PETALUMA, Calif., November 30, 2006 / For years, the Inspector General of the Small Business Administration (SBA) has recommended that small federal contractors be required to certify their size status annually, to curtail fraud and abuse in small business contracting. The SBA, however, has consistently refused to implement that policy. Instead, officials within the Bush administration have finalized a rule that will allow the government to continue to report contracts with large companies as small business awards through the year 2012.

Senator John Kerry, incoming chair of the Senate Committee on Small Business and Entrepreneurship, called the SBA's new policy inadequate. "If there's a way to guarantee no abuse, that's our concern," Kerry told Inc.com. "I know five years is too broad for that."

Nydia Velázquez (D-NY), current ranking member of the House Small Business Committee, concurred with Kerry's assessment. "The agency's rule fails to address the vast majority of this problem," Velázquez stated in the New York Times.

During a hearing earlier this year, SBA Inspector General Eric Thorson had urged the Senate Committee on Small Business and Entrepreneurship to enact annual recertification as law due to the SBA's reluctance to adopt it as a policy. Following the hearing, the committee voted unanimously to include annual recertification in the SBA Reauthorization Bill. Unfortunately, the bill has yet to be passed into law.

In his annual report on top SBA management challenges, Mr. Thorson cited procurement flaws as challenge number one for the second year in a row.

There have been over a dozen federal investigations that have found widespread abuse, fraud, and lack of oversight in federal small business contracting. Billions of dollars that were meant to go to the small companies where most Americans work have been diverted to some of the largest corporations in the world including Lockheed Martin, Boeing, Bechtel, General Dynamics, L-3 Communications, Raytheon, and Northrop Grumman. Forcing companies to recertify their size status annually has been seen as a way to get these mega-companies out of the government's small business database.

In 2003 when the SBA proposed a rule to adopt annual recertification, the agency received the highest number of public comments in its history. Despite the fact that eighty-seven percent of the responses were in favor of the rule, the SBA never adopted it.

"Every dollar in small business contracts that goes to a Fortune 1000 firm is a lost opportunity for America's entrepreneurs," stated Lloyd Chapman, president of the American Small Business League. "It's our hope that Congress will make annual recertification the law of the land. This is an important step toward ensuring that legitimate small businesses have fair access to the federal marketplace."

About the ASBL

The ASBL was 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. For more information see www.asbl.com.

PETALUMA, Calif., November 28, 2006 / -- Earlier this month the Small Business Administration (SBA) issued a press release announcing a policy it claims was designed to help small businesses obtain more federal contracts. Many journalists who had written stories based on the press release were shocked and dismayed to discover that the actual policy, issued the following day, was substantially different than the information contained in the release. In reality, the new SBA policy will allow the government to continue to report contracts to large businesses as small business awards until the year 2012.

According to Lloyd Chapman, president of the American Small Business League (ASBL), the volume of contracts that could be diverted from America's middle class to Fortune 1000 corporations over the next five years is estimated to be in excess of $200 billion.

The SBA acknowledged that the vast majority of responses received during the policy's public comment period agreed with the SBA Inspector General, who has recommended annual recertification of business size status to curtail fraud and abuse in federal small business contracting. The Senate Committee on Small Business & Entrepreneurship has also unanimously recommended annual recertification.

The SBA also acknowledged the presence of illegal contracting activity but declined to put any measures in the policy to enforce stiff federal penalties against contracting fraud.

In delaying implementation of the policy for six months (effective June 30, 2007) federal agencies and prime contractors now have an extended period of time to enter into "small business contracts" with many of the largest corporations in the country that currently qualify as small firms under existing contracting law. Once the contracts are in place and the policy goes into effect next June, the companies will not have to recertify for a period of five years.

"This is the best example that I could ever point to that the SBA does not care about the welfare of small businesses, it only cares about helping the government continue to do what it has done for the last several years, which is to allow small business contracts to go to large firms," said Chapman.

By the time this policy goes into effect, nine years will have passed since this situation was originally exposed in the media. The ASBL estimates that over $400 billion in federal small business contracts will have been awarded to large companies during this period of time.

About the ASBL
The ASBL was 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. For more information see www.asbl.com.

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