Small Businesses Sue Government Goliath

A small business association called the American Small Business League (ASBL) did something unexpected this week. ASBL President, Lloyd Chapman, decided to take the Obama Administration to court and expose the growing divergence between the Administration’s stated goals to meet the federal statutes for small business participation versus the Obama Administration’s total failure on federal, small business contracting.

By any measure, Obama’s record on federal, small business contracting has been abysmal. The recent, National Federation of Independent Businesses (NFIB) Small Business Economic Trends Report confirms that “for small business owners, 2009 ended with a thud.”

Many factors have contributed to the disaster in small business contracting. A rush to push the $787 billion Stimulus funding quickly gave federal contracting officers no real options other than to dump the additional federal money onto existing federal contracts that are held by the largest companies. There just was not enough time to conduct procurements to encourage the participation of small businesses. So, small businesses received very little of any of the new federal business or the loans anticipated from the $787 billion Stimulus spending, even though President Obama and Democrats in Congress stated that awards to small businesses were the primary goal.

Worse yet, Obama decided to delay the long-overdue need to increase the number of federal contracting officers that are in critical short supply. Ten years ago, each federal contracting officer was responsible for an average of $300 thousand dollars of federal contracts. Today, each federal contracting officer is responsible for $50 million dollars in federal contracts. Put bluntly, contracting officers have been stretched thinly and no longer have the time needed to open procurements to small businesses.

Many contend that it is simpler and faster to add funding to an existing federal contract or to bundle many disparate governmental needs into huge omnibus contracts that often top $1 billion in size. This may be a bad policy and a poor return for taxpayer dollars, but it is the most expedient process for a federal procurement officer that is required by Congress to get the billions of dollars of new federal money committed quickly.

The Obama Administration has further rigged the deck, for construction contracts, by forcing small businesses to seek Union participation prior to bidding on federal construction and infrastructure jobs. This move, might be great for the Unions, but it destroys innovation and further burdens small businesses with foolhardy regulatory burdens.

The American Small Business League’s decision to bring suit against the government represents one of the few times that a trade organization has mustered the courage to tell the truth about what’s really happening in federal procurements. The fact is, the government has been doing a poor job in contracting for years, but under the Obama Administration, small businesses have been hit especially hard.

Moreover, the Obama Administration knew the Stimulus funding would exacerbate the problems in government contracting (lack of federal contracting officers, excessive regulatory processes, arbitrary and unpredictable oversight from a multitude of sources). Yet, until the announcement of the ASBL, most industry and trade groups have done lots of complaining, but few have followed through with action.

I experienced this strange phenomenon, firsthand, while serving as the Administrator of General Services Administration (GSA), the government agency responsible for most issuing many of the federal contracts in the government. High profile trade organizations would bring impassioned real-world evidence of the debilitating impact of excessive regulatory regimes imposed upon its member companies trying to compete for government contracts. Yet curiously, when, as the head of GSA, I acted and swiftly attempted to create a more rational and predictable oversight and regulatory regime to govern federal contracts, these very same industry groups and corporations became very quiet.

I learned that the leaders of the vast majority of the different trade organizations dealing with federal government contracting have difficulty taking their claims public, and it seems they become too frightened to say in public what they scream in private.

The dirty, little, DC secret is that many of the leaders of the different Washington-based trade organizations are anxious to court favorable opinion and gain access to government leaders (who themselves seem to demand, above all else, praise and fawning).

Nor are you likely to hear the honest and unfiltered truth from a Congressional hearing. Trade reps understand that lawmakers, like other government bureaucrats, can quickly turn on anyone that might have the gumption to declare that the emperor has no clothes and use facts and figures to prove that the system is not working. Alas, with the Obama Administration, fear and intimidation seem to have reached new heights and seems to have grown excessively thuggish.

So, the recent announcement by the American Small Business League is important. Finally, a trade group has stepped forward with the unfiltered truth that most folks connected to government contracting already know: that the Obama Administration, despite all the lofty rhetoric has failed completely with small businesses.

Many federal government contractors have their eyes are on the American Small Business League, the little engine that might bring real change. Long-suffering, small businesses have a champion, willing to tell the truth and let the chips fall, willing to confront the Obama Administration and demand action.

Lloyd Chapman, at the American Small Business League, does not appear interested in playing the Washington game, nor does he seem too interested in courting government favor that might lead to an appointment in the Obama Administration. Chapman seems like the real deal, an honest man, singularly focused on solving a difficult problem.

Unfortunately, Mr. Chapman should expect the usual M.O. from Democrats: immediate retaliation and attempts to discredit him and his organization for daring to expose the truth about how small businesses are being crushed by the Obama Administration.

Take out your sling and find yourself a hard, little pebble Mr. Chapman: Goliath approaches.