New Obama Small Business Rescue Plan Ignores Abuses In Government Contracting Programs

Senator Barack Obama's new small business emergency rescue plan is being criticized for ignoring a series of federal investigations that found the government has diverted billions of dollars in federal small business contracts to many of the largest firms in the United States and Europe. (http://www.asbl.com/obamasmallbusinessrescueplan.pdf)

In March of 2005, the Small Business Administration (SBA) Office of Inspector General issued Report 5-15, which stated, "One of the most important challenges facing the Small Business Administration (SBA) and the entire Federal Government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards." (http://www.sba.gov/IG/05-15.pdf)

Since 2003, more than a dozen federal investigations have found hundreds of billions of dollars in federal small business contracts have been diverted to some of the largest corporations in the world. (http://www.asbl.com/documentlibrary.html) During that time, CBS, ABC, Associated Press and CNN have aired investigative stories which found federal small business contracts actually went to firms such as: Lockheed Martin, Boeing, Raytheon, Rolls-Royce, General Dynamics, John Deere, Microsoft, Wal-Mart, Hewlett-Packard, Buhrmann NV a Dutch conglomerate and British Aerospace Engineering (BAE).

The American Small Business League (ASBL) projects that middle-class firms are losing over $100 billion a year in federal small business contracts to Fortune 500 firms and other large businesses. Estimates from federal officials have ranged from $65 billion to over $100 billion a year.

In February of this year, Senator Obama issued the following statement, "98 percent of all American companies have fewer than 100 employees. Over half of all Americans work for a small business. Small businesses are the backbone of our nation's economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants." (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php)

In stark contrast to this bold statement, which was issued in February of 2008, Senator Obama is now refusing to even mention the diversion of billions of dollars in federal small business contracts to Fortune 500 firms. He has declined to discuss it publicly, or to mention the issue on his web site.

Small business owners are concerned that pressure, and or political contributions from Fortune 500 firms, which are currently receiving a lion's share of federal small business contracts, may have contributed to Senator Obama's decision to distance himself from his pledge to end the diversion of small business contracts to corporate giants.

Follow Lloyd Chapman on Twitter: www.twitter.com/LloydChapman

Comments

[socalgal59]

There are billions of dollars going to small business through the large contracts. My husband has worked in the public sector his entire career (+37 years). He has managed some pretty big budgets ($700+ million annual operating; $1.5 billion capital). I have also worked in the pubic sector and dealt with procurements.

Every pubic agency--local, state, federal--has a Disadvantage Business Enterprise program. DBE's are small minority- and women-owned companies. Every procurement contract has a DBE requirement. This means a company that is not a DBE or small company must subcontract a portion of the contract to a DBE. In other words, all large companies doing business with the government are required to subcontract a percentage of the work to a DBE. DBE's are usually not able to 1) produce a bid in response to a Request for Proposal as writing a bid for a large contract can cost a company tens of thousands of dollars; 2) not capable of providing all of the services/supplies called for in the RFP.

However, many are capable of providing a portion of the services/supplies. Thus, the large companies must provide DBEs with a portion of the business. A formula is used to determine the percentage of work that must be subcontracted to a DBE. The larger the contract, the higher the percentage—and the more DBEs used to meet that percentage. Almost every small business has a woman or minority as an owner/partner.