Congress should back GAO investigation into small business contracting fraud
California Rep. Janice Hahn (D) has drafted an amendment to H.R. 1481 that would call for a new GAO investigation into fraud and abuses in federal small business contracting programs. In a March 25 hearing, Hahn questioned whether the 23 percent of all federal contracts the SBA claimed were awarded to small businesses actually went to legitimate small businesses based on research done by my staff at the American Small Business League. She referenced firms such as Disney, Apple, Chevron, and Bank of America have been the actual recipients of federal contracts in FY2011 and FY2012 that the SBA claimed had been awarded to small businesses.
The last GAO investigation into the diversion of federal small business contracts to corporate giants began in 2002 and was also based on information I provided.
It’s now been over twelve years since that last GAO investigation that found over 5,300 large businesses were receiving federal small business contracts.
In 2005, the SBA Office of Inspector General released Report 5-15 that 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 the same time they released Report 5-16 that found large businesses had made “false certifications” and “improper small business self-certifications” to illegally received federal small business contracts.
President Obama even acknowledged the seriousness of the problem in 2008 when he released the statement, “It is time to end the diversion of federal small business contracts to corporate giants.”
Source: The Hill, Article written by Lloyd Chapman, Published May 5, 2015
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