No Takers on $10,000 Reward for SBA List of Small Business Contractors

Press Release

No Takers on $10,000 Reward for SBA List of Small Business Contractors

October 31, 2006

Petaluma, CA, October 31, 2006/ It's been one week since American Small Business League (ASBL) president Lloyd Chapman offered a $10,000 reward for an accurate and verifiable list of firms the Small Business Administration (SBA) and the Bush Administration allege received $79.6 billion in small business contracts in fiscal year 2005. So far, no one has come forward to claim the reward.

ASBL offered the reward to show that the majority of small business contracts the SBA claims were awarded to small businesses in 2005 actually went to corporate giants in the defense and aerospace industry. Thirteen federal investigations and reports by ABC and CBS have revealed that billions of dollars in federal small business contracts were awarded to firms such as Rolls Royce, Lockheed, General Dynamics, Titan Industries, Hewlett-Packard, Oracle, Wal-Mart and Raytheon. Officials within the SBA and the Bush Administration have consistently tried to deny these reports.

According to Lloyd Chapman, several government employees from various agencies have contacted him and expressed an interest in claiming the reward but no one has submitted the complete list. "The information provided so far is just what we expected and confirms the fact that the SBA is inflating government small business contracting statistics with awards to large corporations."

Chapman reported that one individual called and sounded as if he was reading information directly from his computer. He stated that Boeing was the largest recipient of federal small business contracts in 2005. Another individual, who sounded very knowledgeable, called and said that over half of the contracts reported as going to small businesses actually went to Fortune 1000 firms and other large businesses. All of the individuals Lloyd Chapman spoke with expressed some concern about losing their jobs if they provided information that would be unflattering to the Bush Administration.

"The facts about the Bush Administration's anti-small business policies are coming to light," Chapman stated. "The information that has been exposed so far indicates that up to $300 billion in federal small business contacts has been diverted to big business since President Bush was elected. This has forced thousands of legitimate small businesses to close their doors after losing contracts to Fortune 1000 firms.

"The Bush Administration has dealt another blow to small business owners across America by moving forward with plans to close the Small Business Administration (SBA), the only federal agency that exists to assist the 23 million small businesses where most Americans work. President Bush has gutted the SBA budget, terminated hundreds of SBA employees, and forced many SBA offices across the country to close. In fact, the SBA budget today is less than half of what it was when President Clinton left office.

"All small businesses owners, especially Republicans, need to quit listening to Bush's rhetoric, look at the facts and see what he is actually doing. Read the first paragraph of SBA Inspector General Report 5-15. In it, the SBA Inspector General states the diversion of small business contracts to large firms is one of biggest problems facing the SBA and the entire federal government today. George Bush and the Republican-led Congress are trying to repeal the Small Business Act and end all federal small business programs. The Bush Administration has duped small business owners into thinking all they need are tax cuts. Tax cuts won't do you much good when you're bankrupt."

About the ASBL
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 1953.


Fear and loathing


Fear and loathing

By Roseanne Gerin
Washington Technology
October 30, 2006

Contractor groups expect more scrutiny if House goes blue
A proposed bill that would bring some unwelcome changes to contracting tops the list of issues that IT groups and government officials are tracking during the upcoming congressional elections.

The Clean Contracting Act, proposed by Rep. Henry Waxman (D-Calif.), ranking minority leader of the House Government Reform Committee, is intended to correct what he calls waste, mismanagement and fraud in federal government acquisition practices.

He introduced the 43-page bill in September as a way to prevent wasteful spending on some contracts awarded for Iraq’s reconstruction and relief and recovery efforts after Hurricane Katrina.

The bill would limit the use of what Waxman has called abuse-prone contracts. It would ban monopoly contracts, or those that do not specify a firm quantity of the property to be purchased, reduce the use of cost-plus contracts, and prohibit “layer cake” deals that inflate costs through tiers of subcontractors.

