The Truth About H.R. 1873 -- The Small Business Fairness in Contracting Act According to the American Small Business League

PETALUMA, CA -- (MARKET WIRE) -- May 15, 2007 -- The following is a statement by Lloyd Chapman, President of the American Small Business League:

Calling H.R. 1873 the "Small Business Fairness in Contracting Act," would be akin to Congress passing legislation to allow strip mining in every national park in America and calling it the, "National Park Beautification and Preservation Act."

On February 24, 2005, the Small Business Administration Office of Inspector General issued Report 5-15, which stated, "One of the most important challenges facing the Small Business Administration (SBA) and the entire Federal Government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards." This will continue under H.R. 1873.

H.R. 1873 does not have an annual re-certification provision for all firms with current Federal small business contracts that will stop large corporations with existing Federal small business contracts from continuing to receive billions of dollars in Federal small business contracts for years to come.

The paltry handful of positive provisions in H.R. 1873 are nothing more than window dressings and could in no way counter the staggering diversion of billions of dollars in Federal small business contracts that H.R. 1873 will continue to ensure. A prime example of how ineffective H.R. 1873 really is can be seen in the provision to raise the Federal small business contracting goal from 23 to 25 percent. As long as hundreds of the biggest companies in the world are considered small businesses what difference does it make? Congress could raise it to 100 percent and it would be meaningless. Under H.R. 1873, Federal agencies and prime contractors can reach a 23, 25 or 50 percent small business contracting levels and never award contracts to a company that is not a Fortune 1000 firm.

The facts surrounding this issue are simple and irrefutable.

1. Fact: The United States government is counting billions of dollars in awards to hundreds of the largest firms in America and Europe towards the government's minimum 23 percent small business contracting goal. Every year, legitimate small businesses are cheated out of billions of dollars in Federal small business contracts because of intentional loopholes in the regulation that allow this to happen. H.R. 1873 will allow this to continue for years to come. There have now been over a dozen Federal investigations and private studies that have found that the Federal government has reported billions of dollars in contracts to hundreds of large businesses as small business contracts. Firms like Boeing, Lockheed Martin, Halliburton, Oracle, BAE, Hewlett-Packard, Raytheon, Titan Industries, L3 Communications and the multi-billion Euro Dutch firm Buhrmann NV have all received billions of dollars in Federal small business contracts. Each one of these firms will be allowed to keep their existing small business contracts under H.R.1873.

The truth is that policies the SBA, General Services Administration, Office of Management Budget and the FAR Council have created; intentionally divert hundreds of billions in Federal small business contracts and subcontracts from legitimate hard working small businesses in every state to big business. It places legitimate small businesses in a position where they must compete head-to-head with giant corporations for even the smallest contracts for goods and services. Thousands of American small businesses have been forced out of business as they unknowingly tried to compete with Fortune 1000 firms for government small business contracts. H.R. 1873 will allow this to continue.

2. Fact: After the first Congressional hearing on this issue in May of 2003, the SBA Inspector General recommended the annual re-certification of all firms holding Federal small business contracts as the simplest solution to this problem. The head of the Office of Federal Procurement Policy, Angela Styles also agreed annual re-certification for all firms holding Federal small business contracts was the solution. In 2006, the Senate Committee on Small Business and Entrepreneurship voted unanimously for annual re-certification for all firms holding Federal small business contracts as part of the SBA reauthorization bill. New SBA Inspector General, Eric Thorson recommended annual re-certification for all firms in his testimony before the Senate Committee on Small Business and Entrepreneurship.

3. Fact: H.R. 1873 DOES NOT CONTAIN ANNUAL RE-CERTIFICATION FOR ALL FIRMS CURRENTLY HOLDING FEDERAL SMALL BUSINESS CONTRACTS. It only requires firms obtaining NEW Federal small business contracts to recertify their status as small businesses. H.R. 1873 allows Fortune 1000 firms and their subsidiaries to continue to rob legitimate small businesses out of billions of dollars in Federal small business contracts for years to come.

You don't have to be a Washington insider to know that the real beneficiaries of H.R. 1873 are corporate giants that have the most powerful lobby in the nation. They are also the largest contributors to Congressional campaigns.

The SBA Office of Advocacy reported that small businesses received around $130 billion in Federal contracts and subcontracts. There is no telling how much of that actually went to legitimate small businesses. The Bush Administration has done everything possible to conceal the names of the actual recipients of Federal small business contracts.

Based on the information I have been able to obtain I would estimate that approximately $65 billion a year in so called small business contracts actually go to the top two percent of firms in America. Firms in Holland, France and England also receive U.S. small business contracts. This wholesale diversion of Federal small business contracts to a, "Who's Who," of international corporate giants will only continue under H.R. 1873 in its current form.

Any member of Congress that allows H.R. 1873 to become law without a provision to remove hundreds of the largest firms in the world from America's small business contracting programs is either an uninformed fool or as deceitful and dishonest as the members of Congress that wrote this bill and introduced it.

Contact Information: Contact: Lloyd Chapman President American Small Business League Email Contact (707) 789-9575