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Small Business Administration Diverts Contracts to Fortune 500 Firms

July 17, 2013

On July 1, the American Small Business League (ASBL) predicted the Small Business Administration (SBA) would release their annual Small Business Contracting Scorecard later that week. The next day the agency quietly released their numbers, including billions of dollars to Fortune 500 companies in their small business contracting data.

Contracts to Chevron, Apple, General Electric, AT&T, Hewlett-Packard Verizon, IBM, Dell, Costco, Wells Fargo, Home Depot, Microsoft, Walgreens, Johnson & Johnson, Pepsi, Intel, Coca-Cola, FedEx, DuPont, Honeywell, Oracle, Delta Air Lines and Sprint were counted as small business contracts in order for agencies to meet their goals.

The SBA’s false claim that small businesses received 22.25 percent of federal contracts was based on a violation of both statutes in the Small Business Act that defines a legitimate small business and the statute that requires small business shall receive “A minimum of 23 percent of the total value of all federal contracts.”

The Small Business Act defines a small business as one that is independently owned and operated, not dominant in its field and has no more than 1,500 employees. The SBA has come up with policies that are illegal and allow them to intentionally divert contracts to Fortune 500 and other large companies.

As early as 1995, the SBA Office of Inspector (SBA OIG) has reported fraud in contracting programs. In SBA Inspector General Peggy E. Gustafson’s latest report to Congress she stated, “The agency faces a number of challenges in carrying out its mission, including fraudulent schemes affecting all SBA programs...”

The SBA OIG has named the diversion of small business contracts to corporate giants as the top management challenge facing the SBA and in Report 5-15 from 2005, they named it “One of the most important challenges facing the Small Business Administration and the entire Federal government today...”

In 2009 the General Accounting Office (GAO) issued report GAO-10-108 after investigating a small business program managed by the SBA. It stated, “The SBA and contracting agencies have sent a message to the contracting community there is no punishment or consequences for committing fraud.”

NBC, CBS, ABC and CNN have all covered the story on the diversion of federal small business contracts to corporate giants. The ASBL predicts Obama will attempt to close the SBA by combining it with the Commerce Department, in an effort to cover up billions of dollars of fraud.

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