The bill also would limit noncompetitive contracts, increase oversight, prevent unjustified award fees, deter corruption in contracting and close a loophole that enables Alaska Native Corporations to receive no-bid work.

“If you just look at the legislation that’s being proposed, it includes a wide range of punitive, regressive measures,” said Stan Soloway, president of the Professional Services Council, the principal national trade association of the government professional and technical services industry. Such measures “basically send a message to the federal workforce, the contractor community and to everybody else that the process is fundamentally broken, that the government is getting ripped off right and left, and that’s it’s the Wild West.”

Some of the bill’s provisions have been resurrected from an amendment that Waxman proposed earlier this year and that subsequently was dropped.

Election day difference
If in the Nov. 7 elections, Democrats gain a majority in the House, accusations of waste, fraud and abuse in government contracting will intensify, Soloway said.

With a Democratic majority in the House, Waxman would replace Rep. Tom Davis (R.-Va.) as chairman of the House Government Reform Committee, which oversees government procurement issues and federal contracts.

The new bill is “a very telling road map of where we would be headed if [Waxman] became chairman,” said Trey Hodgkins, director for defense programs in the enterprise solutions division of IT industry trade association Information Technology Association of America.

“Every company doing business with the U.S. government ought to stand up and take notice of that bill, because it’s scary as hell,” said Larry Allen, executive vice president of the Coalition for Government Procurement. The nonprofit organization lobbies for the interests of its member companies that sell commercial services and products to the federal government, primarily through multiple-award schedule and governmentwide acquisition contracts.

The Coalition for Government Procurement also is tracking a requirement mandating that federal, state and local governments withhold 3 percent from their payments for goods and services. The Senate inserted the requirement in the Tax Reform Act to target contractors that have not met their federal tax obligations or paid other fines levied against them but that are not associated with their government work, Allen said.

“The idea of trying to reconcile all your various accounts with the government in an attempt to get back that 3 percent at the end of the year is going to cost you more that that 3 percent,” he said.

The Coalition for Government Procurement is one of 36 organizations that have formed the Government Withholding Relief Coalition to oppose the proposal. A couple of bills introduced late in the congressional session would repeal the tax, but the next Congress will vote on them, Allen said.

Whoever is chairman of the Government Reform Committee next year must review the Services Acquisition Reform Act panel’s final recommendations, a draft of which is expected in November.

The 2003 Service Acquisition Reform Act authorized the formation of a group to recommend federal procurement changes. Next year, the Government Reform Committee will hold hearings on the panel’s findings, Allen said.

If Waxman becomes committee chairman, look for the panel’s conclusions to be used as a “contractor whipping post,” he said.

The Government Reform Committee will examine closely the report’s recommendations to see which ones it will take further action on, Davis said during a speech at the Oct. 19 Government Electronic and Information Technology Association’s annual government IT forecast conference in Falls Church, Va. He would work with Waxman in reviewing the recommendations, he said.

“In an election year, you get caught up in all the political wrangling, but I think the conversation should be focused on acquiring the best results for the government at this point and a real focus on acquisition policy,” Davis said.

In on outsourcing
Contracting and IT groups also are keeping a close eye on outsourcing. Many Democrats in Congress support limitations, because they want more of government’s work done in-house, said Olga Grkavac, ITAA’s executive vice president, enterprise solutions division.

Outsourcing already faces strong opposition, but if the Democrats become the majority, “we might see even more effort in that area,” she said. Many anti-outsourcing provisions are tacked onto various bills throughout the year, she said.

Issues, such as health care IT, wireless emergency communications, job outsourcing and the energy market, will continue to drive political debates, no matter which party is in power, said Steven Perkins, sector vice president of legislative affairs and alliances at Northrop Grumman Information Technology.

Those issues are major areas of discussion for federal, state and local governments and could provide business for contractors, he said.

