June 30, 2011
Petaluma, Calif. – On Wednesday, June 29, President Barack Obama addressed the American people regarding deficit reduction and job creation. The American Small Business League (ASBL) maintains President Obama could meet these ends, and stimulate the economy, by issuing an executive order to stop the diversion of billions of dollars a year in federal small business contracts to corporate giants.
“Creating jobs and growing the economy help to reduce the deficit,” President Obama stated during his press conference.
The federal government has a congressionally mandated goal of awarding 23 percent of all government purchases to small businesses. Fraud, abuse, loopholes and a lack of oversight in small business programs have prevented the government from meeting this goal. The ASBL has estimated that during fiscal year (FY) 2010, federal agencies awarded less than 5 percent of government contracts to small businesses.
Since 2003, a series of federal investigations have uncovered the diversion of billions of dollars a year in federal small business contracts to Fortune 500 corporations and other large businesses. In Report 5-15, the Small Business Administration Office of Inspector General referred to the issue as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.” (http://www.asbl.com/documents/05-15.pdf)
On Tuesday, the ASBL released an analysis of the top 100 recipients of federal small business contracts during FY 2010. In total, the ASBL identified 61 large businesses in the top 100, receiving more than $8.8 billion in small business contracts. Based on its analysis, and the government’s own data, the ASBL has estimated that every year more than $100 billion in federal small business contracts are diverted to some of the largest corporations in the world. (http://www.asbl.com/documents/asbl_2010_dataanalysis.pdf)
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.
“If President Obama is serious about spurring job growth and bringing this country out of recession, he must take action and end the diversion of federal small business contracts to corporate giants,” ASBL President Lloyd Chapman said. “This would direct billions of dollars a year in existing federal infrastructure spending to the middle class and our nation’s chief job creators, the small business community.”