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Small Business Administration Cheats Small Businesses Again

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On July 2, the Small Business Administration (SBA) released their latest fraudulent, fabricated and false claim that the federal government has come very close to achieving the 23 percent small business contracting goal require by federal law.

As usual, to eliminate media coverage, the SBA quietly released their claim that the government awarded $89.9 billion or 22.25 percent of all federal contracts to small businesses in FY 2012.

Here are the facts. Federal law requires a minimum of 23 percent of the total value of all federal contracts be awarded to small businesses. According to the Federal Procurement Data System (FPDS), the actual federal acquisition budget for FY 2012 is around $1.1 trillion. Legitimate small businesses should have received at least $253 billion in contracts.

The latest data from the FPDS clearly indicates the SBA has included billions in awards to Fortune 500 firms and other large businesses in their small business contracting data.

Some of the firms the SBA included in their small business contracting data included, Chevron, Berkshire-Hathaway, Apple, General Electric, AT&T, Hewlett-Packard, Verizon, J.P. Morgan Chase & Company, IBM, Bank of America, Costco, Wells Fargo, Citigroup, Archer Daniels Midland, Prudential Financial, Home Depot, Microsoft, Walgreens, Johnson & Johnson, Caterpillar, Pepsi, Comcast, Dell, Coca-Cola, Walt Disney, Abbott Laboratories, DuPont, Sprint, Honeywell, Delta Air Lines and Sprint Nextel. Over $215 million in contracts to General Dynamics were reported as small business contracts.

Beginning in 2005, the SBA Office of Inspector General (SBA OIG) described the diversion of federal small business contracts to corporate giants as, "One of the most important challenges facing the Small Business Administration and the entire federal government today..."

The SBA OIG has named the diversion of federal small business contracts to corporate giants as the number one problem at the SBA for nine consecutive years.

In 2008, President Obama even stated, "It is time to end the diversion of federal small business contracts to corporate giants."

If you look at the accurate federal acquisition budget and look at the actual volume of federal contracts awarded to legitimate small businesses, small businesses have been cheated out of approximately $200 billion a year for over a decade. That's two trillion dollars over 10 years.

Clearly one of the reasons this blatant fraud at the SBA has been allowed to go on for over a decade is the inadequate and poor quality of media coverage on the issue.

CBS, ABC, NBC and CNN have all covered this story but in over 10 years of media coverage of this issue, no journalist has ever interviewed any SBA administrator on this issue. No Journalist has ever mentioned federal law does not allow contracts to any Fortune 500 firm or other large business to be included in federal small business contracting data. No journalist has ever mentioned the federal acquisition budget the SBA uses to calculate their percentage is less than half of the real federal acquisition budget which would slash the actual percentage of awards to small businesses by 50 percent. No journalist has ever reported the SBA's own Office Of Inspector General has been reporting blatant fraud in the program since 1995.

No journalist has ever reported the GAO essentially accused the SBA and other federal executives of encouraging fraud in report GAO-10-108.

It stated, "By failing to hold firms accountable the SBA and contracting agencies have sent a message to the contracting community there is no punishment or consequences for committing fraud."

No journalist has ever asked the SBA to explain why the "anomalies" they claim report awards to Fortune 500 firms as small business awards have gone on for over 10 years and always divert small business contracts to large businesses, but never the other way around.

No journalist has ever asked the SBA to explain why they claimed it was a "myth" that large businesses received federal small business contracts in a 2007 press release.

No journalist has ever reported the only organization that has opposed the SBA diverting small business contracts to Fortune 500 firms is the American Small Business League.

No journalist has ever reported the only individual in America to write legislation and get it introduced into Congress to end the diversion of federal small business contracts to corporate giants was Lloyd Chapman. I wrote the Fairness and Transparency in Contracting Act, HR 1622, seven years ago. No journalist has ever reported that Congress has refused to pass any legislation to stop the fraud and abuse against American small businesses.

One good investigative journalist could end this 10-year-old federal contracting scandal and stop the government from cheating America's 28 million small businesses out of over $200 billion a year. Just one. Where are you?

Click here for the American Small Business League's latest video.