Elimination of Loopholes for Pentagon Contractors Could Create Thousands of Jobs

The elimination of a potentially fraudulent Pentagon subcontracting program could help spur job creation by increasing the amount of federal subcontracting dollars available for middle class firms.

The Comprehensive Subcontracting Plan Test Program (CSPTP) was established over 20 years ago with the stated mission of increasing subcontracts for small businesses. The American Small Business League (ASBL) has long maintained that the program actually allows large defense contractors to circumvent small business subcontracting goals. As established, the program eliminates subcontracting reports available to the public, the media, and Congress, as well as eliminating all penalties for non-compliance with subcontracting goals.

The ASBL estimates that elimination of the CSPTP would redirect approximately $10 billion a year in additional subcontracting opportunities for middle class firms. Research conducted by the ASBL has shown that over the past 21 years, small businesses have been defrauded of more than $200 billion in federal subcontracts due to the CSPTP.

When first coming into office, President Obama estimated that every billion dollars spent on federal infrastructure projects would create 40,000 jobs. Based on these estimates, ending the CSPTP would create roughly 400,000 new jobs. According to the U.S. Census Bureau, small businesses are responsible for more than 90 percent of all net new jobs, 50.2 percent of the non-farm private sector workforce, 50 percent of the gross domestic product (GDP) and 90 percent of exports and innovations.

In October, five members of the House of Representatives, lead by Congresswoman Yvette Clarke (D-NY) requested the U.S. Government Accountability Office (U.S. GAO) to investigate and evaluate the CSPTP to determine if the program was meeting its stated goals. After being in place for over two decades, the CSPTP has never been evaluated by the Pentagon or any federal agency.

This program has done the antithesis of what Congress said it would. It needs to be eliminated and investigated to determine how much fraud has occurred over the past 21 years. If President Obama and Congress were serious about job creation, they would end programs like the Comprehensive Subcontracting Plan Test Program and ensure that federal contracts meant for small businesses actually go to middle class firms who create over 90 percent of all new jobs.

 

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Comments

[mommadona]

05:17 AM on 12/12/2010

WHY is doing the RIGHT thing so damned hard with .@BarackObama ? "When first coming into office, President Obama estimated that every billion dollars spent on federal infrastructure projects would create 40,000 jobs. Based on these estimates, ending the CSPTP would create roughly 400,000 new jobs. "

[Lloyd Chapman]

01:10 PM on 12/15/2010

Thank you for your comment. The scary thing is that the CSPTP is only the tip of the iceberg. If the Obama Administration chose to end the diversion of federal small business contracts to corporate giants more than 1.8 million jobs could be created. It would without question be the most powerful stimulus program proposed to date, and yet the Obama Administration has refused to act.

[Arielman]

09:54 PM on 12/10/2010

This should be an important step.That long ago, 21 years, I'd heard for example that two companies, EDO (radar and sonar) and astronaut Neil Armstrong's company (antennas for satellites) had to join together to even get close to the minimums needed to bid on defense contracts, where large conglomerates of former large companies rule in the bidding. Where there were once a number of contractors, in other words there are only five or so that have the receipts to be in on the bidding a "Catch 22" as defined. "Small business" set-a-sides at most have been only at the 5% of those contracts awarded said to also be to "women and minority run" businesses. A moratorium on them in NYC government was enacted just before 9/11, where it's been proposed that if a bid by a locally based company is within 5% of the "out-of-towner" bid it, it would go to the local business. The same federal government agency however was thwarted in obtaining the records of the former VP Cheney's meeting with energy suppliers by the former President Bush, who claims "I'm not a lawyer". Let's hope it works, they used to open the books on demand.

[Lloyd Chapman]

01:13 PM on 12/15/2010

Thank you for your comment. This 20 year "test program" has done tremendous damage to the small business community. It is clear that our government needs to do more to ensure that small businesses get the 23 percent of government contracts designated for them by federal law. The unfortunate part is that the government knows there is an issue and yet refuses to act.