Rep. Joe Sestak

Dear Congressman Sestak,

We haven’t seen each other in person since last year at Netroots Nation, but I’ve followed your Senate race since then and am glad you’re doing well.

I’ve contacted you several times recently regarding the claims you’ve made about your support for small business, but haven’t received a response. I understand you’re busy, but I know you get the messages because every time your campaign wants something from me, they always respond immediately.

Specifically, you claim:

As Vice Chairman of the House Small Business Committee, Joe has a clear record of supporting small businesses and has taken many steps to help them succeed and create jobs.

In fact, the House Small Business Committee pretty much exists to block any legislation that could meaningfully help small businesses. Committee chair Nydia Velazquez has apparently made it her mission in life to allow nothing but bills helping venture capitalists to get through the committee, and I’ve been writing you about a piece of legislation that is currently wallowing there.

As Vice Chair of the committee, Rep. Sestak, you are no doubt aware of federal guidelines which mandate that 23% of all government contracts be awarded to small businesses.  You also know that loopholes in the definition of “small business” allow Fortune 500 companies like Boeing, Honeywell and Dell to get those  contracts instead:

In 2008 a lucky engineering firm snagged the top spot on a list of leading small business contractors to the federal government. Based in Alexandria, Va., the company had signed an impressive 39 contracts with government entities ranging from the U.S. Navy to the Department of Energy. The catch? The “small business” in question, VSE Corp. (VSEC), employs 1,920 workers and posted $1 billion in revenues last year.

VSE’s incongruous distinction illustrates a persistent problem in the federal contracting system: the mislabeling of corporate titans as small businesses. Federal guidelines mandate that 23% of all government contracts be awarded to small businesses, which generate roughly half of private-sector employment and more than half of private, nonfarm GDP.

But at least 16 companies with more than $1 billion in annual revenues were among the top 100 small business contractors in 2008, according to Eagle Eye, a Virginia research firm that tracks federal spending. In addition to VSE, giant defense contractors Lockheed Martin (LMT, Fortune 500) and General Dynamics (GD, Fortune 500) each earned more than $120 million in small business contract payments last year.

Rep. Hank Johnson

Specifically, my emails to you have repeatedly asked if you intend to cosponsor Rep. Hank Johnson’s Fairness and Transparency in Contracting Act, H.B. 2568.  Rep. Johnson’s bill,  introduced over a year ago, would remedy the situation:

H.R. 2568, “The Fairness and Transparency in Contracting Act of 2009,” is the result of more than 15 investigations that have exposed widespread abuses in a system that is supposed to direct a proportion of federal contracts toward small businesses.

The Small Business Administration Inspector General found in 2002, for example, that at least 4.4 percent of 1,000 contractors awarded federal funds designated for small businesses did not meet basic requirements to receive those contracts. Large companies such as Bechtel and HP were awarded small business contracts by government agencies, and those funds counted toward the agencies’ small business contracting goals.

To correct this, H.R. 2568 would modify the definition of a small business in the Small Business Act by including the additional requirement that no publicly traded company can qualify as a small business in relation to these funds. It also allows a person to file a complaint if they have evidence that a small business contract was improperly awarded.

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

If passed, the bill would require the SBA to submit to Congress an annual report detailing the nature of the complaints and the resolution.

American Small Business League President Lloyd Chapman lauded Johnson’s efforts.

“Every small business in America owes Congressman Johnson a debt of gratitude for introducing this bill,” said Chapman. “Small businesses create more than 97 percent of all net new jobs, and this bill will do more to help those firms than any stimulus plan proposed so far. It will create millions of new jobs and provide a dramatic boost to the middle class economy.”

While I think it’s great that you want to help women and minority business owners by encouraging more federal loans, the fact is that it will be chump change next to the hundreds of billions in federal contracts that small business owners are losing out on right now.  That’s money that is already being spent. Money that could be acting as stimulus money, going out to states to small businesses that will create jobs.  Instead, that money is being sucked up by Wall Street.

Who opposes Rep. Johnson’s legislation? Why the Chamber of Commerce, of course:

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.

And who is supporting the bill? Well, principally members of congress whose districts have large minority populations, because their businesses are frequently the ones getting screwed:

Cosponsors of H.R. 2568
Madeleine Bordallo [D, GU-0] Eddie Johnson [D, TX-30]
Corrine Brown [D, FL-3] Steve Kagen [D, WI-8]
Dennis Cardoza [D, CA-18] Barbara Lee [D, CA-9]
Jim Costa [D, CA-20] John Lewis [D, GA-5]
Danny Davis [D, IL-7] Carolyn Maloney [D, NY-14]
Lloyd Doggett [D, TX-25] Eleanor Norton [D, DC-0]
Keith Ellison [D, MN-5] Mike Quigley [D, IL-5]
Brad Ellsworth [D, IN-8] Ileana Ros-Lehtinen [R, FL-18]
Bob Filner [D, CA-51] Bobby Rush [D, IL-1]
Al Green [D, TX-9] Janice Schakowsky [D, IL-9]
Raymond Green [D, TX-29] Bennie Thompson [D, MS-2]
Raul Grijalva [D, AZ-7] Lynn Woolsey [D, CA-6]
Ralph Hall [R, TX-4]

Notice anything conspicuous missing from the list of cosponsors, Joe? Maybe I can help. With the exception of Brad Ellsworth, not one single member of the Small Business Committee — and that includes you — has agreed to cosponsor Rep. Johnson’s legislation, despite being asked repeatedly to do so for over a year now from numerous small business groups:

House Small Business Committee
Democratic Members Republican Members
Chairwoman Nydia Velázquez Ranking Member Sam Graves
Dennis Moore Roscoe Bartlett
Heath Shuler Todd Akin
Kathy Dahlkemper Steve King
Kurt Schrader Lynn Westmoreland
Ann Kirkpatrick Louie Gohmert
Glenn Nye Mary Fallin
Mike Michaud Vern Buchanan
Melissa Bean Blaine Luetkemeyer
Daniel Lipinski Aaron Schock
Jason Altmire Glenn Thompson
Yvette Clarke Mike Coffman
Brad Ellsworth
Joe Sestak
Bobby Bright
Deborah Halvorson
Mark Critz

I guess it’s no wonder that H.R. 2568 has been stuck in the committee of which you are a Vice Chair for over a year. It’s Blue Dog/New Dem Central, and nobody on the committee finds the bill particularly interesting.

I realize you’re busy on the campaign trail and all, and I wouldn’t bother you except I’ve receive 5 or 6 emails from you in the past week alone saying what a great champion you are of small business, and yet my calls and emails regarding this bill have gone unanswered for weeks now.

Small businesses don’t need more bread crumbs, Joe, they need to get what they’re already entitled to.  Which won’t result in one dollar more of federal spending, but could act as desperately needed stimulus money.

I’m sure this is an oversight, and have no doubt that your commitment to helping small businesses is genuine.  I look forward to reporting that you are a proud cosponsor of H.R. 2568, and feel confident that in your position as Vice Chair of the Small Business Committee, you can and will be instrumental in working with Rep. Johnson to move the legislation through swiftly.

If you or anyone on your campaign would like to discuss this matter further, you certainly know how to reach me.

Sincerely,
Jane Hamsher
Small Business Owner