July 26, 2011
Petaluma, Calif. – Today the Subcommittee on Contracting Oversight of the U.S. Senate Committee on Homeland Security and Governmental Affairs will hold a hearing titled “Small Business Contracts: How Oversight Failures and Regulatory Loopholes Allow Large Businesses to Get and Keep Small Business Contracts.”
The purpose of the hearing is to examine ways in which, for more than a decade, large businesses have obtained hundreds of billions of dollars in small business contracts.
The first investigation into the diversion of federal small business contracts to large businesses was released in 2003. That investigation was conducted by the General Accounting Office (GAO) and was based on information provided by American Small Business League (ASBL) President Lloyd Chapman. In that investigation the GAO found more than 5,000 large businesses receiving small business contracts. http://www.gao.gov/new.items/d03704t.pdf
Since 2003, the Small Business Administration (SBA) has attempted to justify the diversion of billions in small business contracts to Fortune 500 firms as “miscoding.” This includes small business contracts to Italian defense giant Finmeccanica, Lockheed Martin, Rolls-Royce, British Aerospace (BAE), Raytheon, General Electric and Ssangyong from South Korea. In 2006, SBA issued a press release claiming that the diversion of federal small business contracts was a myth. www.asbl.com/documents/sbamythvfact.pdf
In 2005, the SBA Office of Inspector General (SBA IG) released Report 5-15 that found the diversion of small business contracts to large businesses was, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.” The SBA IG has named the issue as the agency’s top management challenge for the last six consecutive years. http://www.asbl.com/documentlibrary.html#5-15
In 2008, President Obama recognized the magnitude of the issue stating, “It is time to end the diversion of small business contracts to corporate giants.” http://www.asbl.com/documents/20081007_Obama_Promise_Website.pdf
The ASBL has led the drive to end the diversion of federal small business contracts to large businesses. The organization currently has more than a dozen lawsuits against the Obama Administration pending under the Freedom of Information Act.
Representatives from the General Services Administration, SBA and the U.S. Agency for International Development will testify. However, SBA IG Peg Gustafson does not appear on the list of those who will testify.
“Ending the diversion of small business contracts to Fortune 500 firms would do more for the economy than anything the Obama Administration has done to date,” said ASBL President Lloyd Chapman.