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Why Does Washington Hate Small Businesses?

When you look at the facts, the only possible conclusion you could come up with is that the federal government is so pro-big business that they have become anti-small business.

Seal of the Small Business Administration

The real job creators suffer after cuts to the Small Business Administration.

Back in 2009, after the Government Accountability Office (GAO) investigated the Small Business Administration (SBA) they released Report 10-108, “By failing to hold firms accountable, SBA and contracting agencies have sent a message to the contracting community that there is no punishment or consequences for committing fraud.”

Is the GAO saying the SBA and other agencies are encouraging firms to commit felony federal contracting fraud to cheat legitimate small businesses out of billions of dollars in contracts? Sounds like it to me.

In February of 2008, President Obama made the statement, “It is time to end the diversion of federal small business contracts to corporate giants.” Since he has taken office, up to 235 Fortune 500 firms a year have received federal small business contracts.

In 2005, the SBA Office of Inspector General released Report 5-15 that stated, “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.”

The rampant fraud and abuse in federal small business contracting programs has been uncovered in dozens of federal investigations and investigative reports in the mainstream media.

Over the last 24 months, the SBA’s budget has been cut more than any other agency in government. While most agencies have seen their budgets increase by as much as 10% a year, the SBA’s budget has been slashed by over 25%. Why? I thought we were trying to create jobs here in America. The US Census Bureau data clearly indicates small businesses are responsible for over 90% of all net new jobs. Why haven’t the President and Congress doubled the SBA’s budget? The SBA is the only agency in government to help small businesses.

Additionally, the Small Business Act mandates that a minimum of 23% of all federal contracts be awarded to small businesses and is one of the most efficient and effective economic stimulus and job creation programs in government. Yet still, both Republicans and Democrats in Congress have agreed to gut the SBA budget. Why?

Last week, the House Small Business Committee voted unanimously to cut the SBA budget by an additional $50 million. Why?

J.D. Harrison of the Washington Post did a story last week about the House Small Business Committee proposing to cut the SBA budget even further because they were not doing enough to prevent fraud. Does that make sense?

Why aren’t they increasing the budget for the SBA Office of Inspector General so they can crack down on the widespread fraud that has been uncovered in federal small business programs for over a decade?

I have a bill in the House Small Business Committee, H.R. 1622, The Fairness and Transparency in Contracting Act that would completely halt the diversion of federal small business contracts to Fortune 500 firms and large businesses. The Committee has never voted it on. Why?

My bill does not require any new spending or any new taxes. It would redirect up to $100 billion dollars a year in existing federal infrastructure spending back into the middle class and create millions of net new jobs. Why hasn’t this bill been signed into law?

Every year of the Obama Administration the Inspector General for the SBA, Peg Gustafson, who was appointed by President Obama, has named the diversion of federal small business contracts to large businesses as the number one problem at the agency. No policies or legislation have been adopted to stop it. Why?

Every SBA Inspector General for nine years has named the diversion of federal small business contracts to big businesses as the number one problem at the agency. Why hasn’t the SBA adopted simple solutions to stop Fortune 500 firms from hijacking federal small business contracts? It was 10 years ago that the first GAO investigation was released that found big businesses were receiving federal small business contracts. Isn’t ten years long enough to stop the rampant fraud?

The answers to all these questions are simple. The President and Congress are not interested in ending the diversion of federal small business contracts to large businesses. They are not interested in helping the small businesses where most Americans work in any way. Just the opposite, they have gutted the operating budget for the SBA to make it harder to investigate and uncover fraud in federal small business contracting.

Maybe that’s why last year 175 Fortune 500 firms received billions of dollars in federal small business contracts.

By using a federal acquisition budget that is less than 50% of the actual federal acquisition budget of $1.1 trillion and by including hundreds of billions of dollars in contracts to large businesses in their calculations, it appears the federal government has cheated the legitimate small business that are responsible for over 90% of the net new jobs, over 50% of the private sector workforce and over 50% of the GDP out of over $2 TRILLION in federal contracts over the last decade.

By their actions, or lack thereof, the federal government is making it clear that big business is Washington’s priority. Starving the SBA of funding ensures that rampant fraud and abuse will not be addressed. As far as the increasing outcry from small businesses and small business advocates, that might explain why retired Naval Commander Terry Sutherland, one of the Pentagon’s top damage control and cover up men, is quietly running the SBA Press Office.

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Lloyd Chapman

Lloyd Chapman