September 20, 2010
In February of 2008, Barack Obama promised small businesses that if elected president he would, “end the diversion of federal small business contracts to corporate giants." (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php)
President Obama’s campaign promise was based upon a series of federal investigations, which found that Fortune 500 firms and thousands of large businesses in the U.S. and Europe received billions of dollars in federal small business contracts. The first federal investigation was held in May of 2003. Today, large businesses continue to receive billions of dollars in federal contracts intended for small businesses.
The American Small Business League (ASBL) strongly encourages Congress to add language to H.R. 5297, the Small Business Jobs Act, which would simply halt the diversion of federal small business funds to corporate giants. The ASBL maintains that ending these abuses would be the most effective and efficient means of stimulating the American economy and creating jobs.
According to the U.S. Census Bureau, small businesses are responsible for more than 90 percent of all net new jobs, 50.2 percent of the non-farm private sector workforce, 50 percent of the gross domestic product (GDP) and 90 percent of exports and innovations. (http://www.sba.gov/advo/research/rs359.pdf)
The most recent information released by the Obama Administration indicates that of the top 100 recipients of federal small business contracts, 65 percent of the dollars actually went to large businesses.(http://www.asbl.com/documents/ASBL_2009_dataanalysis.pdf)
The federal government has a goal of awarding 23 percent of all government contracts to small businesses. The ASBL has estimated that the government is currently awarding less than 5 percent of its purchases to small businesses. Ending the diversion of federal small business contracts to corporate giants could increase the volume of government dollars awarded to small businesses by more than 18 percent.
In April of 2010, U.S. Senate Committee on Small Business and Entrepreneurship Chair, Mary L. Landrieu (D-LA), estimated that increasing contracts to small businesses by just 1 percent, would create more than 100,000 new jobs. Based on this estimate, ending this fraud and abuse could create more than 1.8 million new jobs. (www.smallbusinessmajority.org/_docs/resources/SBC_Jobs_Package.pdf)
“If President Obama wants to create jobs, it’s real simple; quit giving small business contracts to Fortune 1000 firms and large businesses. He could do that with one or two sentences in the jobs bill,” ASBL President Lloyd Chapman said.