Petaluma, Calif. – The Small Business Administration (SBA) has lost its fourth lawsuit to the American Small Business League (ASBL) in the 9th Circuit Court of Appeals.  The ruling will increase transparency and set a new legal standard.  The SBA will now be forced to release the names of any and all firms that received federal small business contracts.

In September of 2008, the SBA appealed a United States District Court ruling, which directed the agency to release the specific names of all recipients of federal small business contracts during fiscal years (FY) 2005 and 2006.

The ASBL filed suit against the SBA under the Freedom of Information Act (FOIA) after the SBA refused to comply with the ASBL’s request.  The ASBL requested the data from the SBA as a means of proving the Bush Administration diverted billions of dollars in federal small business contracts to Fortune 500 corporations, their subsidiaries and other clearly large businesses.

Although the SBA is charged with the responsibility of overseeing and administering virtually every aspect of federal small business contracting programs; during proceedings in United States District Court, Northern District of California, SBA attorneys attempted to convince United States District Judge Marilyn H. Patel that the agency maintained no such information. 

Patel dismissed the SBA’s excuse, ruling in favor of the ASBL.  In the court’s decision, Patel stated, “The court finds curious the SBA’s argument that it does not ‘control’ the very information it needs to carry out its duties and functions.”
(www.asbl.com/documents/26-2.pdf)

Since 2002, over a dozen federal investigations have found that hundreds of billions of dollars in federal small business contracts have been diverted to corporate giants such as Lockheed Martin, Boeing, General Dynamics, Raytheon, L-3 Communications, Northrop Grumman and British Aerospace (BAE).

Report 5-15 from the SBA Office of Inspector General stated, “One of the most important challenges facing the Small Business Administration and the entire Federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards." (http://www.sba.gov/IG/05-15.pdf)

The ASBL has drafted legislative language titled the, “Small Business Fairness and Transparency in Contracting Act,” which would end the diversion of billions of dollars in federal small business contracts to Fortune 500 firms, and redirect over $100 billion a year back into the middle class economy where over 97 percent of new jobs are created.

Petaluma, Calif. - According to the most recent data from the U.S. Census Bureau, firms with fewer than 20 employees comprise over 90 percent of all U.S. firms and are responsible for more than 97 percent of all new jobs in America. Over half of all Americans work for small businesses. (http://www.inc.com/news/articles/200708/data.html) 

Congress realized the vital importance of small businesses to our national economy when it passed one of our nation's first economic stimulus plans in 1953, the Small Business Act. Today, federal law based on the Small Business Act of 1953 requires a minimum of 23 percent of all federal contracts and sub-contracts be awarded to small businesses.

Since 2003, over 15 federal investigations have been released, which found hundreds of billions of dollars in federal contracts that by law should be going to hardworking American small businesses have been diverted to Fortune 500 firms.

Every major newspaper in the country has reported on the problem and several of the largest television networks such as ABC, CBS and CNN have aired stories on the issue.

President Obama seemed to agree it was time to stop the fraud and abuse in federal small business contracting programs when, in February of 2008, he released the statement, "Small businesses are the backbone of our nation's economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants." (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php)  

Since making that statement almost a year ago, President Obama has consistently refused to make good on his campaign promise, and support legislation to stop Fortune 500 firms from hijacking federal contracts designated for America's nearly 27 million small businesses.

Not only has President Obama refused to propose even a single policy to address the problem, but he actually changed his website to remove the appearance that he had ever made the statement, "It is time to end the diversion of federal small business contracts to corporate giants." (http://my.barackobama.com/page/content/sbhome/)

Just three weeks before the election, President Obama dropped a plan developed by his small business advisory council that would have halted the diversion of billions of dollars in federal small business contracts to "corporate giants" and created millions of jobs. (https://www.asbl.com/documents/BOsmallbusinesspolicy.pdf) 

The American Small Business League (ASBL) is encouraging journalists to ask President Obama if he will allow Fortune 500 firms to continue to take federal small business contracts during his administration.

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Petaluma, Calif. - Relief to small businesses and homeowners recovering from this season's round of hurricanes will be dramatically hampered by a series of severe Bush Administration budget cuts at the Small Business Administration (SBA). The SBA's ability to respond to victims of Hurricane Katrina was severely handicapped by dramatic budget and staffing cuts at the agency prior to the storm.

