PETALUMA, CA--(Marketwired - September 01, 2016) - A federal lawsuit that has been filed against the Small Business Administration (SBA) could have an impact on the monthly jobs report released by the Labor Department. A report by the SBA found that 90% of all U.S. firms have less than 20 employees and those firms are responsible for up to 97% of all net new jobs in America.
Federal law mandates that small business receive a minimum of 23% of all federal contracts. American Small Business League (ASBL) research based on information from the Federal Procurement Data System and the Congressional Budget Office indicates legitimate small businesses may be receiving as little as 3% of all federal contracts.
If the ASBL wins their case, they estimate the nation's 28 million small businesses could receive an additional $240 billion a year in federal contracts and subcontracts.
ASBL President Lloyd Chapman stated, "When we win this case it will redirect over one trillion dollars in additional federal infrastructure spending to small businesses over the next five years. This should have a noticeable impact on the monthly jobs report as those funds begin to flow to small businesses across the country. U.S. Census Bureau data and SBA data indicate small businesses are responsible for over 90% of net new jobs in America. In reality, the monthly jobs report is predominantly the small business jobs report."
The American Small Business League has filed the case against the SBA in federal district court in San Francisco. The ASBL is asking the court to grant an injunction to stop the SBA from diverting federal small business contracts to Fortune 500 firms, their wholly owned subsidiaries and any other firms that would not currently qualify as small businesses under federal law.
Mother Jones released an article on July 25th, titled, "Giant Corporations Reaping Billions in Federal Small Business Contracts" that concurred with the ASBL's position.
The ASBL is also asking the court to stop the SBA from fabricating and inflating the percentage of contracts awarded to small businesses by excluding the vast majority of federal acquisitions from their calculations. For 2015 the Congressional Budget Office reported a total acquisition budget of 1.2 trillion. The SBA used a number of just $391 billion to claim small businesses received 24.9% of all federal contracts that year.
A legal opinion from one of the nation's leading experts on federal contracting law, Professor Charles Tiefer agrees with the ASBL findings the SBA has been excluded approximately two thirds of the federal acquisition budget from their calculations.
President Obama pledged to end the abuses at the SBA when he released the statement, "It is time to end the diversion of federal small business contracts to corporate giants."
The first court appearance in the case will be on October 6, 2016, before Federal District Court Judge Vince Chhabria.