By Editorial Staff
March 30, 2009
The Obama Administration deserves credit for its recent pledge to make it easier for borrowers to apply for Small Business Administration loans and for lenders to supply the cash.
The administration has said it will spend up to $15.4 billion on the effort, most of it spent on buying securities backed by SBA loans sold by financial institutions.
But when it comes to oversight of how federal agencies adhere to rules on providing contracts to small businesses, the administration needs to act swiftly.
Since 2003, a number of federal investigations have concluded that the federal government has provided billions in contracts intended for small businesses to Fortune 500 companies and other large businesses.
Last year, the Washington Post reported billions of dollars in such have been diverted to Fortune 500 firms and thousands of other large businesses around the world.
The Post used a sampling of the $89 billion in contracts to show that companies such as Lockheed Martin and Dell Computer were awarded more than $230 million worth because of their status as “small businesses.”
The newspaper found that up to 38.5 percent of all small business contracts were awarded to Fortune 500 companies.
The American Small Business League estimates that ending the diversion of contracts to large businesses would re-direct $100 billion a year in existing federal infrastructure spending directly to small firms, “creating more jobs and stimulating the economy more than anything else he has proposed so far.”
It’s not like Obama hasn’t been aware of the problem. In February of 2008, the business league points out, he released a statement declaring, “It is time to end the diversion of federal small business contracts to corporate giants.”
Candidate Obama was correct then. Now, President Obama needs to make the effort to hold federal agencies responsible for how they dole out contracts intended for small businesses. And he needs to hold the Small Business Administration accountable for policing its programs.