Legislation that would produce a searchable Internet database of federal contracts, grants and loans passed the Senate Thursday night, pleasing government oversight groups that believe it would prompt improvements to existing federal databases.

The 2006 Federal Funding Accountability and Transparency Act (S.2590) directs the Office of Management and Budget to ensure the operation of an online database accessible to the public at no cost.

Passage of the bill was delayed by holds from Sens. Ted Stevens, R-Alaska, and Robert Byrd, D-W.Va. They cited the need for more time to review the measure.

A similar bill co-sponsored by House Government Reform Committee Chairman Tom Davis, R-Va., and Rep. Roy Blunt, R-Mo., (H.R. 5060) passed the House on June 21, but that system would include only grant information, not contracts.

The Senate legislation calls for the database to host a Google-like search engine that would gather information from existing federal databases, including the Federal Procurement Data System, the Federal Assistance Award Data System and Grants.gov.

The Congressional Budget Office estimated that updating existing databases and adding a central search engine would cost about $4 million in fiscal 2007 and $5 million in fiscal 2008. Another $2 million in annual appropriations would be needed thereafter to cover maintenance costs.

According to government oversight organizations, the information available on the existing sites frequently is inaccurate and incomplete. In September 2005, the Government Accountability Office reported that an upgrade to the Federal Procurement Data System failed to improve data quality and user-friendliness.

"The current databases are woefully inaccurate," said Adam Hughes, director of federal fiscal policy for OMB Watch, a government watchdog group. "With the greater scrutiny from this new database, we're hoping that those [old] databases are improved."

Hughes said as public interest groups and journalists pore over information on contracts awarded to Halliburton and other major Defense Department contractors, the need for accurate information on the databases will increase.

"Nobody wants to be on a top 10 list [of poorly performing government contractors] so companies will apply pressure [to the agencies] to get the right data up there," Hughes said. "It's one thing to have access to the information but if the information stinks, it's no good."

Hughes said media outlets nationwide would likely use the database to report on federal contracts and grants awarded to local companies, and bloggers probably would use the data to draw attention to abuse of federal funds.

OMB Director Rob Portman praised the passage of the bill, saying, "Taxpayers benefit from having the necessary information to hold government accountable for results."

"OMB stands ready to work with federal agencies to establish a single, user-friendly Web site so the public can scrutinize how government is spending taxpayer dollars," Portman said.

CHICAGO – The new head of the Small Business Administration, a former Chicago-area executive at a decidedly big business, says his agency must do a better job of helping minority, rural and inner-city small companies grow.

"That's a huge social opportunity for us," said Steven Preston, a Hinsdale, Ill. resident preparing to move to his new job in Washington. He became the SBA's administrator in June.

Preston is taking on a small agency with vocal critics, who claim that too many federal contracts are going to giant businesses when they should be allocated to small companies. Meanwhile, some minorities believe they are shortchanged when it comes to winning government work.

The SBA, best known as the financier of last resort, guarantees loans to small businesses that could otherwise not obtain credit. Last year, for example, the SBA backed about 100,000 loans worth $19 billion. The default rate on loans ranges up to 7 percent in any given year. Because of fees it charges, the agency breaks even.

People familiar with the SBA say its more important role is advocating the interests of small businesses to other federal agencies in everything from regulation to making contracts available.

Harry C. Alford, president of the National Black Chamber of Commerce, said the SBA needs to be more aggressive in pushing other government agencies to offer business to small companies, especially those that are minority-owned.

"African-Americans account for 2 or 3 percent of SBA loans and we are 13 percent of the population," Alford said.

"We are looking at his numbers now," Preston said. He said SBA data show that blacks account for about 7 percent of loans, a figure still substantially lower than their percentage of the population.

"They make up 13 percent of the population," Preston said. "They do not make up 13 percent of businesses."

Preston has been meeting with black and other minority organizations to see what the SBA can do to better serve small businesses in depressed neighborhoods. He said he is also working to ensure that rural small businesses are served.

To tackle faulty database

Preston said he plans to work on a chronic SBA problem. A federally maintained database of contracts awarded to small businesses, notorious for its inaccuracy, keeps turning up the names of transnational companies that are decidedly not small.

Lloyd Chapman, president of The American Small Business League, said, "Democrats and Republicans alike need to realize that when the president allows billions of dollars in small-business awards to be diverted to large corporations, it hurts every American no matter what their political affiliation."

A Korean War-era law says 23 percent of government contract expenditures should go to small businesses.

Preston said the problem is more with the way contract data are recorded than it is big companies getting work meant for small businesses.

He said that a small business that wins a contract and then grows big remains listed as a small business until the contract expires. In other instances, he said, a small company with a government contract is acquired by a large one but the acquiring company is listed as a small business in federal records as long as the contract runs.

SBA existence questioned

Some people question whether the SBA should even exist.

"The SBA is kind of a ridiculous agency," said Chris Edwards, director of tax policy for the libertarian Cato Institute. "Its basic mission is incoherent.

