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Lloyd Chapman

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Do Apple, Bank of America, GM and Chevron Sound Like Small Businesses to You?

Posted: 02/28/2012 5:01 pm

The most recent data from the Federal Procurement Data System (FPDS) shows that last year the Obama administration diverted billions of dollars in federal small business contracts to some of the biggest companies in the world.

A report from the American Small Business League (ASBL) conducted using FPDS shows that 72 of the top 100 federal small business contractors during fiscal year (FY) 2011 were large companies. This number is up from FY 2010 data, which showed 60 large companies among the top 100.

The federal government has a statutory goal of awarding 23 percent of all federal contract dollars to legitimate small businesses. However the federal government has never hit the 23-percent small business contracting goal. Due to fraud, abuse and loopholes, federal agencies report contracts awarded to large companies as small business contracts.

Since 2003, more than a dozen federal investigations have uncovered billions of dollars in federal small business contracts being diverted to large corporations. In a report from October 2011, the Small Business Administration Office of Inspector General (SBA IG) said the SBA's top management challenge was that; "Procurement flaws allow large firms to obtain small business awards and agencies to count contracts performed by large firms towards their small business goals."

According to the FPDS, large companies that were among the top 100 small business contractors for FY 2011 include: BlueCross BlueShield, Sierra Nevada Corporation, General Dynamics Corporation, Harris Corporation, VSE Corporation, GTSI Corporation, Jacobs Engineering Group Inc., Spectrum Group International, Inc., CVR Energy, Inc., Rockwell Collins, Inc. and several others. Each of these companies received at least $86 million in federal small business contracts in FY 2011, and some received upwards of $240 million.

Large companies that were not among the top 100 small business contractors (meaning they received less than $86 million) but received federal small business contracts during FY 2011 include: Apple Inc., Lockheed Martin Corporation, British Aerospace (BAE), L-3 Communications Holdings, Inc., Home Depot, General Motors, Toyota, Sony, Siemens, Ford, Citigroup, IBM, Verizon, ManTech, Shell Oil Company, Chevron Corporation, JPMorgan Chase and co., Coca-Cola, Science Systems and Applications Incorporated (SAIC), PepsiCo, Inc., Bank of America, Wells-Fargo, Panasonic, CVS, Thomson Reuters, General Electric, Comcast, Time Warner, The New York Times Company, Gannett Co. Inc., Hearst Corporation, Walt Disney World Co. and many others.

Misrepresenting your firm as a small business is a felony, but the Department of Justice has NEVER prosecuted a single offender.

In February 2008, Barack Obama addressed the magnitude of this problem stating, "It is time to end the diversion of federal small business contracts to corporate giants." Since taking office, President Obama has failed to adopt policies to end fraud, abuse and loopholes in federal small business programs. In fact, many of his policies will dismantle or weaken federal small business contracting programs.

This most recent report from the ASBL is strong evidence that the proper steps to end fraud, abuse and loopholes in federal small business contracting programs have not been taken. House Small Business Committee Chairman Sam Graves and his colleagues recently introduced a number of new bills to increase the amount of contracts that small business could receive. However, none of the new pieces of legislation are designed to prevent some of the largest companies in the world from receiving billions in small business contracts every month, and are rendered moot.

The Obama administration needs to act by supporting a complete reform of federal small business contracting programs, and changing its decision to close the SBA.

 

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