Héctor Barreto presentó ayer su renuncia a la dirección de la Administración de Pequeños Negocios (SBA) tras meses de presión y críticas por la forma en que la entidad manejó el programa federal de préstamos para las víctimas de los huracanes que el año pasado golpearon la costa del golfo y por los abusos en la distribución de contratos públicos destinados a la pequeña empresa.

El presidente George W. Bush escogió a Steven C. Preston, un ejecutivo de negocios que integra la vicepresidencia de The ServiceMaster Co., para reemplazar a Barreto. Su nominación debe ser confirmada por el Senado.

La salida de Barreto se da justo cuando el nuevo Secretario de la Presidencia en la Casa Blanca, Joshua Bolten, está modificando el equipo alrededor del Presidente debido al bajo nivel de aprobación que su Administración está registrando y a pedidos de los republicanos en el Congreso para que haga una limpia de personal.

Raúl Cisneros, portavoz de la SBA, señaló que la Casa Blanca no obligó a Barreto a renunciar. "Se le invitó a unirse a una prominente organización latina y decidió hacerlo", dijo.

En su carta de renuncia dirigida al presidente Bush, Barreto escribió: "Ha sido un honor único servir como administrador de la SBA y asistir con la ejecución de su visión de brindar oportunidades sin precedentes a todos los empresarios de cada comunidad mientras realizan sus sueños".

Barreto, quien agregó en su renuncia estar orgulloso de los "sólidos resultados" y "metas históricas" cumplidas con las que entrega la dirección de la SBA, de la cual estuvo a cargo desde julio de 2001, anunció que ha aceptado ser el presidente nacional de la Coalición Latina, una organización nacional hispana con sede en Washington.

Entre 2001 y 2005, la entidad duplicó el número de préstamos hechos a través de sus principales programas.

En su carta de renuncia, Barreto agregó: "La SBA ha respondido de una manera sin precedente a los devastadores huracanes del año pasado, aprobando más de 8,400 millones de dólares en préstamos a bajo interés a empresas y propietarios en el área de desastre".

Sin embargo, Barreto había sido ampliamente criticado durante los últimos meses por el pobre desempeño de la SBA para manejar los programas de préstamos para la recuperación de los negocios afectados, tanto por los ataques terroristas del 11 de septiembre como por los huracanes que golpearon la costa del golfo el año pasado, pero también por su supuesta complicidad con la Administración Bush para recortar presupuesto y personal a la entidad durante seis años consecutivos.

Durante su administración de la SBA, la entidad fue sometida a varias auditorías por parte de diferentes entidades, incluyendo la Oficina de la Contraloría General (GAO) y la oficina del Inspector General de la SBA, encontrando una serie de abusos en los contratos federales destinados a los pequeños negocios.

"El Presidente tiene una oportunidad real para mostrar un compromiso de ayudar a los pequeños negocios de todos los sectores a tener éxito. Sus verdaderos colores serán revelados en su elección. Los empresarios de Estados Unidos necesitan un defensor, no más de la misma agenda de grandes negocios que tiene la Administración Bush", afirmó el senador demócrata por Massachusetts John Kerry, uno de los miembros del Comité de Pequeños Negocios y Empresas del Senado.

"En los últimos cinco años hemos visto un completo y profundo abandono de nuestros pequeños negocios cortesía de la Administración Bush. Desde que Bush asumió el cargo, el presupuesto de la SBA se ha reducido en más de un 40%, se han sacrificado programas críticos de asesoría y préstamos y hemos sido testigos de la respuesta más abismal ante las necesidades de las víctimas de los devastadores huracanes que afectaron la costa del golfo, Katrina, Rita y Wilma. Es tiempo del cambio", sostuvo Kerry.

La semana pasada la GAO presentó los resultados de una auditoría que indican que, debido a la pobre supervisión para otorgar contratos federales, grandes compañías de nativoamericanos de Alaska capitalizaron millones de dólares que correspondían a pequeños negocios, sin someterse a licitación.