"If they make loans to healthy businesses that are prosperous, that makes no sense because they could go to banks to get money."

On the other hand, if the SBA funds marginal businesses that no other lender would touch, Edwards said, it is apt to misallocate money that could be put to better use elsewhere.

Preston said that argument is weak. There are some viable businesses that cannot get conventional bank loans but do need money to expand.

Nor is the government wasting the public's money, he said.

"The government does not lose money on these loans," he said. "We break even."

Preston, a 46-year-old triathlete, bicycled through the French Pyrenees last summer.

CHICAGO – The new leader of the Small Business Administration, a former Chicago-area executive at a big business, says his agency must do a better job of helping minority, rural and inner-city small companies grow.

"That's a huge social opportunity for us," said Steven C. Preston, who's preparing to move to his new job in Washington. He became the SBA's administrator in June.

Preston is taking on a small agency with vocal critics, who say that too many federal contracts are going to big businesses when they should be allocated to small companies. Meanwhile, some minorities say they are shortchanged when the time comes to award government work.

The SBA, best known as the financier of last resort, guarantees loans to small businesses that could otherwise not obtain credit. Last year, for example, the SBA backed about 100,000 loans worth $19 billion. The default rate on loans ranges up to 7 percent in any given year. Because of fees it charges, the agency breaks even.

People familiar with the SBA say its more important role is advocating the interests of small businesses to other federal agencies.

Harry C. Alford, president of the National Black Chamber of Commerce, said the SBA needs to be more aggressive in pushing other government agencies to offer business to small companies, especially those that are minority-owned.

"African-Americans account for 2 (percent) or 3 percent of SBA loans, and we are 13 percent of the population," Alford said.

"We are looking at his numbers now," Preston said. He said SBA data show that blacks account for about 7 percent of loans, a figure still substantially lower than their percentage of the population.

"They make up 13 percent of the population," Preston said. "They do not make up 13 percent of businesses."

Preston has been meeting with black and other minority organizations to see what the SBA can do to better serve small businesses in depressed neighborhoods. He said he also is working to ensure that rural small businesses are served.

Preston said he plans to work on a chronic SBA problem. A federally maintained database of contracts awarded to small businesses, notorious for its inaccuracy, keeps turning up the names of transnational companies that are decidedly not small.

Lloyd Chapman, president of the American Small Business League, said, "Democrats and Republicans alike need to realize that when the president allows billions of dollars in small-business awards to be diverted to large corporations, it hurts every American, no matter what their political affiliation." A Korean War-era law says 23 percent of government contract expenditures should go to small businesses.

Preston said the problem is more with the way contract data are recorded.

He said that a small business that wins a contract and then grows remains listed as a small business until the contract expires. In other instances, he said, a small company with a government contract is acquired by a large one but the acquiring company is listed as a small business in federal records as long as the contract runs.

Some people question whether the SBA should exist.

"The SBA is kind of a ridiculous agency," said Chris Edwards, director of tax policy for the libertarian Cato Institute. "If they make loans to healthy businesses that are prosperous, that makes no sense, because they could go to banks to get money."

On the other hand, if the SBA funds marginal businesses that no other lender would touch, Edwards said, it is likely to misallocate money that could be put to better use elsewhere.

Preston said that argument is weak. There are some viable businesses that cannot get conventional bank loans but need money to expand.

Nor is the government wasting the public's money, he said.

"The government does not lose money on these loans," he said. "We break even."

Preston, 46, would appear to be in for the long run. A triathlete, he spent time last summer bicycling through the French Pyrenees.

That endurance could serve him well, because he cannot count on his own experience as a small businessman. He doesn't have any.

He was executive vice president of ServiceMaster Co., which earned $198.9 million on sales of $3.24 billion last year. Before that, he was an investment banker with Lehman Bros.

Preston doesn't see that as a problem.

The SBA recently reported that between 2001 and 2005 it doubled the number of small business loans made through the main SBA loan office, and cited a steady increase in clients receiving counseling, technical assistance and education. It also claimed all-time highs in steering small businesses to federal procurement contracts. But as reflected in 2005, with Lewis' job position in the SBA and the ACVBA actively involved in assisting SDVOBs, the earmarked dollars were far from meeting the 3 percent mark. Why?

"We made it very clear that we were pleased – very pleased, with what Teresa (Lewis) was doing – and trying to do for veterans at the SBA," Weidman said. "As time went on, we realized there were more and more things put in her way. I believe very strongly that she was told to take a new job position offered her or she was out the door. We're not pleased at all."

Almost too coincidentally for some people, SBA Administrator Hector V. Barreto, surrounded by sharpshooters sniping at his handling of the SBA's responses to hurricanes Katrina and Rita, submitted his resignation in April. According to a report published by the National Association of Government Contractors (NAGC), some folks inside the beltway believe Barreto's resignation and President Bush's nominee for replacement, Steven Preston, is an effort to "… place more importance on the administration of a large government agency and less on the value of experience in an actual small business." According to the NAGC, Preston has never owned or managed a small business.

