The Hill

Contractor Disclosure Will Level Playing Field For Small Business

The Hill — Friday, May 20, 2011

By Henry Passapera and Michael Rothschild

The draft executive order requiring disclosure of government contractors' political spending, including contributions to third parties like trade associations, has generated heated debate on Capitol Hill. But lost in that debate dominated by heavy hitter corporate players and large trade associations is the major stake small businesses have in this issue.

As the co-owners of a small airplane parts distribution company that does regular business with many agencies and branches of the government, we whole-heartedly support this proposal to increase transparency and disclosure of secret political spending.

Before we started our business, P&R Trading, in 1980, we both spent time working for a division of Lockheed Martin. Now we're competing with them every day. Unfortunately, when small businesses like ours are up against the big guys — corporations like Lockheed and Boeing who have the resources to spend millions of dollars on lobbying and other political spending to tilt the playing field in their favor — offering the best price isn't always enough.

Just last week, we lost a bid on a part that we quoted at $1,000 per unit to a larger competitor who came in with a bid at $8,000 per unit. We're talking about the same part, the same certification by the US government. We'd even sold this part to the government in the past.

But they said our prior contract was "too old." Instead of issuing a new contract to us, where we have the units in stock and ready to ship, they put it out to this other company that will have to manufacture them from scratch. How does this make sense for the government... or for taxpayers?

And that's just one example of what small businesses that contract with the government face every day. Why do our corporate competitors win out over us on contracts when we meet the specs and beat them hands down on price? We don't know. Without transparency and disclosure, all we can do is wonder. But wondering doesn't help us grow our business and create jobs.

Big business trade groups, like the U.S. Chamber of Commerce, are arguing that shining a light on companies' political spending will have a chilling effect on free speech. Well, take it from the airplane parts guys — that argument doesn't fly with us.

Transparency is a Main Street value. As small business owners, we stand by our word, and when we want to have our voices heard, we sign our names at the bottom. The Lockheed Martin Corporation and the other 50-plus government contractors on the U.S. Chamber's Board should be required to do the same with their political spending.

In fact, I'd like to go even further. Almost 10 states, including our state of New Jersey, have laws on the books that limit political spending by companies contracting with the state. I see no reason not to do this at the federal level, too. That's the way to truly end the danger of pay-to-play scandals — take the money out of the equation.

This is not a partisan issue — in fact, one of us identifies as a Republican and the other as a Democrat. This is a small business issue. Small business owners from all political viewpoints recognize the importance of transparency in building a loyal customer base, establishing trust with partners and investors, and building their company's brand.

We believe business success should be based on offering a good product at a competitive price and backing it up with creativity and great service. Secret political spending should not be permitted to get in the way of honest competition in the marketplace.

We urge the administration not to be deterred by the self-serving arguments of third party groups that bring in much of their operating revenue from secret contributions. It's time to move forward with this executive order and other efforts to promote transparency, accountability, and integrity in government contracting and political spending.

As we mark National Small Business Week, small businesses like ours need measures like the executive order on disclosure to reduce the influence of secret political spending, put an end to pay-to-play schemes, and help level the playing field so we have a fighting chance to compete, grow, and create jobs.

Henry Passapera and Michael Rothschild are co-owners of P&R Trading, Inc., an airplane parts distribution company founded in 1980 and based in East Rutherford, New Jersey.

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