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Wednesday, February 3, 2010

Obama Small Business Plan Criticized for Hypocrisy

February 3, 2010

Petaluma, Calif. - The American Small Business League (ASBL) criticizes President Barack Obama's latest plan to stimulate small businesses and the middle class economy for being hypocritical. Following last week's State of the Union address, President Obama proposed a series of initiatives for small businesses including a $5,000 per new employee tax credit, and the establishment of a $30 billion small business lending fund created from leftover TARP money. While President Obama's recent rhetoric has been focused on small businesses and job creation, over its first year his administration has continued to allow the diversion of billions of dollars in federal small business contracts to Fortune 500 firms. As a result, thousands of businesses have failed and countless jobs have been lost. (

The Small Business Act directs that the federal government award small businesses, "not less than 23 percent of the total value of all prime contract awards for each fiscal year." Since 2003, over two dozen federal investigations have found that the federal government is not hitting that goal, and that a majority of federal small business contracts have been diverted to Fortune 500 firms. (

In Report 5-15, the Small Business Administration (SBA) Office of Inspector General (IG) referred to the diversion of federal small business contracts to corporate giants as, "One of the most important challenges facing the Small Business Administration (SBA) and the entire Federal Government today."( In October of 2009, the SBA IG referenced this issue as the #1 management challenge facing the agency for the fifth consecutive year. (

In February of 2008, President Obama recognized the magnitude of the problem when he stated, "It is time to end the diversion of federal small business contracts to corporate giants." Two years later, the latest government data clearly shows the Obama Administration is continuing to award billions of dollars a month in federal small business contracts to large businesses. (

The American Small Business League believes if President Obama really wanted to create jobs he would do the following:

1. Issue an executive order to end the diversion of federal small business contracts to corporate giants or push for the passage of H.R. 2568, the Fairness and Transparency in Contracting Act. (
2. Institute the 5 percent set-aside goal for women-owned firms.
3. Restore the SBA's budget and staffing, and open all of the small business offices closed during the Bush Administration.
4. End the comprehensive test program, which allows government prime contractors to circumvent their small business contracting goals. (

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