In June, the American Small Business League released a report reflecting statistics on federal contracts with all small businesses during FY 2005. It marked the lowest participation by small businesses in the past 20 years (23.09 percent in 2004 to 17 percent in 2005). The release also points to an SBA fraught with fraud and systemic abuse, citing 11 federal investigations and two private studies that have found fraud, abuse, and lack of oversight in small business contracting. Lloyd Chapman, president of the American Small Business League, called the diversion of federal contracts from small businesses "One of the biggest problems facing the SBA and the entire federal government today."

Barreto failed to reply to a letter dated May 26, 2006, from Weidman. The letter asked for straight answers regarding the removal of Lewis' office and its impact on maintaining an effective program that best represents the interests of SDVOBs. The letter also addressed the SBA's decision to permit the ACVBA's charter to expire. The letter was courtesy copied to the White House as well as key members of Congress.

In his letter of resignation to the president, Barreto does not mention either successes or failures with veterans' SBA programs administered during his tenure. He served as the SBA's chief executive since 2001. Barreto accepted an appointment to become the national chairman of the Latino Coalition, an organization based in Washington, D.C. To date, DeMolet has not received a response to his many questions for veterans dealing with the SBA. A Marine Corps veteran who served two tours in Vietnam, he is dismayed at these recent events and the lack of answers, particularly because the ACVBA was an all-volunteer force serving on their own time without compensation.

CHICAGO -- The new head of the Small Business Administration, a former Chicago-area executive at a decidedly big business, says his agency must do a better job of helping minority, rural and inner-city small companies grow.

"That's a huge social opportunity for us," said Steven Preston, who's preparing to move to his new job in Washington. He became the SBA's administrator in June.

Preston is taking on a small agency with vocal critics, who contend that too many federal contracts are going to giant businesses when they should be allocated to small companies. And some minorities believe they are shortchanged when it comes to winning government work.

The SBA, best-known as the financier of last resort, guarantees loans to small businesses that could otherwise not obtain credit. Last year, for example, the SBA backed about 100,000 loans worth $19 billion. The default rate on loans ranges up to 7 percent in any given year. Because of fees it charges, the agency breaks even.

People familiar with the SBA say its more important role is advocating the interests of small businesses to other federal agencies in everything from regulation to making contracts available.

Harry C. Alford, president of the National Black Chamber of Commerce, said the SBA needs to be more aggressive in pushing other government agencies to offer business to small companies, especially those that are minority-owned.

"African-Americans account for 2 or 3 percent of SBA loans and we are 13 percent of the population," Alford said.

"We are looking at his numbers now," Preston said. He said SBA data show that blacks account for about 7 percent of loans, a figure still substantially lower than their percentage of the population.

"They make up 13 percent of the population," Preston said. "They do not make up 13 percent of businesses."

Preston has been meeting with black and other minority organizations to see what the SBA can do to better serve small businesses in depressed neighborhoods. He said he is also working to ensure that rural small businesses are served.

Preston said he plans to work on a chronic SBA problem. A federally maintained database of contracts awarded to small businesses, notorious for its inaccuracy, keeps turning up the names of transnational companies that are decidedly not small.

Lloyd Chapman, president of The American Small Business League, said, "Democrats and Republicans alike need to realize that when the president allows billions of dollars in small-business awards to be diverted to large corporations, it hurts every American no matter what their political affiliation." A Korean War-era law says 23 percent of government contract expenditures should go to small businesses.

Preston said the problem is more with the way contract data are recorded than it is big companies getting work meant for small businesses.

He said that a small business that wins a contract and then grows big remains listed as a small business until the contract expires. In other instances, he said, a small company with a government contract is acquired by a large one but the acquiring company is listed as a small business in federal records as long as the contract runs.

Some people question whether the SBA should even exist.

"The SBA is kind of a ridiculous agency," said Chris Edwards, director of tax policy for the libertarian Cato Institute. "Its basic mission is incoherent.

"If they make loans to healthy businesses that are prosperous, that makes no sense because they could go to banks to get money."

On the other hand, if the SBA funds marginal businesses that no other lender would touch, Edwards said, it is apt to misallocate money that could be put to better use elsewhere.

Preston said that argument is weak. There are some viable businesses that cannot get conventional bank loans, but do need money to expand.

Nor is the government wasting the public's money, he said.

"The government does not lose money on these loans," he said. "We break even."

Preston, 46, would appear to be in for the long run. A triathlete, he spent time last summer bicycling through the French Pyrenees.

That endurance may serve him well, because he cannot count on his own experience as a small-business owner. He doesn't have any.

He was formerly executive vice president of ServiceMaster Co., which earned $198.9 million on sales of $3.24 billion last year. Before that, he was an investment banker with Lehman Brothers.

Preston said his personal lack of experience in small business is no barrier to doing a good job.