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Wednesday, April 14, 2010

Small Businesses Sue Government Goliath

by Lurita Doan

A small business association called the American Small Business League (ASBL) did something unexpected this week. ASBL President, Lloyd Chapman, decided to take the Obama Administration to court and expose the growing divergence between the Administration’s stated goals to meet the federal statutes for small business participation versus the Obama Administration’s total failure on federal, small business contracting.

By any measure, Obama’s record on federal, small business contracting has been abysmal. The recent, National Federation of Independent Businesses (NFIB) Small Business Economic Trends Report confirms that “for small business owners, 2009 ended with a thud.”

Many factors have contributed to the disaster in small business contracting. A rush to push the $787 billion Stimulus funding quickly gave federal contracting officers no real options other than to dump the additional federal money onto existing federal contracts that are held by the largest companies. There just was not enough time to conduct procurements to encourage the participation of small businesses. So, small businesses received very little of any of the new federal business or the loans anticipated from the $787 billion Stimulus spending, even though President Obama and Democrats in Congress stated that awards to small businesses were the primary goal.

Worse yet, Obama decided to delay the long-overdue need to increase the number of federal contracting officers that are in critical short supply. Ten years ago, each federal contracting officer was responsible for an average of $300 thousand dollars of federal contracts. Today, each federal contracting officer is responsible for $50 million dollars in federal contracts. Put bluntly, contracting officers have been stretched thinly and no longer have the time needed to open procurements to small businesses.

Many contend that it is simpler and faster to add funding to an existing federal contract or to bundle many disparate governmental needs into huge omnibus contracts that often top $1 billion in size. This may be a bad policy and a poor return for taxpayer dollars, but it is the most expedient process for a federal procurement officer that is required by Congress to get the billions of dollars of new federal money committed quickly.

The Obama Administration has further rigged the deck, for construction contracts, by forcing small businesses to seek Union participation prior to bidding on federal construction and infrastructure jobs. This move, might be great for the Unions, but it destroys innovation and further burdens small businesses with foolhardy regulatory burdens.

The American Small Business League’s decision to bring suit against the government represents one of the few times that a trade organization has mustered the courage to tell the truth about what’s really happening in federal procurements. The fact is, the government has been doing a poor job in contracting for years, but under the Obama Administration, small businesses have been hit especially hard.

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