Obama Jobs Bill Could Be Job Killer for Small Businesses

Obama Jobs Bill Could Slash Contracting Opportunities for Small Businesses

President Barack Obama's small business jobs bill contains a dangerous loophole that could encourage billions of dollars in fraud in small business contracting programs, and protect fraudulent companies from prosecution. The bill is currently pending in the U.S. Senate.

Section 1341 of H.R. 5297, the Small Business Jobs Act, contains provisions that would allow the Small Business Administration (SBA) to develop policies and procedures that would protect large businesses that have misrepresented themselves as small businesses from prosecution for felony contracting fraud.

Since 2003, over a dozen federal investigations have found billions of dollars a month in federal small business contracts have been diverted to Fortune 500 firms, large businesses throughout the U.S. and some of the largest companies in Europe.

In 2005, the the SBA Office of Inspector General (SBA IG) referred to the diversion of federal small business contracts to large businesses as, "One of the most important challenges facing the Small Business Administration and the entire Federal government today."

In Report 5-16, the SBA IG found that large businesses had received federal small business contracts fraudulently by making "false certifications" and "improper certifications."

Section 1341 of President Obama's jobs bill would give the SBA a blank check to develop policies that could protect large corporations from prosecution under the law. Section 16(d) of the Small Business Act prescribes a penalty of up to ten years in prison and a fine of not more than $500,000 per occurrence for firms that have misrepresented themselves as small businesses.

For over a decade, the SBA has attempted to cover-up flagrant abuses in the program by claiming they were the result of miscoding and computer glitches. In one case, Pevco, a Baltimore based small business began losing small business contracts to one of the largest companies in Switzerland. Pevco Chairman Fred Valerino Sr. contacted his congressman, and the SBA responded by claiming that Translogic Corporation received 147 small business contracts over a six-year period "accidentally."

The harm done to small businesses by Section 1341, would greatly outweigh any minor benefit the other provisions of the bill might provide. This paragraph could legalize billions of dollars in federal contracting fraud and be tantamount to repealing the small business act. We are going to do everything we can to block this section of the bill. It would only encourage fraud and abuse, divert more federal funds away from legitimate small businesses, and cost America jobs.

 

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

Comments

[ThePeacemakers]

03:43 PM on 09/16/2010

"Since 2003, over a dozen federal investigations have found billions of dollars a month in federal small business contracts have been diverted to Fortune 500 firms, large businesses throughout the U.S. and some of the largest companies in Europe."

Yep, cause you have a government subsidized economy that creates millionaire/billionaire paupers.

[guveqzero]

02:15 PM on 09/16/2010

Setting up government funding using the existing US infrastructure always has to deal with corruption. Is that the point of the article? So, you want to fix the corruption before we fix the economy? Why don't we do it a the same time? For every million dollars, assign a financial investigator retained at $50,000. Call it the cost of money. Solutions are always possible.

[memememeeeee]

11:34 AM on 09/16/2010

I think moral is so far down the toilet, that he is willing to do anything that will possibly boost peoples moral and outlook on the economy. Now if he realizes that this bill is death for small business in disguise, or if he really is naive to that fact, is something else.

one can only hope that things do not get worse. its apparent that voting people into office does nothing. whether is be Rep, Dem, Ind.. It does not matter. They all lie, they all cheat, and they all steal. Its just a matter of who they do it to. And I will admit I voted for him, and I stand by that proudly. I just "hope" that he is the right guy to do the job... But this bill is scary.

[Better Better]

03:51 AM on 09/16/2010

the first politician to lay out a plan to reduce US debt to GDP to 50% within 10 years is going to set off a monster stock rally and massive US economic boom. Uncertainty gone. America will soar.

[OhioHunter]

12:09 AM on 09/16/2010

This is easily fixed. Simply include Section 16(d) of the Small Business Act in Section 1341 of the Small Business Jobs Act.

[Sievehead]

11:55 PM on 09/15/2010

I think it's more than evident at this point that outside of what amounts to a few measly pesos that somehow manage to evade the grubby hands of the true power-brokers, it's really nobody but the various global criminal enterprise that Obama, the Congress, and all of America actually works and pays taxes for. And don't be fooled by that Elizabeth Warren nonsense - as soon as the election's over, she'll be properly scuttled for a much more trustworthy, and far less troublesome, representative of the moneyed elite. This program is obviously designed to be nothing but a massive plundering of the citizenry with just enough window-dressing for the corn-fed rubes who haven't the brains to figure out the true lay of the land. A deeply saddening revelation, this.

[ran6110]

11:28 PM on 09/15/2010

I've been writing my congressional politicians about this for years and got nothing for my effort but a subscription to their 'happy times' emails and newsletters.

If they really wanted to help the small business community they would close this loophole and investigate the past contracts.

But they are owned so they won't...

[VikingQuest]

10:09 PM on 09/15/2010

As we did with the HC bill . . .

Let's just pass it and find out what's in it later.

[Radar423]

05:23 PM on 09/15/2010

I think Jack Obama is trying to sell us some magic beans here.
It still is amazing to me that big business can buy politicians and get whatever they want. I guess it does make sense from a fiscal standpoint.
You can buy the President for less campaign money then it would cost you from buying a minute of advertising on Super Bowl Sunday.

[giddeeup]

02:14 PM on 09/15/2010

Oh sure! And President Obama says he's trying to HELP small business?! What a load! When are these politicians going to start doing the right thing, vs. what their biggest campaign contributors want?! What a bunch of [fill in the blank].....

[iridium53]

01:23 PM on 09/15/2010

After 20 months in office, nothing could be more clear about Obama - that he is very pro-very big business and that he is anti- small business and anti- the average American.

The Obama Administration - under the advice of Summers (a culprit in Clinton's initial creation of the current financial problems), Geithner (Goldman Sachs chief cheerleader), What Bubble? Bernanke, and, now, the ultimate elitist, Goolsbee - have taken every action they can to support big business at the expense of the average American and small business.

Glad you keep reporting this stuff.

Too bad that the average American isn't catching on.

Unfortunately, the choice is between Repugnantones who are worse than Obama, and Obama.