Wireless emergency communications is one area that could provide such opportunities. Northrop Grumman hopes to get more work similar to its win earlier this year of a $500 million contract from New York’s Information Technology and Telecommunications Department to build a broadband public-safety wireless network. The network will add high-speed data and video capabilities to New York’s mobile wireless communications network. It also will build several wireless applications to support first responders and transportation personnel.

The company also is tracking increased interest from state and local governments to outsource their IT and business processes. Virginia awarded Northrop Grumman IT a $2 billion contract to update and manage the state’s IT infrastructure. Now, the company is competing head to head with IBM Corp. for work in Texas for data center services, Perkins said.

The Texas Information Resources Department has not publicly disclosed the contract amount, according to Northrop Grumman, but an award could come in December.

Contractors will continue to track developments regarding competitiveness for IT companies and security issues involving U.S. borders, infrastructures and networks, said Gregory Poersch, vice president of government and commercial markets at the AeA. Formerly called the American Electronics Association, the group is a trade association that represents the technology industry.

And presidential directives for a health care IT system will remain high on industry’s watch list, Poersch said.

“Despite what happens in Congress,” he said, “all of those issues will be of major concerns to both parties as something that will have to be further addressed.”

Eagle Eye takes aim at ASBL challenge


Eagle Eye takes aim at ASBL challenge

By David Hubler
Federal Computer Week
October 30, 2006

Market research firm Eagle Eye Publishers has taken up the cause of the Small Business Administration in a dispute over small-business contracting dollars.

The latest battle began last week when the American Small Business League offered $10,000 to anyone who could come up with a list of vendors coded as small businesses. Such a list is necessary to verify SBA's claim that $79.6 billion in prime contract dollars went to small firms in fiscal 2005, said ASBL President Lloyd Chapman.

But Eagle Eye, which regularly crunches data provided by the government's Federal Procurement Data System – Next Generation, says SBA's numbers add up.

Murphy said in an open letter today that, based on extensively revised figures from the General Services Administration, Eagle Eye calculates that government procurement spending with small firms amounted to $83 billion in fiscal 2005, an increase compared with original $65 billion calculation in March.

"After incorporating hundreds of thousands of correction and change records into our existing contract database, we found that the overall, reported federal spending total for FY 2005 increased to $383.9 billion and the reported small-business contract total grew to $82.9 billion," he said. "This makes the overall small-business share for FY 2005 approximately 21.6 percent, 4.2 percentage points higher than our previous measure. As you know, Eagle Eye does not perform the SBA's exclusions process to the overall data, which we believe gives a more accurate picture of small-business procurement spending."

"What seems clear from [Eagle Eye's] revised October spending numbers is that over the last several months, GSA has reclassified around $15 billion in procurement spending as going to small firms," he said. "Note that the revised, overall procurement total only rises by $7 billion ($377 billion to $384 billion) while small-business spending grows $18 billion ($65 billion to $83 billion). Given the number of large firms appearing in the new small-business ranking, the issue of whether businesses were categorized accurately as small firms remains open to question."

The letter includes Eagle Eye's Top 100 Small Business Table. Based on the revised calculations, the table shows large firms such as L-3 Communications, Science Applications International Corp., Lockheed Martin, BAE Systems, IBM and ITT prominently ranked in the top 25, Murphy said.

Ex-Bush aide Safavian gets 18-month prison term


Ex-Bush aide Safavian gets 18-month prison term

By Richard Cowan
ABC News
October 27, 2006

Oct 27, 2006 – WASHINGTON (Reuters) - Former Bush administration official David Safavian was sentenced to 18 months in prison on Friday for lying and obstructing justice in connection with the Jack Abramoff influence-peddling scandal that has ensnared Republicans.

Safavian, 39, a former chief of staff of the General Services Administration (GSA) and ex-White House budget office appointee, received the prison term less than two weeks before elections that will determine whether Republicans keep control of the U.S. Congress.

Besides the Iraq war, ethics breaches have dominated many Senate and House of Representatives campaigns, allowing Democrats to accuse Republicans of fostering a "culture of corruption" in Washington.

