PETALUMA, Calif., April 29, 2015 /PRNewswire-USNewswire/ -- Next week the Federal Government will celebrate National Small Business Week May 4-8. The weeklong celebration of federal small business programs could be spoiled by a series of federal investigations that have uncovered Fortune 500 firms are the actual recipients of billions of dollars in federal small business contracts.
Every year of the last decade the Small Business Administration Office of Inspector General has reported the diversion of federal small business contracts to large businesses as the number one problem at the SBA.
Neither the SBA nor Congress has adopted any legislation or policies to halt the fraud and abuse that has been uncovered. Quite the contrary, in February the SBA adopted the final rule of the "Safe harbor from fraud penalties" policy that would provide legal protection for large businesses that are caught committing fraud by illegally obtaining federal small business contracts.
SBA Administrator Maria Contreras-Sweet was chastised by members of the House Small Business Committee for diverting billions in federal small business contracts to Fortune 500 defense contractors such as Northrop Grumman and Raytheon.
An investigation released by the SBA Inspector General in 2005, Report 5-14, found the SBA's policy of diverting small business contracts to large businesses was illegal and was in direct violation of the Small Business Act. Report 5-16 discovered large businesses were committing felony federal contracting fraud by making "false certifications" and "improper certifications."
As early as 1995, the SBA Inspector General found large businesses were committing a "particular fraudulent practice" to illegally obtain federal small business contracts.
In 2003, the Government Accountability Office launched an investigation based on information provided by American Small Business League (ASBL) President and founder Lloyd Chapman that found over 5,300 large businesses were the actual recipients of billions in federal small business contracts.
In the following years dozens of federal investigations continued to find Fortune 500 companies and their subsidiaries were hijacking federal small business contracts.
Federal Judge William Alsup has accused the Pentagon of trying to "cover up" and "suppress the evidence" in the Pentagon's small business subcontracting programs. Professor Charles Tiefer issued a legal opinion on the Pentagon's small business-subcontracting program describing it as a "sham."
In March, the House Small Business Committee unanimously adopted an amendment to request a new GAO investigation into fraud in small business programs based on research done by Lloyd Chapman's ASBL.
The latest threat to federal small business programs has come from President Obama when he included a proposal in his FY 2016 budget to resurrect a plan by Ronald Reagan to permanently close the SBA and end all federal programs for small business by combing the SBA with the Department of Commerce.
The ASBL has produced a documentary to save the SBA.
SOURCE American Small Business League