No Help From Uncle Sam

Government regulators wasted no time in hatching a rescue plan for mortgage giants Fannie Mae and Freddie Mac-long run by well-connected Beltway insiders. And given the key role Fannie and Freddie play in the U.S. housing market, it’s hard to argue for letting them fail. But it’s fair to ask: What is the federal government doing to help small businesses hurt by the current economic slowdown?

If assistance through government contracting is one indicator, the answer is not very much. A recent report from the GAO found that the SBA’s HUBZone program, aimed at helping small businesses in economically distressed areas land federal contracts, was weak and an easy target for fraud. The report found 10 companies in the Washington DC area that had been given contracts worth $105 million since 2006 even though they didn’t meet HUBZone requirements.

While this is disturbing-it's not exactly surprising. Small business advocates have been shouting for years about the fact that small businesses aren't getting their share of federal contract opportunities despite programs aimed at ensuring that. Another recent report, this one by the Department of the Interior Office of Inspector General found that the data on the DOI's small business contracting success was unreliable-with companies like Home Depot getting contracts that were later counted as small business deals.

Ask Lloyd Chapman, president of the American Small Business League and an advocate focused on small business contracting, about these reports and you get an earful. Says Chapman:

There's always been a problem with big companies getting small business contracts. But it's worse than it's ever been. It looks to me like small business doesn't have any friends in Washington.

At a time when rising fuel and other costs are putting a squeeze on business owners, seems like Uncle Sam should take a hard look at how to fix this problem. We're not talking bailout here-just delivering on what has already been promised.

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