May 27, 2009
Petaluma, Calif. – On Thursday, May 21, Georgia Congressman Hank Johnson (GA-04) introduced a bill into the House of Representatives that could redirect billions of dollars in federal small business contracts back into the hands of legitimate small businesses. If passed into law, the bill will create millions of new jobs and provide one of the most significant economic stimulus plans ever proposed.
Bill H.R. 2568 is titled, “the Fairness and Transparency in Contracting Act of 2009.” The new bill is the only legislation ever introduced in Congress to halt the diversion of over $100 billion a year in federal small business contracts to Fortune 500 firms and thousands of other large businesses.
Congressman Johnson worked with the staff at the American Small Business League (ASBL) for several months to get the bill into its final form before he introduced it into the House of Representatives on May 21. (http://www.house.gov/apps/list/press/ga04_johnson/05_26_09_small_biz.shtml)
Current federal law based on the original Small Business Act requires a minimum of 23 percent of the total value of all federal contracts and subcontracts be awarded to small businesses. Since 2003, over a dozen federal investigations have been released, which found Fortune 500 firms and even some of the largest corporations in Europe were the actual recipients of most federal small business contracts.
In Report 5-15, the Small Business Administration Office of Inspector General (SBA IG) described the problem as, "One of the most important challenges facing the Small Business Administration and the entire Federal government today…" (http://www.sba.gov/IG/05-15.pdf)
President Barack Obama acknowledged the magnitude of the problem when he released the statement, "It is time to end the diversion of federal small business contracts to corporate giants." (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php)
The Fairness and Transparency in Contracting Act prevents the federal government from continuing to report contracts to publicly traded firms as small business awards. The original Small Business Act stipulates that a small business must be "independently owned." Firms that are publicly traded are publicly owned, and do not qualify as "independently owned."
The latest U.S. Census Bureau statistics indicate 98 percent of U.S. firms have less than 100 employees and create over 97 percent of net new jobs in America. During the 2008 election cycle, President Obama stated that every billion dollars spent on federal infrastructure projects could create up to 40,000 jobs. Based on this estimation, H.R. 2568 could create up to 4 million new jobs.
"It's unconscionable that some large corporations are the beneficiaries of small business contracts," Congressman Johnson said. "Especially given how many small businesses are struggling in this recession. H.R. 2568 will go a long way in helping correct this egregious error."