On Friday, August 21, 2009, the Small Business Administration (SBA) released its fiscal year (FY) 2008 small business goaling report and procurement scorecard, which indicated that the government awarded 21.50 percent or $93.3 billion in prime contract awards to small businesses. That said, there are a host of reasons why 21.5 percent is simply unacceptable. Most notably, the numbers are significantly inflated with some of the largest corporations in the world. In some cases the numbers even appear to be the result of fabrication by high-level government officials at the SBA and other government agencies.
For more than eight years the SBA and its executives have claimed that computer coding mistakes were responsible for billions of dollars in misplaced federal contracts. However, a series of federal investigations into the diversion of federal small business contracts to large corporations speak to a very different truth. Since 2003, more than 15 federal investigations have found that billions of dollars in federal small business contracts have been diverted to corporate giants because of fraud, abuse, loopholes and a lack of oversight by government officials.
Despite the SBA's mode of denial, the following reports illuminate an unchecked reality, which has pulled up to $100 billion a year out of the middle class economy.
- In Report 5-15 PDF, the SBA Office of Inspector General (OIG) referred to the diversion of federal small business contracts to large corporations as, "One of the most important challenges facing the Small Business Administration and the entire Federal government today."
- In Report 5-14 PDF, the SBA OIG found that the SBA itself was counting small business contracts to large corporations. In a memorable quote the report stated, "The SBA awarded four of the six high dollar procurements, reported as small business procurements, to large companies at the time of the procurements."
- In Report 5-16 PDF, the SBA OIG reported that in some cases large businesses received federal small business contracts because of "False certifications," and "improper certifications."
FY 2008 represents the eighth consecutive year that the federal government has allowed billions of dollars in federal small business contracts to flow into the hands of some of the largest corporations in the United States and Europe. The American Small Business League (ASBL), the only small business advocate focused on this issue, has estimated that over the last ten years nearly $1 trillion in federal small business contracts have been diverted to some of the largest corporations on earth.
Through investigations and examinations of third party data, firms such as British Aerospace (BAE), Xerox, Dell Computer, John Deere, Microsoft, Wal-Mart and Rolls-Royce have been exposed as recipients of federal small business contracts.
Despite this mountain of evidence pointing to fraud, abuse, loopholes and a lack of oversight as primary contributing factors to the diversion of billions of dollars in federal small business contracts to large corporations, the SBA refuses to acknowledge the extent of the problems. Additionally, through two administrations the agency has refused to take responsibility for stopping these abuses, or for protecting the small businesses the agency was designed to protect.
It is not reasonable that a federal agency designed to support the interests of small businesses has been involved with, responsible for, and lied about the continued diversion of billions of dollars in federal small business contracts to corporate giants.