New Senate Proposals Will Cheat Small Business Out of Billions

Buried in legislation put forth in the U.S. Senate to reauthorize the Small Business Administration are two controversial proposals that will allow the government to report billions of dollars in contracts to large firms as federal small business awards. In the face of 13 federal investigations that have found billions in small business contracts have been awarded to a Who’s Who list of giant corporations, the Senate Committee on Small Business & Entrepreneurship unanimously approved measures that will make this problem even worse. Recent exposes in the media have revealed that companies such as Microsoft, Wal-Mart, AT&T, Rolls Royce, Lockheed Martin, and Northrop Grumman are on the receiving end of millions in federal small business contracts.

“If these new loopholes become law, they will do more to divert funds from small businesses than any potential solutions the Senate has proposed will fix,” stated Lloyd Chapman, president of the American Small Business League.

The first provision will allow the largest financial institutions to receive federal small business status through owning a controlling interest in a small firm in the Small Business Innovation Research (SBIR) program. The second provision will allow the SBA to increase the size standards for small businesses to a level that will be 150 times larger than the average American small business of ten employees — up to 1,500 employees.

Both provisions were resoundingly rejected one year ago when the Small Business Administration issued them as proposals for public comment. Even after an 11-city SBA tour to promote the policies, over 95% of comments received were violently opposed to creating new loopholes that would increase opportunities for large businesses to obtain federal small business contracts. The response to these proposals was the highest that the SBA had ever received.

“I think the U.S. Senate needs to realize that this country is a democracy. When the government asked people for their comments, they responded with an overwhelming 95% against adopting these measures,” stated Chapman. “In a country where we elected a president based on a 2% margin, 95% should be considered a mandate.”

Chapman believes the loopholes are inconsistent with the Congressional intent of passing the Small Business Act: “We know large corporations have a very strong voice in Congress. It looks like the best interests of small firms are being sold out again in favor of big money contractors.”