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An unusual battle: big business vs. small business

In a clash of business interests, the California Chamber of Commerce finds itself in an odd position: It doesn’t support federal legislation that would generate billions of dollars for California small businesses.

The bill by Rep. Hank Johnson, a Georgia Democrat, aims to eliminate the diversion of billions of dollars in federal contracts intended for small businesses from going to Fortune 500 corporations and large foreign films. The legislation, H.R. 2568, dubbed the Fairness and Transparency in Contracting Act, was introduced May 21.

While the Chamber has not given a specific reason why it doesn’t support H.R. 2568, some small business interest including the American Small League have their own hunch.

Is the Chamber’s neutral position on the bill an indication that its interests may be more aligned with protecting large businesses than smaller ones?

The Chamber declined to discuss the issue with Capitol Weekly.

But others weren’t so reluctant.

“Both [the U.S. and California Chambers of Commerce] are funded by, and run for the benefit of, the Fortune 500 firms that I am trying to stop from receiving federal small business contracts,” American Small Business League President Lloyd Chapman said.

“There is a direct correlation between the firms that are receiving the lion’s share of federal small business contracts and the boards of directors for both the U.S. Chamber of Commerce and the California Chamber of Commerce,” he added.

Specifically, the bill would change the Small Business Act’s definition of a small business to include a new provision that would prohibit publicly traded companies from qualifying as a small business for the purpose of the funds. The act would also allow individuals to file a complaint if there was evidence that the rule had been broken.

In California alone, it is estimated that the bill would effectively create 400,000 new jobs and provide an additional $10 billion a year to California small business, according to estimates done by the ASBL, the group backing the bill.

The legislation is backed by the American Small Business League, which for years has been railing against the loophole that has allowed corporations such as Hewlett Packard to receive federal contracts intended for smaller operations.

The ASBL speculates that President Obama will support the bill because he stated last year that “it is time to end the diversion of federal small business contracts to corporate giants,” according to ASBL spokesman Christopher Gunn.

“If passed, H.R. 2568 would infuse the middle class economy with up to $100 billion a year in infrastructure spending,” Gunn said. “Given the state of our economy, it is imperative that our legislators pass H.R. 2568 as a means of providing small businesses the tools they need to drive our floundering economy….To date, 44 chambers of commerce and small business groups have endorsed the bill, and exclusive of Congressman Johnson, 12 members of congress have co-sponsored the legislation,” Gunn said.

“It’s unconscionable that some large corporations are the beneficiaries of small business contracts,” Congressman Johnson added. “Especially given how many small businesses are struggling in this recession. H.R. 2568 will go a long way in helping correct this egregious error.”

The California Chamber of Commerce denies joining the opposition coalition, stating that it is neither for nor against H.R. 2568.
The bill has been referred to the House Committee on Small Business and the House Committee on Oversight and Government Reform. Currently, the bill is being reviewed by staff members on both committees.

Johnson notes that the Small Business Administration Inspector General found that four out of 100 recipients of federal contracts intended for small business did not qualify.

The ASBL has estimated that every year more than $100 billion in federal small business contracts are awarded to Fortune 500 corporations and other clearly large firms around the world. 

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