The Small Business Administration is
asking a judge to throw out a lawsuit claiming it uses “creative
accounting” for federal contracting benchmarks.
SBA filed a motion to dismiss the
lawsuit, which was filed in May by the American Small Business League,
related to the agency’s annual goaling report.
“SBA’s requirement to publish agency
remediation plans stems directly from the Small Business Act,” SBA counsel
stated in court documents. “Though the implementation of this requirement is
tied to the outcomes published in the goaling reports, it is the statute — not
the reports — which binds SBA to act. Moreover, the alleged legal consequences
for [ASBL] are speculative and result not from SBA’s actions but from
individual contracting decisions across multiple federal agencies.”
ASBL in a statement called the motion a
dodging of fraudulent policies.
“The SBA has obviously sidestepped the
relevant issues of this case because their policies are undeniably in direct
conflict with the Small Business Act,” said Robert Belshaw, an attorney for
ASBL. “The SBA is trying to deny any legal obligation to give an accurate
report on the true level of small business participation as the statutes
SBA in March released its annual report card on small
business federal contracting. As a whole, the government received an “A”
on its report card for fiscal 2015.
For the first time the government
reached its 5 percent women-owned small business [WOSB] contracting goal since the bar was set
in 1996. The government spent $17.8 billion working with WOSBs, according
to the report.
The government also passed its 23
percent overall small business procurement goal by spending 25.75 percent, or
$90.7 billion on small business contracts.
SBA explained in its motion that “each
agency submits a report to the SBA Administrator at the end of each fiscal year
indicating whether the agency achieved its goals, any justifications for
failure, and a remediation plan.”
The business league takes issue with
what it says is the SBA practice of excluding certain contracts in a
way to “misrepresent and fabricate” compliance with those goals, resulting in
Fortune 500 companies being awarded small business contracts.
In a May interview with Federal News
Radio, SBA’s associate administrator of Government Contracting and Business
Development John Shoraka said the agency’s exclusion process was both a work in
progress and a holdover from the previous administration.
“When we came in as an administration in
2009, we wanted to be able to continue to measure apples to apples to apples,
to see if we’re actually progressing,” Shoraka said. “We kept those exclusions
as they stood when we arrived, to make sure we weren’t accused of sort of
fiddling with the numbers and making it look like we were having success.”
A request for comment from SBA was not
In SBA’s motion, the agency makes
three arguments for tossing the lawsuit. One argument is
that the agency’s goaling report is not equal to a rule or order.
“The criteria used to determine which
contracts qualify as small business, and which contracts qualify as goaling
exclusions, are already determined by existing laws and policies that govern
the SBA and other agencies,” court documents state. “Though SBA is also
directed by statute to publish the information found in the goaling reports,
the reports themselves do not ‘implement’ the law.”
Another argument is that the reporting
does not directly impact legal rights.
“Whatever legal consequences might
accrue to [ASBL] would be the result of further contracting decisions by
other federal agencies, not the goaling reports or agency remediation plans,”
the motion states. “The data contained in the goaling reports does not create
SBA’s responsibility to publish remediation plans, which already exists under
the Small Business Act.”
The third argument rests on what SBA
says is a lack of “final agency action,” which ASBL needs to be able to file a
lawsuit under the American Procedure Act.
“The APA permits suit against an agency
when a person has suffered a ‘legal wrong because of agency action’ or has been
‘adversely affected or aggrieved by agency action within the meaning of a
relevant statute,'” the motion states.
“SBA’s reporting of small business
contracting achievements is not final agency action within the meaning of the
APA, and thus cannot be challenged in federal court. While SBA is required by
statute to report these achievements and agency remediation plans, the reports
themselves do not affect the law or SBA policy, nor impose direct, legal
consequences for either party.”
A hearing on the motion is scheduled for
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