Los auditores de la GAO también señalaron: "Los funcionarios de gobierno hicieron poco para determinar si las firmas de Alaska podrían estar obteniendo una ventaja de competencia injusta o sirviendo como frentes ilegales de grandes negocios que estaban haciendo la mayor parte del trabajo".

Una investigación del inspector general de la SBA confirmó a finales del año pasado lo que reportes periodísticos ya habían anticipado: en un programa para ayudar a negocios después de los ataques del 11 de septiembre, un alto porcentaje de los préstamos garantizados por el gobierno fue a empresas que aparentemente no eran elegibles para recibirlos.

En ese entonces el inspector general indicó que "uno de los retos más importantes que enfrenta la SBA y todo el gobierno federal es que las grandes empresas están recibiendo los contratos de las pequeñas y las entidades [federales] están recibiendo crédito por esos contratos".

La renuncia de Barreto no causó sorpresa entre grupos defensores de los pequeños negocios, algunos de los cuales ya habían pedido su destitución.

"Esperábamos su renuncia hace meses", afirmó Lloyd Chapman, presidente de la Liga Americana de Pequeños Negocios, una organización que promueve y defiende las políticas que proveen mayores oportunidades a la pequeña empresa y que ha sido crítico abierto del desempeño de Barreto en la SBA.

"Mi preocupación ahora es que con su renuncia pueda tomar forma la agenda del presidente Bush de transferir la función de la SBA al Departamento del Comercio o, definitivamente, cerrarla, algo que los republicanos han querido hacer desde la administración Reagan", indicó Chapman.

Hector Barreto has submitted his resignation as head of the U.S. Small Business Administration to become a lobbyist. He will head the Latino Coalition, a Hispanic advocacy group.

Mr. Barreto is not being forced to resign, a public relations aide claimed in speaking with The Associated Press.

Steven Preston has been picked by President George W. Bush to succeed Mr. Barreto.

Mr. Barreto was appointed to the SBA by Mr. Bush in 2001.

His resignation comes after the SBA was criticized for its handling of loans to help small businesses recovery after the 9/11 attacks and last year's hurricanes.

The SBA has also been sued twice by the American Small Business League, whose president, Lloyd Chapman, says he's not surprised at the resignation.

"I'm concerned this could signal a move by the government to adopt policies that may try to erode federal small business contracting programs," Mr. Chapman says.

He says he is also concerned about Mr. Preston's appointment.

((Listen to an interview with Mr. Chapman by clicking on the link below)).

The White House buried the announcement of Mr. Preston's appointment in a press release announcing routine appointments such as a nominee to be ambassador to the Republic of Tajikistan and a district court judge on the island of Guam.

Mr. Preston currently serves as executive vice president at ServiceMaster Co. Earlier, he was senior vice president and treasurer of First Data Corp.

ServiceMaster (NYSE:SVM) of Downers Grove, Ill., is a conglomerate, which includes such brands as Terminix, TrueGreenChemLawn, Merry Maids, Rescue Rooter and ServiceMaster.

It had sales of more than $3.2 billion in its most recent fiscal year.

Its sales are provided through a network of over 5,400 company-owned and franchised service centers and business units, its Web site says.

Mr. Preston did not immediately respond to a request for an interview made through ServiceMaster.

WASHINGTON – Small Business Administration chief Hector Barreto resigned Tuesday after a tenure marked by criticism of the agency's response to the Sept. 11 terror attacks and the Gulf Coast hurricanes.

President Bush immediately announced a new agency chief, Steven C. Preston, an executive vice president for The ServiceMaster Co. The appointment requires Senate confirmation.

Barreto, a California businessman, was appointed head of the agency in 2001. After the Sept. 11 terror attacks that year, his agency provided nearly $5 billion in economic disaster recovery loans to small businesses across the country.

The Associated Press reported last year, however, that many of the businesses that received loans said they neither wanted nor knew they were receiving money earmarked for terror victims. Companies receiving aid ranged from an Oregon winery to a Virgin Islands perfume bar, drawing outrage on Capitol Hill.

