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Monday, March 19, 2007


No Plans From New Congress to Stop Fraud and Abuse

Petaluma, Calif.- Since the Democrats took control of Congress in January, more than $10 billion in small business set-aside contracts have been diverted to some of the largest firms in the U.S. and not one piece of legislation has been passed to stop it.

There have been over 400 stories in the media and 14 federal investigations over the last four years on large businesses receiving small business procurement awards. The Small Business Administration Inspector General called this situation “one of the most important challenges facing the Small Business Administration and the entire Federal government today.”

Lloyd Chapman, president of the American Small Business League, said that although the Democrats pledged to clean up fraud, corruption and abuses in government while campaigning for Congress, they have given nothing but lip service to this issue.

“The Democrats have blamed the Republicans for years for the loopholes and abuse in federal small business contracting and yet, now that they are in power, they have done nothing to change it,” Chapman said. “If you look at the House and Senate Small Business Committee Web sites, you will notice that any mention of small business contracting abuse is conspicuously absent.”

Sen. John Kerry, current head of the Senate Small Business and Entrepreneurship Committee, who has been a proclaimed advocate for small businesses for nearly two decades, has publicly stated that the current policies are inefficient.

“Politicians love to say they want to help small businesses,” Kerry said in the Marin Independent Journal. “But how can any politician make that claim with a straight face when contracts that should be going to these hard-working small businesses are being turned into giveaways to large multinational companies?"

Rep. Nydia Velázquez, the head of the House Small Business Committee, has also challenged current SBA policies in investigative reports on CBS, ABC, and CNN and in the New York Times.

“The fact that large businesses are being awarded with small-business contracts, and that there is no system in place with penalties or consequences for this, is extremely concerning,” Velázquez said in a New York Times article in December 2006.

Chapman said that despite all the statements Velázquez and Kerry have given regarding the magnitude of this problem, they continue to be “all show and no go.”

“I hope we get more than just talk from the Democrats like we got from the Republicans,” Chapman said.

ASBL research concluded that approximately half of all funds reported as going to small businesses actually went to some of the largest firms in the U.S., totaling nearly $65 billion a year. Chapman said this problem could be easily resolved with passing an annual recertification policy, but instead, the SBA passed a five-year plan that will allow large businesses to continue collecting small business awards until 2012.

“Five-year recertification is just like repealing the Small Business Act for the next five years,” Chapman said. “I can’t believe we’re even talking about how many more years Fortune 1000 firms will get small business contracts.”

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