‘Small business’ or Fortune 500?

The Petaluma-based American Small Business League says a new report showing some federal government work given to Fortune 500 companies was passed off as small-business contracting further underscores the need for a bill U.S. Sen. Barbara Boxer is preparing.

The League, which is dedicated to documenting and ending what it says is widespread fraud and abuse costing small businesses $100 billion per year in federal contracts, called attention today to a report issued last week by the Department of Interior’s Office of the Inspector General. This report found giant companies such as Home Depot, Dell, Weyerhaeuser, John Deere, Xerox, Waste Management, Sherwin-Williams, McGraw-Hill and Starwood Hotels were included in the Interior Department’s 2006-07 goals for small-business contracting.

The report says these companies got about $5.7 million out of $1.6 billion the Interior Department claimed to spend on small businesses that year — only about 0.35 percent — but League spokesman Chris Gunn says this is only the latest report to cast doubt on the Small Business Administration‘s repeated assertions that talk of Fortune 500 companies getting small-business contracts is a myth. In fact, the League thinks diversion of federal small-business contracts to big corporations during the Bush Administration could top $800 billion.

The League seems to be pinning its hopes on the Fairness and Transparency in Contracting Act of 2008, which they say Boxer will introduce to completely halt this diversion. “It’s our understanding that it’s pretty much done,” Gunn said of the bill Wednesday. “We’re waiting for some logisitcal things to come together.”

But the League might be “exaggerating” the bill’s imminence, said Scott Hauge, president of San Francisco-based Small Business California, another group representing the same constituency.

“I don’t know if it’s been changed recently but we had a problem with it because it basically allowed any privately held business to be a small business, and we have a little problem with Bechtel being a small business,” Hauge said later today, adding he was in contact today with a Boxer aide who’s been working on the bill and “she said they’re not planning on introducing the bill soon because it hasn’t been finalized.”

Sounds as if the small-business advocacy community agrees on the problem, but isn’t yet on the same page about how best to fix it…

UPDATE @ 1:03 P.M. THURSDAY: There’s been some more back-and-forth since I posted this item.

“The Fairness and Transparency in Contracting Act of 2008 will stop the diversion of up to $100 billion a year in funds that should be going to middle class firms to large businesses. Mr. Hauge’s position is a gross mischaracterization of the legislation and its purpose. The truth about this legislation is that it would eliminate 99 percent of Fortune 500 corporations from federal small business contracting programs,” ASBL President Lloyd Chapman said in an e-mail to me a short while ago. “This is the most effective legislation ever written to address this problem. We expect that if this bill passes we can bring an additional $5 billion per year in government contracts to small businesses in California. The ASBL has been fighting this issue single handedly for six years, and in the process we have won 5 federal lawsuits and produced more than 400 stories in the mainstream media. It is my understanding that Small Business California has never said or done anything to address the diversion of federal small business contracts to large corporations. If SBC wants to be a true small business advocate, we call on them to join us in encouraging Senator Boxer to move towards the immediate introduction and passage of this bill.”

SBC President Scott Hauge said he didn’t care to comment on what Chapman said. “I am not sure I have the most current draft of the bill and I am sure Senator Boxer and her staff are working to put together a bill that will help small business,” he said. “Small Business California had a problem with the draft we saw that would allow a company like Bechtel to be classified as a small business.”

Josh Richman

Josh Richman covers state and national politics for the Bay Area News Group. A New York City native, he earned a bachelor’s degree in journalism from the University of Missouri and reported for the Express-Times of Easton, Pa. for five years before coming to the Oakland Tribune and ANG Newspapers in 1997. He is a frequent guest on KQED Channel 9’s “This Week in Northern California;” a proud father; an Eagle Scout; a somewhat skilled player of low-stakes poker; a rather good cook; a firm believer in the use of semicolons; and an unabashed political junkie who will never, EVER seek elected office.