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Small Business Federal Contract Diversion

By Minara El-Rahman on December 30, 2009 | Last updated on March 21, 2019

While Congress is trying to ensure that Main Street gets some relief from the recession with some stimulus bills in the works, there are plenty of small business interest groups who complain that all of the bills fail to address one major issue: diversion of small business federal contracts to big business. They claim that government federal contracts that belong to small businesses have been awarded to big businesses that should not be receiving the contracts to begin with.  

The American Small Business League's press release calls the proposed legislation to help small businesses a "sham." The press release goes on to state that the $100 billion dollars a year in small business federal contracts have somehow been diverted to large corporations. It uses strong language to describe how the proposed legislation does little to stop the "widespread fraud, abuse and loopholes in small business contracting programs, which continue at the cost of countless jobs every year."

There was proposed legislation called the Fairness and Transparency in Contracting Act of 2009. That bill would have stopped the flow of $100 billion dollars a year in government federal contracts to big businesses. It would also double the volume of federal small business contracts to every state in the country since a majority of small business government contracts are awarded to firms in the Washington, DC area at the moment.

According to the Open Congress website, the bill would amend the Small Business Act to exclude as a small business, for purposes of meeting federal agency contracting goals with small businesses, any small business (or subsidiary thereof) that is publicly traded, or any business (or subsidiary thereof) with more than 50% non-U.S. citizen ownership.

It would require the Administrator of the Small Business Administration (SBA) to notify the head of each federal department or agency regarding this Act and its amendments, and the department or agency head to then notify its contractors. It also requires that the SBA Administrator publish a report of who is awarded government federal contracts and to establish penalties for companies that misrepresent that they are a small business in order to get a small business federal contract.

Currently the Fairness and Transparency in Contracting Act of 2009 has been referred to the Subcommittee on Contracting and Technology since May 21, 2009. Stay tuned to see if and when the proposed bill will be passed. In the meantime, please visit our Related Resources links in order to see how your small business can score small business federal contracts.

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