U.S. District Judge Paul Friedman sentenced Safavian, who had faced up to 20 years in prison after being convicted on four counts, to 18 months.

"I stand here contrite and ashamed," a tearful Safavian said at his sentencing. He acknowledged he should not have given disgraced Washington lobbyist Abramoff information on the GSA, but did not admit to the charges.

Safavian is expected to appeal his conviction, which could take about a year.

In another Abramoff case, Ohio Republican Rep. Bob Ney pleaded guilty on October 13 to illegally accepting trips, meals and other items worth tens of thousands of dollars in return for doing favors for Abramoff and his clients.

Safavian was with Ney and others on a lavish golf trip to Scotland in 2002 that Abramoff arranged.

Prosecutors said Safavian lied about his involvement in Abramoff's attempts to do business with GSA, including a possible acquisition of a historic post office near the White House.

The White House has played down its relations with Abramoff. Safavian is the only former White House official convicted in the scandal.

But earlier this month, Susan Ralston, an aide to President George W. Bush's top political adviser Karl Rove, resigned after a congressional report said she had passed White House information to Abramoff while accepting tickets to sporting and entertainment events from the ex-lobbyist.

SBA Administrator Refuses to Release the Names of Giant Firms Masquerading as Small Businesses

Press Release

SBA Administrator Refuses to Release the Names of Giant Firms Masquerading as Small Businesses

October 26, 2006

Petaluma, CA, October 26, 2006/ -- It has been over three months since American Small Business League (ASBL) president, Lloyd Chapman, made his first request to Small Business Administration (SBA) Administrator Steven Preston to release a complete list of firms that received federal small business contracts during fiscal year 2005. Preston is still refusing to provide the information. Several journalists have also requested this information but he has consistently declined to provide it.

Both ABC and CBS reported that 2,500 of the nation's largest firms were found on the list of federal small business contractors including Lockheed Martin, Boeing, General Dynamics, Raytheon, Northrop Grumman, Microsoft, Wal-Mart, and Rolls Royce. Thirteen federal investigations have exposed the wholesale diversion of billions in federal small business contracts and yet Preston, in a conversation with a reporter from the Chicago Tribune, stated, "the problem is more with the way contract data is recorded than it is big companies getting work meant for small businesses."

Chapman says that Preston is either stupid or he's lying, "and I don't think he's stupid. I believe that it's an insult to the intelligence of everyone in America for Preston to claim that small companies aren't damaged by the government counting contracts to Fortune 500 firms toward their small-business contracting goal. The fact is that legitimate small businesses are losing out on billions of dollars in federal contracts every year. And thousands of small contractors have been forced into bankruptcy competing head to head with some of the largest companies in the world for federal small business contracts."

In stark contrast to Preston's recent statement, several federal officials have acknowledged that small businesses have been significantly damaged. Thomas Sullivan, the head of SBA's Office of Advocacy said, "We now have hard data, and not just anecdotes, from across federal agencies that shows contracts meant for small businesses were going to larger firms."

David Drabkin, senior procurement officer for the General Services Administration (GSA) stated, "The numbers are inflated, we just don't know the extent."

The SBA's own Inspector General has identified the diversion of small business contracts to large firms as the #1 most serious challenge facing the Small Business Administration today.

The ASBL is preparing to file suit in federal court to force the SBA and the GSA to make the list of these firms public. Chapman believes this information will reveal that as much as $100 billion in federal small business contracts that the Bush Administration claims is going to small firms is being diverted to some of the nation's largest defense contractors, many of which were major contributors to the Republican National Committee.

Chapman added, "I think Republican small business owners need to take a look at this information before they go to the polls in November. The Bush Administration is clearly anti-small business. He's allowing small firms to be cheated out of billions in contracts and he's trying to close the SBA–the only federal agency designed to protect the best interests of the small businesses where most Americans work."

About the ASBL
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 1953. See