August 31, 2011
Petaluma, Calif. - The Obama Administration plans to require all federal contractors and subcontractors to report employee pay and benefits. This comes despite President Obama’s recently publicized announcement to curb regulatory burdens, particularly on small businesses.
Existing federal regulations require federal contractors to report the five most highly compensated executives for sub-contracts under prime contracts exceeding $25,000. The pending requirement for reporting employee pay will add to already burdensome regulations on small business contractors. The American Small Business League (ASBL) believes this regulation will create friction between small business owners, their employees and customers.
Federal small business contracting programs have been plagued by rampant fraud and abuse for over a decade.
Federal law requires 23 percent of all federal contracts be awarded to small businesses. Yet the Obama Administration’s 2010 small business contracting data showed that most small business contracts actually go to large businesses. An ASBL analysis of the data found that 61 of the top 100 small business contractors were large businesses.
Since 2003, a series of federal investigations have found that companies like General Electric, Northrop Grumman, Lockheed Martin, British Aerospace (BAE) and Finmeccanica, a defense conglomerate based in Italy with over 70,000 employees, have all received federal small business contracts.
In Report 5-15, the Small Business Administration Office of Inspector General (SBA IG) described the abuse as, "One of the most important challenges facing the Small Business Administration and the entire Federal government today."
President Obama acknowledged the magnitude of the problem during his 2008 presidential campaign when he stated, “It is time to end the diversion of federal small business contracts to corporate giants.”
“When you quit listening to what President Obama says and watch what he does regarding small business, it appears he is trying to drive small businesses out of the federal marketplace,” said ASBL President Lloyd Chapman. “His refusal to stop the diversion of small business contracts to Fortune 500 companies and these new burdensome regulations show that he is not trying to make it easier for small businesses to compete in the federal marketplace, but to make it much more difficult.”