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Monday, November 30, 2009

Small Business Contracting Abuses #1 Problem at SBA for 5th Consecutive Year

SBA IG Cites Contracting Abuses as #1 Problem for the 5th Consecutive Year

November 30, 2009

Petaluma, Calif. - For the fifth consecutive year the Small Business Administration Office of Inspector General (SBA OIG) has described the diversion of federal small business contracts to Fortune 500 firms and other clearly large businesses as the #1 problem facing the SBA.

Since 2003, over 24 federal investigations have found that every year billions of dollars in federal small business contracts are diverted away from legitimate small businesses and into the hands of Fortune 500 firms. According to the latest information released by the Obama Administration the top recipient of federal small business contracts was Textron, a Fortune 500 corporation with 43,000 employees, and $14 billion in annual revenue. Other firms that are receiving federal small business contracts include: Lockheed Martin, Boeing, Raytheon, Northrop Grumman, British Aerospace (BAE), Ssangyong Corporation headquartered in Seoul, South Korea and Finmeccanica SpA, which is located in Italy with 73,000 employees.

In 2005, the SBA OIG released Report 5-15, which referred to the diversion of federal small business contracts to large corporations as "One of the most important challenges facing the Small Business Administration and the entire Federal government today." (

Even President Obama acknowledged the magnitude of the issue when in February of 2008 he promised to end the abuses by stating, "It is time to end the diversion of federal small business contracts to corporate giants." (

To date, the Obama Administration has failed to honor that promise. The American Small Business League (ASBL) estimates that every year over $100 billion in federal small business contracts are diverted to corporate giants.

On May 21, 2009, Congressman Hank Johnson (D - GA) introduced H.R. 2568, the Fairness and Transparency in Contracting Act, to address this issue. The bill was originally drafted by the ASBL, and currently has 17 co-sponsors as well as the support of more than 50 business organizations and chambers of commerce across the country.

To date, the Obama Administration and both the House and Senate small business committees have refused to address this issue or endorse H.R. 2568.

"The fact that the SBA Inspector General has found this issue to be the agency's #1 problem for the fifth consecutive year, yet the SBA has done nothing to address it, goes way beyond incompetence," ASBL President Lloyd Chapman said. "This is by design, and this issue is not going to stop until journalists start asking President Obama why his administration talks about helping small businesses, and then gives hundreds of millions of dollars in small business contracts to corporate giants every day."


Please click here to watch a short clip about the ASBL's concerns:

Christopher Gunn
Communications Director
American Small Business League
(707) 789-9575

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