THE BLOG

John Boehner Is a Bag of Hot Air

12/01/2011 07:51 pm ET | Updated Jan 31, 2012

The House Speaker's staff posted a blog today (Dec. 1, 2011) titled, "Uncertainty Hampering Small Businesses, GOP Taking Action with Plan for Jobs," heavily criticizing the Obama administration for not taking small business concerns seriously.

Speaker Boehner is correct that President Obama is failing to support small businesses, but he and the GOP are merely using their jobs plan as a ruse to deregulate Fortune 1000 corporations.

Since taking office the president has completely ignored America's oldest and most cost-effective economic stimulus program, the Small Business Act. This existing federal law aims to stimulate the American economy by requiring that a minimum 23 percent of all federal contract dollars be awarded to small businesses. The Act defines a small business as being "independently owned," which excludes publicly traded corporations.

Yet every year, federal agencies fraudulently misreport their funding actions as contracts awarded to small businesses, when in reality, large corporations like Raytheon, Boeing, Lockheed Martin, AT&T, Italian defense giant Finmeccanica, Rolls-Royce and British Aerospace are the true recipients of the majority of federal small business contracts. More than a dozen federal investigations conducted since 2003 confirm this.

In recent weeks, mention of a federal bio-defense contract given to Siga Technologies, a company controlled by private equity mogul Ronald Perelman (a top Democratic donor), has sparked a scandal.

Republicans, who otherwise don't bother to point out contracting fraud, pounced on the $433 million sole-source contract from the Department of Health and Human Services that Siga received in May to make an experimental smallpox treatment, because Democratic donors may have benefited.

Before Siga received the contract, a small business complained about not being allowed to bid on the
smallpox drug contract, bringing attention to the fact that the government was about to give a small business contract worth as much as $2.8 billion to Siga Technologies, a publicly traded company.

According to the Los Angeles Times, the Small Business Administration agreed that Siga's affiliation with Ronald Perelman's holding company, MacAndrews & Forbes, disqualified Siga Technologies from the contract. Still, in the long run (having spent $800,000 on campaign donations and lobbying efforts since 2005) Siga received a $433 million contract to develop the smallpox vaccine without competition.

Siga Technologies threatened The Huffington Post with legal action in October 2010 for reporting that "Siga had named labor leader Andy Stern to its board and compensated him with stock options that would become dramatically more valuable if the company managed to win the contract it sought with HHS."

Siga won the bid one week after the offending Huffington Post article, although the contract was specifically required to be awarded to a small business.

The Los Angeles Times reported last month that "the Obama administration could have awarded the contract to Chimerix as the only eligible small-business applicant. Or it could have reopened the competition to companies of any size. Instead, the administration moved to block all companies -- except Siga -- from bidding on a second offering of the contract."

This flies in the face of American small business programs.

Discoveries such as these are irrefutable evidence that federal contracts with publicly traded companies shouldn't be counted as small business awards and that federal oversight is needed to prevent the highest paying lobbyists from holding a monopoly of the federal acquisitions budget.

And while the GOP is no doubt overjoyed about the potential damage the Siga scandal has inflicted on Obama's incumbency, very few members of Congress are willing to approve legislation that would end federal contracting fraud.

During his 2008 presidential campaign Barack Obama stated, "It is time to end the diversion of federal small business contracts to corporate giants." Since taking office, President Obama has failed to follow on that promise. As a result, during every day of his administration, hundreds of millions of dollars in federal small business contracts are illegally diverted to large businesses.

SBA Inspector General Peggy Gustafson testified before Congress in October, naming the issue of federal small business contracting abuse as a "top management challenge" facing the SBA for the seventh consecutive year.

Georgia Representative Hank Johnson introduced H.R. 3184, "The Fairness and Transparency in Contracting Act," to the House in October. Now under consideration by the House Small Business Committee and House Oversight and Government Reform Committee, H.R. 3184, "The Fairness and Transparency in Contracting Act," presents a straightforward solution to the decade-long existence of federal small business contracting abuse in the United States.

If passed, H.R. 3184 would prohibit publicly traded companies from receiving federal small business contract awards and therefore re-divert more than $100 billion in federal infrastructure spending to small businesses every year. The bill currently has 17 co-sponsors (all Democrats), although H.R. 3184 should have the full support of the House, Senate and Executive branch because it presents a simple, deficit-neutral solution for significant job creation that requires no new taxes and no new spending.

If Speaker Boehner and the GOP wanted to go above and beyond supporting small businesses, they would urge House Small Business Committee Chair Sam Graves to appear on national television daily, campaigning to stop federal small business contracting fraud by supporting H.R. 3184.

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