Weeks ago the budget bill for the Small Business Administration abruptly vanished under an avalanche of last-minute amendments. Now some lawmakers think it's time to send out a search party.

Rep Nydia M. Velázquez, D-N.Y., the ranking Democrat on the House Small Business Committee, is calling for an open process to review the legislation. The committee has held only one hearing on the bill at a time when the agency needs a massive overhaul, she said.

"Utilizing an open process will allow the committee to work in a bipartisan manner to improve the underlying bill and the agency's programs," Velázquez added.

Problems began when the bill failed to address numerous shortcomings in the agency, which had been highlighted in reports by the Government Accountability Office and SBA Inspector General. That led Democrats to file more than 50 amendments.

Warning of another deadly storm season ahead, Senate Democrats introduced a bill last week to boost federal aid for small businesses in the wake of natural disasters.

Among other measures, the Small Business Disaster Loan Reauthorization and Improvement Act, sponsored by Sen. John Kerry (D-Mass.), would streamline the process of applying for federal disaster loans, while providing immediate bridge loans to disaster victims while they await for longer-term assistance.

It would also require the Small Business Administration, which oversees federal disaster loans for small businesses, to make regular reports to Congress on the progress of recovery efforts, as well as the number of rebuilding contracts awarded to smaller firms.

Both the SBA and the Federal Emergency Management Agency were widely criticized for their slow response to Hurricanes Katrina, Rita, and Wilma last year.

"Residents of the Gulf Coast continue to rebuild form last year's hurricane season, and they do so despite the slow and inadequate response from their federal government," Kerry said in introducing the bill on Thursday.

Kerry, the ranking Democrat on the Senate Committee on Small Business and Entrepreneurship, said the bill seeks to increase access to capital for small businesses after a disaster and helps ensure that federal disaster response agencies are "doing their jobs."

On June 1, the official start of the Atlantic Hurricane Season, outgoing SBA chief Hector Barreto said the agency's disaster-operation centers in the Gulf were fully staffed with loss verifiers, loan processors, and attorneys.

Barreto also said the agency's computerized loan processing system -- which some critics said was ill-equipped to handle the volume of applications from storm victims last year -- "has been significantly upgraded and will be operational this month,"

The agency has also requested proposals from private sector lending companies to assist with the closing and disbursement of disaster loans, Barreto said.

Since Katrina struck on Aug. 29, the SBA has approved more than $2.15 billion in disaster loans spread over nearly 60,000 applications from small businesses. About 125,000 small and midsize businesses were disrupted by the storm, the U.S. Chamber of Commerce estimates.

The share of government contracting dollars that went to small businesses last fiscal year may have hit a record low in fiscal 2005, jeopardizing the government's goal of channeling 23 percent to small ventures, a Virginia-based research firm said Wednesday.

Of the $377.5 billion in federal contracting dollars awarded in fiscal 2005, small companies won just $65 billion -- or 17 percent -- according to Eagle Eye Publishers.

The Small Business Administration would not comment on the figures, saying it is still compiling its own small-business contracting report. But if the data holds up, it would be the lowest percentage awarded to small businesses since at least 1998.

By comparison, the SBA reported small firms won $69 billion worth of contracts -- or 23 percent of the total -- in 2004.

Eagle Eye President Paul Murphy said increased Department of Defense spending, which traditionally goes to larger companies, seems to be driving the contracting divide between large and small companies.

"Small business is healthy in many areas, but DOD contracts are causing the overall total to rise and small business is falling behind," he said from his office in Fairfax, Va.

Despite the weak showing on paper, the reality could be even worse, said the American Small Business League, a California-based advocacy group that has repeatedly sued the administration over contracting issues.

After reviewing Eagle Eye's list of the top 100 contractors identified as "small" by the government, the ASBL said at least 30 appear to be large companies, including defense giants General Dynamics and Northrop Grumman.

The top small-business contractor in 2005 was Gulf Stream Coach, which won $521 million worth of contracts. According to the company's website, it's the nation's largest privately held, full-line recreational vehicle manufacturer with more than 1,500 employees.

"There's no way Gulf Stream should be considered a small business," said ASBL President Lloyd Chapman.

A representative from Gulf Stream was unavailable for comment Wednesday.

There are numerous loopholes in SBA contracting that allow large corporations to be counted as small.

Firms sometimes outgrow the size standards, and small companies that were purchased by large corporations before 2004 can maintain their small-business status for the life of a contract, which can often last years.

More than a dozen government and private investigations have pointed to instances of abuse and fraud in the government's small-business contracting program.

The SBA's own Office of the Inspector General stated in a 2005 report that ``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."

The General Services Administration, which compiles procurement data for the SBA, said it could not comment on Eagle Eye's numbers until the SBA issues its report.

Eagle Eye, which sells procurement data and also does studies for government agencies including the SBA, used raw data from the GSA's Federal Procurement Data System and then supplemented it with Department of Defense data to produce its report, Murphy said.

When the SBA eventually does announce its figures, the scenario is likely to look rosier, said Murphy. The government excludes thousands of contracts from its calculations, including those that are carried out abroad, those funded by foreign governments and all Transportation and Security Administration deals.

"They wind up excluding tens of billions off the base, and that tends to increase the small-business share," Murphy said.

In 2004, when the SBA reported that the small business take was 23 percent, Eagle Eye's calculations put it at 20 percent.

I was extremely disappointed to read the editorial "SBA is DOA" (June 5 and PghTrib.com), which argued that there is no need for the Small Business Administration's government-sponsored small business lending program.

This partisan political propaganda was obviously inspired by the anti-small business rhetoric of Veronique de Rugy of the American Enterprise Institute, an extremely conservative organization funded by Fortune 500 corporations, which would like nothing better than to see an end to programs for small businesses.

Ms. de Rugy is one of a very few people in the world who believe the SBA should be closed. I am not aware of any member of Congress who supports her position. Furthermore, her statistics are flawed and do not represent the true benefit of SBA loans.

According to David Bartram, president of U.S. Bank's SBA Division, SBA "accounts for 40 percent of all long-term small business loans made in America." This effectively refutes de Rugy's claim that few small businesses benefit from the government's lending program.

The SBA, which ensures that 23 percent of federal contracts (worth $119 billion) are directed to small businesses, is the only agency that exists to address the needs of the 23 million small, women-owned, minority-owned and veteran-owned companies in the United States today. President Bush has repeatedly pledged his undying support for small businesses and the SBA has the support of Congress and the American people.

Lloyd Chapman
Petaluma, Calif.