Obama Administration Juggles the Books to Shortchange Small Businesses Out of Billions

FOR IMMEDIATE RELEASE
August 25, 2009

Petaluma, Calif. – The Obama Administration released its latest small business contracting statistics on August 21, claiming that the federal government awarded 21.5 percent of federal contracts to small businesses. (http://www.asbl.com/documents/20090825TopSmallBusinessContractors2008.pdf)

The American Small Business League (ASBL) has uncovered information within the Federal Procurement Data System - Next Generation (FPDS-NG), which indicates that the government actually did closer to 7 percent with small businesses.

Since 2003, over a dozen federal investigations have found that federal officials consistently inflated the government's actual small business contracting data, and allowed billions of dollars in federal contracts intended for small businesses to be diverted to corporate giants.

One technique used by the government to misrepresent compliance with the congressionally mandated 23 percent small business contracting goal was to create the term, "small business eligible." Using this technique, government officials subtract larger federal prime contracts from the overall federal acquisition budget. Reducing the actual federal acquisition budget significantly inflates the percentage of all federal contracts awarded to small businesses.

The ASBL points out that excluding large contracts as not being "small business eligible" is not supported by any statute of the law, and is contrary to the actual language of the Small Business Act which states, "The Government-wide goal for participation by small business concerns shall be established at not less than 23 percent of the total value of all prime contract awards for each fiscal year." (http://www.sba.gov/regulations/sbaact/sbaact.html) The ASBL estimates that the actual federal acquisition budget for 2008 was approximately $700 billion. The SBA used a figure of $434 billion to arrive at the 21.5 percent number. (http://www.sba.gov/idc/groups/public/documents/sba_homepage/fy2008official_goaling_report.html)

Another technique, uncovered in federal investigations and used by government officials to misrepresent the actual percentage of federal contracts awarded to small businesses, is to include billions of dollars in contracts to Fortune 500 firms and hundreds of other large businesses as small business awards.

Some of the firms Obama officials used to reach the government’s 21.5 percent figure included Lockheed Martin, Textron, Boeing, Raytheon, L-3 Communications, Northrop Grumman, Dell Computer, General Dynamics, Office Depot, Xerox, 3M, Staples, GTSI, General Electric, AT&T, Hewlett-Packard, British Aerospace (BAE), Rolls-Royce, French giant Thales, Ssangyong Corporation headquartered in Seoul, South Korea and Finmeccanica SpA which is located in Italy with 73,000 employees.

In response to the SBA's release of its 2008 small business goaling report, the ASBL conducted a detailed analysis of small business contracting data obtained from FPDS-NG. By excluding the large recipients of federal small business contracts and using the actual federal budget from fiscal year 2000 forward, the ASBL has estimated that legitimate American small businesses have lost an average of approximately $100 billion a year in government small business contracts.

A new bill titled the "Fairness and Transparency in Contracting Act," or H.R. 2568 has been introduced into the House of Representatives would redirect billions of dollars in federal small business contracts back to legitimate American owned small businesses.


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Please click here to watch our response to the Obama Administration’s small business contracting statistics: http://www.youtube.com/watch?v=oV0jeTrYPsM


Contact:
Christopher Gunn
Communications Director
American Small Business League
cgunn@asbl.com
(707) 789-9575