Because of fraud and corporate shenanigans, hundreds of millions of dollars in federal contracts have been awarded to large — even multinational — corporations instead of to disadvantaged business owners who have served the United States honorably.
Abuse of the federal government’s Service-Disabled Veteran-Owned Small Business Program (SDVOSB) is unfortunately common. A legislative initiative aimed at curbing fraud and abuse of the SDVOSB program and other federal set-asides for disadvantaged and small business owners has been under review since February 2009 by the U.S. House Committee on Small Business. The American Small Business League, which helped author the bill, has repeatedly called on the committee’s chairwoman, U.S. Rep. Nydia M. Velazquez, a Democrat from New York, to move the bill out of committee.
The bill is H.R. 2568, the Fairness and Transparency in Contracting Act.
Based on the Small Business Act, the bill would prevent the federal government from reporting awards to publicly traded firms as small business awards. Publicly traded firms do not qualify as “independently owned” — a status required of any firm wanting to be recognized as a small business.
Since 2003, dozens of federal investigations have shown that billions of dollars meant for small businesses have been diverted to corporate behemoths. One 2009 report released by the U.S. Government Accountability Office (GAO) found that 10 ineligible firms received about $100 million from SDVOSB contracts through fraud or abuse of the program. The GAO also found several instances of SDVOSB companies being used as a pass-through for large, sometimes multinational, corporations.
In another report issued in March, the GAO reported that 14 ineligible firms received $325 million in sole-source and set-aside contracts.
The American Small Business League released an analysis of the Top 100 small business contract recipients for fiscal year 2009 and found that 61 of them were not actual small businesses. And get this: those 61 companies received 64 percent of the total dollars awarded to the Top 100 firms. Their take? Almost $10 billion.
H.R. 2568, which was introduced by U.S. Rep. Hank Johnson, a Democrat from Georgia, has 26 co-sponsors.