An SBA internal agency investigation confirmed the AP's findings in an investigation of one of the main programs, the Supplementary Terrorist Attack Relief (STAR) effort.

Barreto also was criticized for his agency's response to the 2005 Gulf hurricanes. A month after Hurricane Katrina laid waste to much of the Louisiana, Mississippi and Alabama coasts, no loans had been handed out, and the backlog of applications was in the tens of thousands. Although the SBA eventually was able to boast that it approved more than $8 billion in disaster relief loans, lawmakers on Capitol Hill were angered by the delays and high rates of loan rejections.

Rep. Nydia Velazquez, the top Democrat on the House panel that oversees the SBA, called for Barreto's resignation in December. In a statement, Velazquez, who represents part of New York City, said that "unfortunately he was simply not up to the challenges of running this agency."

"In the last five years, we have seen the complete and utter abandonment of our small businesses courtesy of the Bush administration," said Sen. John Kerry, D-Mass., the top Democrat on the Senate panel overseeing the SBA. "It's time for a change."

Sen. Olympia Snowe, the Maine Republican who leads the Senate SBA panel, wished Barreto well and said she looked forward "to working with Hector's successor, who I hope will be someone who has a deep commitment to the success of small businesses and understands the vital role the SBA plays in that success."

Rep. Donald Manzullo, an Illinois Republican who chairs the House SBA panel, praised the SBA for having "learned to do more with less while facing unparalleled challenges."

In his resignation letter, Barreto defended his tenure. He told Bush that "it has been a unique honor ... to help execute your vision to bring unprecedented opportunities to all entrepreneurs in every community as they seek to realize their dreams. I am proud that the agency has delivered strong results and achieved historical milestones on behalf of a vital component of our great economy, America's small businesses."

A spokesman said he had not been forced out. Barreto has agreed to remain in his post as SBA administrator during a transition period.

His successor, Preston, is a former investment banker who has been at ServiceMaster since 1996. The company provides home services through more than 5,400 company-owned and franchised services, including TruGreen ChemLawn, ServiceMaster Clean and Merry Maids. Preston is a graduate of Northwestern University and earned his master's in business administration from the University of Chicago Graduate School of Business. He and his wife have five children.

If allegations were true, penalty is light, observers said
Complaints that large companies steal government work from small businesses may no longer be falling on deaf ears. In what is believed to be the first-ever False Claims Act settlement between a company allegedly posed as a small business and the U.S. government, Insight Public Sector Inc. has agreed to pay $1 million for misrepresenting itself as a small business.

The alleged improper activity began in 1996 when the company, then known as Comark Government and Education Services Inc., won a General Services Administration multiple-award schedule contract as a small business.

In 2002, Insight Enterprise Inc., a Fortune 1000 company with 2005 revenue of $3.3 billion, acquired Comark, which continued to operate as a small business until 2005.

The settlement was the result of a two-year investigation by GSA, the Justice Department and the Small Business Administration that concluded Comark was not a small business when it won the contract and, therefore, was given preferential treatment and contracts it should not have received.

Insight of Tempe, Ariz., declined to be interviewed for this story.

Glenn Harris, an attorney in SBA's inspector general's office who worked on the investigation, said between 1996 and 2005, the company won roughly 250 small-business set asides worth about $4.2 million.

Harris could specify neither the total number of task orders nor their value, but, he said, there were "many other contracts."

Allegations of fraud
Lloyd Chapman, president and founder of the small-business advocacy group American Small Business League, began looking into Insight in 2002 after hearing repeated complaints from small companies that were losing contracts to Insight.

Later that year, he turned Insight and two other companies over to SBA for misrepresenting themselves as small businesses. Chapman claims Insight won more than $50 million worth of small-business contracts, and called the $1 million settlement inappropriate.

"It is a joke and an insult to the American people and to small businesses, and it serves to encourage fraud and abuse," he said. "That's like having the fine for bank robbery be that you have to pay a percentage of what you stole."

Under the Small Business Act, companies found guilty of misrepresenting themselves as small businesses face punishment of up to 10 years in prison, a fine of $500,000 per infraction and debarment from government contracting.

