core sector communique

Obama Extends Program that Reduces Opportunities for Small Business

Petaluma, Calif. – President Obama has extended a 21-year-old defense program that allows large defense contractors to withhold subcontracting information from the public, media and Congress.

The program – known as the Comprehensive Subcontracting Plan Test Program (CSPTP) – was established in 1990 in an attempt to reduce administrative burdens associated with small business subcontracting goals. The program’s three-year reauthorization was included in the National Defense Authorization Act of 2012.

The American Small Business League (ASBL) has long maintained that the CSPTP allows large defense contractors to evade the Small Business Act, which requires that 23 percent of all federal contracts (including subcontracts) must be with small businesses.

Participants of the CSPTP, including 12 of the largest federal contractors, are exempt from submitting subcontracting reports used by federal agencies to monitor compliance with small business goals. This allows large contractors to dodge the Federal Acquisition Regulation “liquidated damages” clause, which requires any government contractor that fails to meet its small business-subcontracting goal to pay damages to the federal government in the amount of the deficiency.

The only known evaluation of the program is a 1994 report obtained by the ASBL through the Freedom of Information Act. The 1994 report indicated a decline in subcontract work for small businesses since implementation of the CSPTP.

In 2010 five members of Congress led by New York Congresswoman Yvette D. Clarke called for a federal investigation of the program. In a letter written to the General Accountability Office (GAO) the representatives stated, “Federal contracting data calls into question whether … participants in the CSPTP are actually meeting their small business subcontracting goals.” Despite these efforts, the GAO has not investigated the CSPTP.

“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.”