The SBA was so overwhelmed during relief efforts following Hurricane Katrina, that the agency was forced to hire thousands of temporary workers to do the work of the multitude of experienced SBA staff that had been laid off by the Bush Administration. A Government Accountability Office (GAO) report issued on July 25, 2007 stated, "SBA also faced challenges training and supervising the thousands of mostly temporary employees the agency hired to process loan applications and obtaining suitable office space for its expanded workforce. As of late May 2006, SBA processed disaster loan applications, on average, in about 74 days compared with its goal of within 21 days." (GAO-07-1124T, http://www.gao.gov/new.items/d071124t.pdf)

The SBA's lack of experienced staff was seen as a contributing factor in the hundreds of cases of fraud and abuse that were uncovered in the aftermath of relief efforts.

On March 28, 2008, the SBA Office of Inspector General released Report 8-11 stating, "Due to the unprecedented number of loans, by the fall of 2006 SBA had accumulated a backlog of more than 90,000 undisbursed loans.  To expedite disbursement, SBA launched a 90-in-45 Campaign to resolve the backlog within 45 days. Several SBA employees involved in this initiative complained that, to meet performance goals, SBA disbursed funds against borrowers' wishes, circumvented loan-processing requirements, unnecessarily cancelled approved loans and inappropriately withdrew loan applications." (SBA OIG Report 08-11, http://www.sba.gov/ig/8-11.pdf)

Despite the SBA's efforts to mask its inability to adequately respond to the volume of disaster loan applications following Hurricane Katrina, the agency still managed to accumulate a massive backlog of loan applications.

According to Report 7-20 released by the SBA OIG, following the 2005 Gulf Coast hurricanes, the SBA approved 158,000 disaster loans totaling $10.6 billion.  The report stated that as of September 30, 2006, the SBA had only dispersed $3.1 billion or 30 percent of the loans.  Furthermore, Report 8-11 states that as of January 25, 2008, the SBA had only dispersed $6.3 billion after approving more than 160,000 disaster loans. (SBA OIG Report 07-11, http://www.sba.gov/ig/7-20.pdf)

Since taking office, President Bush has cut the SBA's budget and staffing more than any other federal agency. Today, the agency's budget is less than half of what it was when President Bush took office.

Depending on the overall magnitude of the damage caused by Hurricanes Ike, Gustav and the remainder of the seasons storms, the SBA may have to once again resort to hiring inexperienced temporary workers as a means of handling the workload the agencies larger and more experienced staff was able to provide in the past.

Relief to victims of this season's hurricanes could be even worse than it was after Katrina, because the SBA's budget and staffing have been cut further in the years following Katrina.

To date, neither Senator Barack Obama (D - IL), nor Senator John McCain (R - AZ) have posed plans to restore the SBA's Budget if elected president.

PETALUMA, Calif., February 9, 2006 /PRNewswire/ -- For the 6th year in a row, President Bush has requested a budget for the Small Business Administration that further cuts staff and programs to benefit America's 23 million small businesses. Lawmakers on both sides of the aisle have criticized the proposal.

Although the $624 million budget request is $31 million more than the initial request for 2006, the budget is artificially inflated with a sizeable allocation that was not part of this year's budget. Taken apart, the operating budget would be $429 million, or 28% less than the initial $593 million for 2006. Moreover, the 2007 request cuts SBA staff by 24%, increases costs to borrowers for future disaster loans, increases fees for small business loans, and axes a number of programs including the Microloan and Microloan Technical Assistance Programs, which serve a large proportion of minority and women-owned small businesses.

Republican Olympia Snowe, chair of the Senate Committee on Small Business & Entrepreneurship, noted that the SBA budget is only 3/100ths of a percent of the overall Federal budget, but "the SBA and its programs have a tremendous return on investment." Snowe added, "This steady decline to the SBA's budget could jeopardize its ability to provide economic stimulus in the future."

John Kerry, leading Democrat on the Senate Committee, had this to say, "While President Bush brags about government costs going down for the Small Business Administration, he fails to tell the truth that slashing Federal resources over the years raises costs for small business owners."

The current budget cuts are consistent with rumors that the Bush Administration intends to wind down the SBA and reduce, if not eliminate, Federal small business contracting programs.

"The actions of President Bush are in stark contrast to his rhetoric. Even members of his own party are upset by these relentless cuts," stated Lloyd Chapman, President of the American Small Business League. "This new budget clearly shows Bush's lack of commitment to the businesses where most Americans work. I expect it to have a significant negative impact on legitimately small, women-owned, and minority-owned businesses."

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% of U.S. companies with less than 100 employees. The ASBL is 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 1951. Representing small businesses in all fields and industries throughout the United States, the ASBL monitors existing policies and proposed policy changes by the Small Business Administration and other federal agencies that affect its members.

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