Casey: Legal Loopholes Are Harming Small Businesses, Offers Amendment to Key Defense Bill That Would Eliminate Fraudulent Practices

Current Law Allows Big Companies to List Small Businesses On Their Proposal Yet Never Give them Work

Washington, DC — U.S. Senator Bob Casey (D-PA) today introduced a bi-partisan amendment to a must-pass defense bill, the National Defense Authorization Act (NDAA), that would prevent contractors from fraudulently adding small businesses to bids without the intention of following through to deliver work to listed sub-contractors.  Senators Mike Enzi (R-WY) and Claire McCaskill (D-MO) are co-sponsors of this amendment. 

“Supporting small businesses is vital to our economic recovery, especially in the current economic climate,” said Senator Casey.  “This amendment will especially help women and minority-owned businesses by protecting them from fraud and ensuring that there is transparency and accountability in the procurement process.”

In some cases, prime contractors have reportedly listed minority business enterprises (MBEs) or women business enterprises (WBEs) as sub-contractors on bids in order to strengthen their applications without the intention of actually giving them the work.  This often occurs without the knowledge of the MBE or WBE.  The purpose of Senator Casey’s amendment is to prohibit prime contractors from using small businesses as straw men to win government bids.  This amendment would:

  • Require subcontractors identified on a solicitation for a competitive proposal made by an executive agency be notified by the prime contractor before the application is submitted. 
  • Establish a reporting mechanism that allows a subcontractor to report fraudulent activity by a contractor.

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