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Tuesday, May 12, 2009

Dear President Obama, Why Are You Cheating Small Businesses?

Do these companies sound like small businesses to you? Halliburton, Rolls-Royce, Wal-Mart, Home Depot, John Deere, Dell Computer, Xerox, Sherwin-Williams, and British Aerospace (BAE). How about Buhrmann NV in Amsterdam with 26,000 employees worldwide?

These are just a few of the thousands of corporate giants from around the world that your administration is giving billions of dollars a month in government small business contracts to.

Since 2003, there have been over a dozen federal investigations that found Fortune 500 firms and thousands of large businesses are receiving government small business contracts. The Small Business Administration (SBA) Office of Inspector General described the magnitude of this problem very eloquently in report 5-15. The report states, "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."

When you were running for president, you seemed to understand the staggering negative impact this problem was having on our economy.

Let me remind you of what you said during the campaign, "98 percent of all American companies have fewer than 100 employees. Over half of all Americans work for a small business. Small businesses are the backbone of our nation's economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants."

You were absolutely right, small businesses are the backbone of our nation's economy. In fact, according to the latest statistics from the U.S. Census Bureau, small businesses with less than 100 employees create over 97 percent of all new jobs in America.

Nobel Prize winning economist Paul Krugman said your economic policies are almost certain to fail, and they are, "more than disappointing. In fact, it fills me with a sense of despair." Ditto for me.

Allowing Fortune 500 firms to participate in economic stimulus programs for small businesses, especially during a recession, is absolutely moronic and asinine. How in the world do you expect to create jobs and stimulate the economy if you won't even stop the diversion of billions of dollars in federal small business contracts away from the middle class firms that create 97 percent of all new jobs in this country?

Here is my suggestion, why don't you do what you said you would do during the campaign and stop giving federal small business contracts to "corporate giants"? I even have a way you can accomplish that at no additional cost to the taxpayers. I have written legislation titled the "Fairness and Transparency in Contracting Act." It is based on one of the most foundational principals of the original Small Business Act of 1953, which states that a small business must be "independently owned." My lawyers all tell me that would clearly exclude publicly traded firms. The Fairness and Transparency in Contracting Act simply says, the federal government can no longer report awards to publicly traded companies and their subsidiaries as small business awards. Tah Dah, no more small business contracts going to "corporate giants."

Your economic stimulus plan calls for $111 billion in infrastructure spending this year. My guess is about 90 percent of that money will go to big businesses. I don't know if anyone has told you this, but big businesses in America have not created one net new job since 1977.

With my plan, you simply stop giving government SMALL BUSINESS CONTRACTS on existing infrastructure spending to "CORPORATE GIANTS." I have won several Freedom of Information Act cases against the government and I have tons of data that indicates around $100 billion a year in federal small business contracts are being diverted to big businesses. Ask Paul Krugman, or one of your top economic advisors like Dr. Laura Tyson, if you can create any new jobs and stimulate the national economy by redirecting $100 billion a year in current federal infrastructure spending to the middle class firms that create over 97 percent of all new jobs in America.

$100 billion a year, year-after-year, redirected to the American small businesses that create 97 percent of all new jobs, using the original congressional intent of a 55-year-old economic stimulus program called the Small Business Act. Did I mention that it's free to the taxpayers? What's not to love?

P.S. How about a quick executive order, and we can get this economy back on track pronto?

Lloyd Chapman
President, American Small Business League