December 13, 2010
Petaluma, Calif. – The elimination of a potentially fraudulent Pentagon subcontracting program could help spur job creation by increasing the amount of federal subcontracting dollars available for middle class firms.
The Comprehensive Subcontracting Plan Test Program (CSPTP) was established over 20 years ago with the stated mission of increasing subcontracts for small businesses. The American Small Business League (ASBL) has long maintained that the program actually allows large defense contractors to circumvent small business subcontracting goals. As established, the program eliminates subcontracting reports available to the public, the media, and Congress, as well as eliminating all penalties for non-compliance with subcontracting goals.
The ASBL estimates that elimination of the CSPTP would redirect approximately $10 billion a year in additional subcontracting opportunities for middle class firms. Research conducted by the ASBL has shown that over the past 21 years, small businesses have been defrauded of more than $200 billion in federal subcontracts due to the CSPTP.
When first coming into office, President Obama estimated that every billion dollars spent on federal infrastructure projects would create 40,000 jobs. Based on these estimates, ending the CSPTP would create roughly 400,000 new jobs. (http://www.nytimes.com/2008/12/07/us/politics/07radio.html?fta=y) 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)
In October, five members of the House of Representatives, lead by Congresswoman Yvette Clarke (D-NY) requested the U.S. Government Accountability Office (U.S. GAO) to investigate and evaluate the CSPTP to determine if the program was meeting its stated goals. After being in place for over two decades, the CSPTP has never been evaluated by the Pentagon or any federal agency. (http://www.asbl.com/documents/DoDCSPTPLetter.pdf)
“This program has done the antithesis of what Congress said it would. It needs to be eliminated and investigated to determine how much fraud has occurred over the past 21 years,” ASBL President Lloyd Chapman said. “If President Obama and Congress were serious about job creation, they would end programs like the Comprehensive Subcontracting Plan Test Program and ensure that federal contracts meant for small businesses actually go to middle class firms who create over 90 percent of all new jobs.”