Harris, while not acknowledging whether criminal prosecution was ever recommended against Insight, said the government considered all its options, but that the final settlement was the result of extensive negotiations with the company's legal team. He called it a "good settlement for the government."

In a statement announcing the agreement, SBA Administrator Hector Barreto went even further.

"This should act as a deterrent to such activity," he said.

But the agreement lets Insight stay on the 20-year GSA schedule contract and does not include any admission of wrongdoing on the company's behalf. Taken in combination with a fine that is a fraction of what the company won in awards, small-business advocates fail to see the deterrent.

Guy Timberlake, CEO and chief visionary officer for the American Small Business Coalition, lauded the government for taking action, but disagreed with the severity of the punishment.

"Fraud is what it is, and it should be treated as harshly as fraud, as a federal offense," he said.

Lack of oversight
The problem of large companies winning small-business contracts is an institutional one and is not limited to one company under one contract, SBA and industry officials said.

In a report from Feb. 24, 2005, then SBA IG Harold Damelin called the issue one of the most important challenges facing SBA and federal government.

"Large businesses are receiving small-business procurement awards, and agencies are receiving credit for these awards," he wrote.

Among the bones of contention is the way government contracting officers search for vendors. Using the Central Contractor Registry's (CCR) search function, contracting officers access a complete list of companies that have been certified by SBA as members of its 8(a) Business Development, HUBZone Empowerment Contracting and Small Disadvantaged Business programs.

However, the registry lists any businesses that claim to qualify as small, not solely those certified by SBA. The registry is largely an honor system; companies enter their own information with no oversight and are expected to update it regularly and accurately, SBA's Harris said.

"There are a lot of problems with that in terms of data accuracy," he said.

In a series of reports over the last two years, the SBA IG has urged the agency to make changes to the registry. As of yet, no changes have been made, although SBA officials claim to be working with the Defense Department on a solution.

Skirting requirements
The IG also has taken issue with the practice, on governmentwide acquisition contracts, of vendors maintaining their small-business status for the life of the contract – 20 years in some cases – even if the company outgrows its designation or is purchased by a large corporation.

The IG wants this practice stopped, but SBA has declined to do so.

A rule enacted in 2004 forced recertification of companies on multiple-award schedule contracts every five years as options are picked up. But companies are allowed to grow out of the small-business category during those five years.

SBA in April 2003 issued a proposed rule change that would require annual recertifications, but the rule has yet to be adopted.

That may not be enough, Harris said. To ensure that the contract winner is a small business, the certification should be done before each task order award, he said.

Yet another problem exists in government agencies themselves; some contracting officers selectively pick North American Industrial Classification System codes for procurements to let companies win small-business contracts, Timberlake said. Procure- ments often are tagged with NAICS codes, each of which has its own size standard.

Some NAICS codes are revenue-based; others are based on number of employees. Contracts often have several NAICS codes, which lets companies that do not qualify under one code qualify as small under another code. NAICS codes each company qualifies for are listed on the CCR, and are entered by the company.

In the case of Insight winning awards under the 1996 GSA contract, it is likely that each contract awarded to the company, set-aside or not, was counted by the awarding government agency toward its small-business contracting goal, Harris said.

"They try to do everything they can to take as much credit as possible, so I would think it quite likely that they did," he said.

Fueled by the contents of newly released documents, the head of a small business advocacy group is renewing his call for a federal investigation of the Small Business Administration.

American Small Business League President Lloyd Chapman said his group obtained more than 100 formal contract-award protests from the SBA through a federal Freedom of Information Act lawsuit and 18-month legal battle.

"Our findings confirm we were right on target with our concerns," said Chapman, "and this is just a sampling over an 18-month period."

The group charges that large corporations are winning federal contracts earmarked for small businesses, and that the SBA is doing next to nothing to police the process. Chapman said a preliminary review of the documents shows that a large number were dismissed on minor technicalities. In other cases, he said, the SBA failed to follow up on complaints.