-neutral, requiring no new taxes and no new spending. Moreover, this is a permanent solution, not the usual one-shot-deal that tends to increase the deficit and has not actually worked.

Because of fraud, abuse, loopholes and lack of oversight of federal small business contracting programs, hundreds of billions of dollars in federal small business contracts are actually awarded to large, publicly traded and foreign-owned companies. During fiscal year 2010 alone, the government's data indicated that more than $175 million in federal small business contracts was awarded to Lockheed Martin. I think most Americans can agree that Lockheed Martin, a company with more than 125,000 employees and more than $45 billion in annual revenue, is not a small business. This happens while small businesses are forced to close their doors and millions of Americans lose their jobs. The Labor Department reports that the latest jobless figure remains at 9.1 percent, meaning 14 million people don't have jobs.

For nearly a decade, I have worked tirelessly to alert the press, lawmakers and the general public about large publicly traded and foreign-owned companies receiving federal small business contracts. Yet the Small Business Administration press office has downplayed the abuse and even denied its existence instead of working with lawmakers to solve the problem. Through the Freedom of Information Act, I have obtained emails from the SBA press office claiming to journalists that I am everything from a lunatic to a conspiracy theorist.

But this is not a conspiracy theory. The diversion of federal small business contracts to corporate giants has been well documented. Since 2003, a series of federal investigations have found hundreds of billions of federal small business contracts being awarded to large publicly traded companies like AT&T, Office Depot, Raytheon, John Deere, General Electric, Italian defense giant Finmeccanica and Rolls-Royce.

In Report 5-15 the SBA Office of Inspector General (SBA IG) described agencies awarding small business contracts to large businesses as, "One of the most important challenges facing the Small Business Administration and the entire federal government today." The SBA IG has named the issue as a top management challenge for six consecutive years.

During his 2008 campaign, Barack Obama stated, "It is time to end the diversion of federal small business contracts to corporate giants." If President Obama really wants to create jobs and save the world economy, he will keep his campaign promise and support and sign the Fairness and Transparency in Contracting Act.

 

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