I had hoped that when President Trump promised to “drain the swamp” and stated, “I will be the greatest jobs President that God ever created”, he would bring an end to decades of fraud and abuse in federal small business programs. It looks like that’s not going to happen.
In a May 18th press release the Small Business Administration claimed the federal government had achieved the small business procurement contracting goal for the 4th consecutive year. The SBA states that in fiscal year 2016 small businesses received $99.96 billion in federal contracts which they claimed was 24.34 percent of all federal contracts.
For $99.96 billion to be 24.34 percent of all federal contracts, the total federal acquisition for FY 2016 would have to be around $410 billion. In reality, according to the Congressional Budget Office, in FY 2016 the total federal acquisition budget was over $1.2 trillion. That seems reasonable with an overall federal budget of $4 trillion. A legal opinion from Professor Charles Tiefer in 2013 reported the total federal acquisition budget that should have been used to calculate the true percentage of federal contracts awarded to small businesses was over $1.1 trillion. The SBA’s $410 billion number would mean the federal government is only spending a little more than 10% of their annual budget. That is simply not believable.
If legitimate small businesses had received $99.96 billion in federal contracts, it would only be 8.3 percent of all federal contracts for FY 2016 and not the 24.34 percent the SBA claimed.
According to data from the Federal Procurement Data System (FPDS) compiled by FEDMINE, the $99.96 billion the SBA claimed was awarded to small businesses was greatly inflated. A report compiled by FEDMINE found over 100 Fortune 500 firms received small business contracts. Of the $99.96 the SBA claimed went to small businesses, it appears no more than 50% of that number actually went to firms that currently legally qualify as small businesses. In reality, legitimate small businesses probably received no more than $50 billion in federal contracts and subcontracts in FY 2016. That would come out to just 4.2 percent of all federal contracts for FY 2016 a far cry from the 24.34 percent claimed by the SBA.
The SBA has been fabricating the true volume and percentage of federal contracts that have been awarded to legitimate small businesses for over two decades. In a 2003 investigation the Government Accountability Office found over 5,000 large businesses were the actual recipients of billions in federal contracts. The SBA’s efforts to falsify small business contracting data is old news. The blatant diversion of federal small business contracts has been exposed in dozens of federal investigations by the GAO, the SBA Office of Inspector General and the Inspectors General from other federal agencies.
The story was first reported by the Associated Press in 2003. Since 2003 the SBA’s efforts to fabricate and falsify the diversion of hundreds of billions in federal small business contracts to Fortune 500 firms has been the topic of hundreds of articles. ABC, CBS, NBC, CNN, CNBC, MSNBC, Fox News and RTTV have all covered the abuses. In 2014, Public Citizen released an investigative report titled ‘Sleighted’ that exposed the blatant fraud and abuses in federal small business programs. In 2015 Mother Jones released their investigative report ‘Giant Corporations Are Reaping Billions From Federal “Small Business” Contracts.’
Every year for 16 years the SBA Inspector General has reported the diversion of federal small business contracts as the number one problem at the SBA. SBA Inspector General Report 5-15 stated, “One of the most important challenges facing the Small Business Administration (SBA) and the entire Federal Government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards.’
At this point it seems clear the SBA has lost all credibility and no one believes their totally fabricated annual Small Business Scorecard.
President Trump needs to come to grips with two irrefutable facts. A report by the SBA found over 90% of all U.S. firms have less than 20 employees and they create over 97% of all net new jobs. U.S Census Bureau data concurs with the SBA’s report. Next, the Small Business Act mandates a minimum of 23% of all federal contracts be awarded to small businesses, making it the largest economic stimulus program that Congress ever passed to boost the middle-class economy and create jobs.
If President Trump decides to continue to cheat the 28 million small business that are the undeniable engine of job creation in America, he will leave office being the worst jobs President god ever created.