Watchdog group wants truth in small business procurement

Radhika Sivadi

2 min read ·


Most small business federal procurement dollars go to big business, group says.

The Obama Administration hasn't yet released its annual report on the proportion of federal contract dollars awarded to small businesses in the past year, but the American Small Business League predicts that when the document arrives this summer it will misrepresent the facts. Not that the league is accusing the Obama Administration of doing anything its predecessors haven't. It's common practice for big businesses disguised as small ones to be counted among the awardees of federal procurement dollars designated for small business.

Since 1953, the federal government has been mandated to spend 23 percent of the total value of all federal prime contracts with small businesses. But "fraud, abuse, and loopholes in federal policy and implementation result in the majority of federal small business contracts being illegally diverted to large corporations every year," the watchdog group says. The organization estimates that only 10 percent of federal contract dollars were awarded to legitimate small businesses in 2011. Of the 100 largest federal contracts that the Administration will say went to small businesses, only 28 truly did, the league says.

League president and founder Lloyd Chapman has been bringing attention to the issue since 2004, and his campaigns have resulted in recent media attention such as a New York Times report about a Russian arms dealer that was briefly classified as a small business, and another explaining how the New York Times Company itself came to be considered a small business. But Chapman's nonpartisan organization is particularly disappointed in the current administration because it has reneged on its promise to do better, according to spokesman Brian Reeder.

In a statement this week, the league recalls President Obama's campaign promise to "end the diversion of federal small business contracts to corporate giants," and notes that "nothing has been done." Pointing to Federal Procurement Data System information, the league suggests that "most of the money that the Obama Administration will claim went to small businesses in FY 2011 actually went to large companies such as Lockheed Martin, Apple, Boeing, Chevron, and GM." In fact, the league estimates that the government diverts more than $100 billion a year in federal small business contracts to help large and international corporations.

"It's time to investigate rampant abuses of federal small business contracting programs," Chapman says. "If President Obama were serious about creating jobs, he'd quit giving federal small business contracts to corporate giants around the world. This would direct more existing federal infrastructure funds to the middle class and create more jobs than anything his administration has ever proposed."

Radhika Sivadi