February 1, 2007
Petaluma, Calif.—The National Aeronautics and Space Administration has lost an 18-month legal battle with California-based American Small Business League, forcing NASA to provide detailed information that proved the agency had exaggerated its small business contracting statistics for 2002, 2003 and 2004.
The ASBL filed the suit in San Francisco federal court after NASA refused to comply with a Freedom of Information Act request as well as a second formal appeal for information that revealed billions of dollars in contracts that NASA had reported as going to small businesses actually went to many of the nation’s largest defense and aerospace contractors, such as Lockheed Martin and Boeing.
Federal law mandates a minimum of 23 percent of the total value of federal contracts and subcontracts be awarded to small businesses. However, since 2003, 13 federal investigations have found federal agencies and prime contractors like NASA have allowed billions in federal small business contracts to wind up on the desks of corporate giants. Even though some of the federal investigations revealed fraud was responsible for this diversion, Congress has failed to enact any legislation to stop it.
“The SBA’s own Inspector General has called this one of the biggest problems facing the nation today,” said Lloyd Chapman, president of the ASBL. “Yet I don’t think you can find a single piece of legislation currently being proposed by either party to stop it.”
The ASBL has won a series of federal lawsuits against the Small Business Administration that proved the SBA was aware NASA and other federal agencies were diverting government small business contracts to Fortune 500 firms. In December, new SBA Administrator Steven Preston proposed a federal policy that experts agree would allow these fraudulent practices to continue until the year 2012.
Based on information obtained through its legal campaign and the Freedom of Information Act, ASBL president Lloyd Chapman estimates that over $200 million a day in federal small business contracts are actually going to the top 2 percent of firms in the United States.
“I plan to file several more federal law suits against the SBA, NASA, General Service Administration and the Department of Defense to uncover the blatant fraud, abuse and corruption that has been allowed to go unchecked in federal small business contracting programs,” said Chapman. “This new Congress needs to realize there are 23 million small businesses in this country; they pay their taxes, they vote and they are sick and tired of being cheated. This congress needs to come through with its promise to end fraud and corruption in government.”
About the ASBL
The American Small Business League was formed to promote and advocate policies that provide the greatest opportunity for small businesses - the 98 percent of U.S. companies with less than 100 employees. Founded on the principle that small businesses, the backbone of a vital American economy, should receive the fair treatment promised by the Small Business Act of 1953, the ASBL monitors existing policies and proposed policy changes by the Small Business Administration and other federal agencies that affect its members.