By American Small Business League
June 14, 2012
Over $375 million in U.S. funds meant for minority-owned small businesses have been awarded to Rosoboronexport, Russia’s state-owned arms trading company— the company currently raising headlines for its role as lead arms supplier to Syrian dictator Bashar al-Assad.
The U.S. Army awarded the no-bid contracts to Rosoboronexport in May 2011 to supply the Afghan military with 21 Mi-17 helicopters.
Rosoboronexport is Russia’s leading international arms dealer but its $377 million Army contracts were originally entered into the Federal Procurement Data System (FPDS) as awards to a small minority-owned business and are currently labeled as contract awards to a minority-owned business.
Rosoboronexport is just one of the many foreign defense contractors that have received billions of dollars in federal small business contracts in recent years. Other foreign-owned firms that received U.S. small business contracts include BAE, Rolls-Royce, Italian firm Finmeccanica, Ssangyong Co. in South Korea, Thales and Buhrmann N.V. in Holland.
In 2005, The Small Business Administration Office of Inspector General issued Report 5-15, which stated: “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 2008, President Obama promised to end these abuses by issuing the statement, “It is time to end the diversion of federal small business contracts to corporate giants.”
Legislation has been introduced to prevent large corporations and foreign defense contractors (such as Rosoboronexport) from receiving federal small business contracts but neither the President nor committee leadership have supported the bill (H.R. 3184).
“The U.S. is giving minority-owned small business contracts to Russia’s leading arms dealer — this is a prime example of the extreme fraud and abuse that persists in federal programs for small and minority-businesses,” said ASBL President Lloyd Chapman. “These rampant abuses have gone on for the last decade because the mainstream media refuses to report on the issue, Congress has refused to address the problems, and the President has gone back on his campaign promise to end the diversion of federal small business contracts to corporate giants.”