THE BLOG
02/23/2009 05:12 am ET Updated May 25, 2011

Bush May have Cheated Small Businesses Out of a Trillion Dollars in Contracts

There is no way to know exactly how many billions of dollars George W. Bush cheated American small businesses out of during his eight years in office. Officials in the Bush Administration went to extreme lengths to make it difficult, if not impossible to tell how many billions of dollars in government small business contracts were actually diverted to corporate giants around the world.

Under Bush, the Justice Department went to federal court on several occasions to fight Freedom of Information Act (FOIA) requests for the specific names of firms that had received federal small business contracts. They fought the release of reports that uncovered large businesses committing fraud to illegally receive government small business contracts. A case is currently pending in the 9th Circuit Court of Appeals after the Bush Justice Department appealed a San Francisco Federal District Court judges ruling to turn over the names of all firms that received federal small business contracts for 2005 and 2006 to the American Small Business League (ASBL). (http://www.asbl.com/showmedia.php?id=1150)

Since 2003, 15 federal investigations have uncovered the diversion of billions of dollars in federal small business contracts by Bush officials to Fortune 500 firms and thousands of other large businesses in the U.S. and Europe. (http://www.asbl.com/documentlibrary.html)

One investigation by the GAO found, "Over 10,000 Indefinite Delivery Indefinite Quantity (IDIQ) contracts are missing in the system [FPDS]," and "The identification numbers assigned to each contract awarded prior to FY2003 are concealed." (http://www.asbl.com/documents/fpdsaccuracyletter10000.pdf)

In 2005, the Small Business Administration (SBA) Office of Inspector General released report 5-15, which stated, "One of the most important challenges facing the Small Business Administration 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)

In another attempt to cover up the diversion of federal small business contracts to large corporations, Bush officials removed the number of employees and annual volume fields from the Central Contractor Registration (CCR) database. This move made it almost impossible to uncover the identities of large businesses masquerading as small businesses in the government's vendor databases. (http://www.ccr.gov/)

Based on the results of the 15 federal investigations, statements of current and former government executives and dozens of investigative stories by main stream media such as the Washington Post, the Associated Press, the Miami Herald, the Wall Street Journal and ABC, CBS and CNN, the American Small Business League estimates Bush Administration officials diverted up to $100 billion a year in government small business contracts to Fortune 500 firms and other large businesses.

Each time a new federal investigation or a major media story was released, which found Fortune 500 firms had received billions of dollars in federal small business contracts, Bush officials at the SBA would claim the findings were the result of honest mistakes or "miscoding." They have never explained why the "miscoding" mistakes (http://www.asbl.com/asbl.resource/content/supdoc/hr3567/ASBL0820.pdf) always resulted in federal small business contracts being diverted to Fortune 500 firms. On several occasions the SBA press office even issued press releases claiming it was a "myth" that large businesses had received federal small business contracts. (http://www.asbl.com/documents/sbamythvfact.pdf)

For eight years Bush Administration officials refused to implement a federal law establishing a 5 percent federal contracting goal for woman-owned firms. Bush Administration officials at the SBA closed the office to assist veteran-owned firms. The vast majority of SBA staff designated to assist minority-owned firms were laid off.

Bush cut the SBA's budget and staffing to the point that the agency could barely function. Hundreds of the SBA's most experienced staff were laid off.

After 9/11, the SBA allowed millions of dollars in federal disaster relief funds designated for small businesses affected by the terrorist attack in New York to be diverted to unaffected firms all across the country. (http://www.asbl.com/showmedia.php?id=86)

During recovery efforts following major hurricanes like Katrina and Ike, hundreds of small businesses went bankrupt because government financial assistance was delayed as the result of SBA staffing cuts. Recovery work and contracts that could have been given to small businesses, more often went to very large companies.

Considering the volume of federal small business contracts that were diverted to large businesses, and the lost contracting opportunities for small businesses and firms owned by women, minorities and veterans, the Bush administration likely cheated small businesses out of over $1 trillion.

Small businesses may not fair much better under President Obama. To date, President Obama has not proposed a single policy to stop the flow of over $400 million a day in federal small business contracts to corporate giants. Even worse, President Obama appears to favor a change in federal law that will divert federal small business contracts to firms owned and controlled by some of the nation's wealthiest venture capitalists.

If President Obama does follow in George W. Bush's footsteps and enact legislation and policies that will divert even more government small business contracts to large businesses and wealthy investors, he will most likely do just what President Bush did and talk about what a valuable resource small businesses are to our nation's economy while he is doing it.