January 6, 2011
In a recent letter to the Administrator of the U.S. Small Business Administration (SBA), Senators Mary Landrieu (D-LA) and Olympia Snowe (R-ME) used strong rhetoric to describe a wide variety of problems facing federal small business programs, but failed to mention the job killing diversion of small business contracts to large corporations. Senators Landrieu and Snowe are the chair and ranking member of the Senate Committee on Small Business and Entrepreneurship respectively.
For the last five years, the SBA Office of Inspector General (SBA IG) has named the issue as the top management challenge facing the agency. In Report 5-15, the SBA IG went as far as to state, “One of the most important challenges facing the Small Business Administration and the entire Federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards.”
In addition to Report 5-15, a series of federal investigations have uncovered billions of dollars in small business funds flowing into the hands of large businesses.
The most recent information released by the Obama Administration shows large recipients of small business contracts such as Boeing, Lockheed Martin, Northrop Grumman, Raytheon, Dell Computer, Xerox, SAIC, General Dynamics, Bechtel and John Deere. (www.asbl.com/documents/ASBL_2009_dataanalysis.pdf)
The Small Business Act requires that a minimum of 23 percent of the total value of all prime contracts be awarded to small businesses. As a result of this flagrant abuse, the American Small Business League (ASBL) has estimated that less than 5 percent is awarded to small businesses every year. This figure equates to the diversion of more than $100 billion a year in small business contracts to some of the largest corporations in the world, and millions of lost jobs.
In April of 2010, Chairwoman Landrieu estimated that increasing contracts to small businesses by just 1 percent would create more than 100,000 new jobs. Based on this estimate, ending the flow of federal small business contracts to corporate giants could create more than 1.8 million new jobs. Despite these figures, Chairwoman Landrieu has not passed legislation to the end the abuse. (www.smallbusinessmajority.org/_docs/resources/SBC_Jobs_Package.pdf)
“This is nothing more than meaningless posturing. During their years at the helm of the Senate small business committee, Senators Landrieu and Snowe have done nothing to stop the diversion of federal small business contracts to large corporations,” ASBL President Lloyd Chapman said. “If they really wanted to help America’s 27 million small businesses they would pass legislation to end this abuse immediately.”