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Senate to Hold Hearing on SBA Fraud and Abuse

June 13, 2011

Petaluma, Calif. – On Thursday, June 16th, the Senate Committee on Small Business and Entrepreneurship will hold a hearing titled, “An Examination of SBA Programs: Eliminating Inefficiencies, Duplications, Fraud and Abuse.” Kevin Baron, Director of Government Affairs for the American Small Business League (ASBL), will testify before the committee regarding the continued diversion of federal small business contracts to corporate giants.

Since 2003, a series of federal investigations have uncovered the diversion of billions of dollars a year in small business contracts to large corporations. (http://www.asbl.com/documentlibrary.html)  

In Report 5-15, the Small Business Administration Office of Inspector General (SBA OIG) referred to the issue as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.” The SBA IG has named the diversion of federal small business contracts to corporate giants as one of the most important challenges facing the agency for six consecutive years. (http://www.asbl.com/documents/05-15.pdf)  

Government data shows that this trend continues.  A recent ASBL analysis of the government’s contracting data found 61 large firms in the top 100 recipients of small business contracts. These large firms received $10.7 billion, or a staggering 64.5 percent of dollars intended for legitimate small businesses. (www.asbl.com/documents/ASBL_2009_dataanalysis.pdf)

The federal government has a congressionally mandated goal of awarding 23 percent of all government contracts to small businesses. The ASBL has estimated the diversion of small business contracts to corporate giants has lead to the government awarding no more than 5 percent of government contracts to small businesses; an 18 percent shortfall.

In April 2010, Senator Mary Landrieu (D-LA), the Chair of the Committee on Small Business and Entrepreneurship estimated that, “increasing contracts to small businesses by just 1 percent,” would create more than 100,000 new jobs. Based on an ASBL examination of government contracting data, and Chairwoman Landrieu’s estimation, ending this abuse would create upwards of 1.8 million jobs.
(http://sbc.senate.gov/public/index.cfm?a=Files.Serve&File_id=bc065833-dafc-46c5-9e6f-21209a532de2)

“Since President Obama was elected, unemployment has jumped from 7.6 to 9.1 percent.  Ending the diversion of federal small business contracts to corporate giants would put more existing federal spending into the hands of our nation’s chief job creators than anything proposed by the Obama Administration to date,” ASBL President Lloyd Chapman said. “In February of 2008, President Obama promised to end this abuse.  President Obama can honor that promise by passing the Fairness and Transparency in Contracting Act.” (http://www.asbl.com/documents/20081007_Obama_Promise_Website.pdf)


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