September 8, 2010
Petaluma, Calif. – President Barack Obama is set to rollout a new economic plan on Wednesday. The American Small Business League (ASBL) predicts that the plan will completely ignore the simplest, most logical and effective means of creating jobs and stimulating the nation’s failing economy; bringing an end to the diversion of federal small business contracts to corporate giants.
Small businesses are the backbone of America’s economy, and a major engine for job creation. According to the U.S. Census Bureau, small businesses are responsible for more than 90 percent of all net new jobs in America, over 50 percent of the gross domestic product (GDP), and over 90 percent of all U.S. exports and innovations. (http://www.sba.gov/advo/research/rs359.pdf)
Congress established small businesses as the economic engine of the nation with the passage of the Small Business Act of 1953. Today federal law requires a minimum of 23 percent of all federal contracts to be awarded to small businesses. (www.asbl.com/documents/small_bus_act.pdf) With the annual federal acquisition budget for foreign, domestic, classified and unclassified acquisitions hovering around $1 trillion, small businesses should be receiving roughly $230 billion a year in federal contracts.
On August 27, the Obama Administration announced that it missed its 23 percent goal, awarding 21.89 percent to small businesses. The ASBL has estimated that as a result of the diversion of federal small business contracts to corporate giants, the government actually awarded less than 5 percent of its purchases to small businesses. (http://www.asbl.com/documents/ASBL_2009_dataanalysis.pdf)
To further compound the issue, since 2003 over a dozen federal investigations have found most federal small business contracts actually go to Fortune 500 firms and corporate giants around the world.
President Obama realized the magnitude of this problem during his campaign when he released the statement, “It is time to end the diversion of federal small business contracts to corporate giants.” To date President Obama has failed to honor that promise. (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php)
“If President Obama really wants to create jobs in the most cost effective and efficient way, he should direct the Small Business Administration to end policies that divert billions of dollars a month in federal small business contracts to corporate giants,” ASBL President Lloyd Chapman said. “This will create more jobs than anything else, and he could do it without congressional approval.”