10/18/2009 05:12 am ET Updated May 25, 2011

Obama Administration Policies Will Divert Funds From Middle Class Economy

The Obama Administration is diverting federal contracts intended for middle class firms to many of the largest corporations in the world. Information on the government's Federal Procurement Data System (FPDS) indicates that Obama officials are counting billions of dollars in contracts awarded to corporate giants around the world towards the federal government's 23 percent small business contracting goal.

The Obama Administration claimed, "2008 was a record year" for federal contracts awarded to small businesses. Some of the firms Obama officials counted as small business included, General Electric, Xerox, Office Depot, Staples, Dell Computer, AT&T, Hewlett-Packard, 3M Company, General Dynamics, Booz Allen Hamilton, Northrop Grumman, L-3 Communications, GTSI, Raytheon, Boeing and Lockheed Martin.

Obama officials also counted dozens of large foreign owned firms such as Rolls-Royce, British Aerospace (BAE) and French firm Thales Communications as small businesses. Over $254 million in contracts to Ssangyong Corporation in South Korea, and over $283 million in contracts to the Italian based Finmeccanica SpA were also counted towards the government's small business goal. Finmeccanica SpA is a publicly traded company headquartered in Italy with over 73,000 employees.

Federal law requires that a minimum of 23 percent of the total value of all federal contracts be awarded to small businesses. Obama officials have further reduced the volume of federal contracts going to middle class firms by under-reporting the actual federal acquisition budget, which is the total dollar amount the percentage is based. Obama officials used a figure of $434 million to arrive at 21.5 percent of federal contracts awarded to small businesses. The actual federal acquisition budget including top-secret projects is in excess of $650 billion)

The American Small Business League (ASBL) projects that by counting big businesses in the United States and Europe as small businesses, and by under reporting the actual federal acquisition budget, the Obama Administration may be shortchanging middle class firms out of as much as $100 billion a year in federal small business contracts.

During his campaign, President Obama released the statement, "It is time to end the diversion of federal small business contracts to corporate giants." A new bill has been introduced into the House of Representatives that would completely halt the flow of federal small business contracts to large businesses. President Obama has not issued a statement of administration policy endorsing the Fairness and Transparency in Contracting Act, H.R. 2568.

Please click here to watch our response to the Obama Administration's small business contracting statistics