Small Business Finance News

Reauthorization Of Federal Program Reduces Opportunities For Small Business Contractors

Written by Tim Morral
Published: 1/10/2012

According to the American Small Business League, the recent reauthorization of a federal program allows defense contractors to continue to skirt the Small Business Act.

The American Small Business League (ASBL) is crying foul over the Obama administration's reauthorization of the Comprehensive Subcontracting Plan Test Program (CSPTP), a program initially established in 1990 to reduce the administrative workload of monitoring SMB federal contracting goals.

Small Business Federal Contracts

Buried in the National Defense Authorization Act of 2012, CSPTP allows large, federal defense contractors to circumvent key aspects of the Small Business Act, requiring that at least 23% of all federal contracts -- and subcontracts -- be awarded to small businesses.

Large contractors participating in CSPTP are not required to submit subcontracting reports -- essential compliance monitoring tools for small business subcontracting quotas. The benefit for large contractors is that the exclusion allows them to dodge the payment of damages and penalties if they fail to meet small business subcontracting requirements.

"If President Obama thinks eliminating reporting requirements for large defense contractors and exempting them from penalties is a good idea, then the IRS should adopt the same policy so the public wouldn't be required to submit income tax returns and there would be no penalty for not paying your taxes," said ASBL President Lloyd Chapman. "This is another Obama administration anti-small business policy that you won't read about in the national media."

A 1994 report obtained through the Freedom of Information Act revealed a decline in the awarding of federal subcontracts to small businesses since the implementation of CSPTP. Although several Congressional leaders called for an investigation of the program's impact on small businesses in 2010, the GAO has yet to act on their request.

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