New SBA Policy Will Divert Billions to Big Business

Press Release

New SBA Policy Will Divert Billions to Big Business

November 15, 2006

PETALUMA, Calif., November 15, 2006 / A new policy proposed by the Small Business Administration (SBA) and the Office of Federal Procurement Policy (OFPP) will allow the government to continue reporting awards to large companies as federal small business contracts.

Even though the SBA's own Inspector General has urged the agency to implement annual recertification of business size status to prevent fraud and abuse in small business contracting, the SBA has consistently refused to implement it. Instead, the agency has adopted a policy that will allow companies to retain their small business status for up to five years. Issued under the guise of improving federal contracting opportunities for small business, this recertification policy will allow the government to continue including contracts to some of the nation's largest companies toward their small business contracting goals.

"This policy should be evaluated by asking one question," stated Lloyd Chapman, president of the American Small Business League (ASBL). "Will this policy allow the government to report contracts to Fortune 1000 companies as small business awards? The answer is yes and I'm against it. SBA Administrator Steven Preston and OFPP Administrator Paul Dennett are being deceptive. This policy was designed to help the government, not small firms."

Chapman added, "For over three years the SBA Inspector General has recommended annual recertification of small business size status. This would truly increase contracting opportunities for legitimately small firms by forcing the government to eliminate large businesses from its small-business contracting database. When the federal government hits its small business goals by reporting contracts to Fortune 1000 firms as small business awards, America's small businesses lose out on billions. This is totally unfair and it has to stop."

About the ASBL

The American Small Business League was formed to promote and advocate policies that provide the greatest opportunity for small businesses - the 98% of U.S. companies with less than 100 employees. 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. Representing small businesses in all fields and industries throughout the United States, the ASBL monitors existing policies and proposed policy changes by the Small Business Administration and other federal agencies that affect its members. See www.asbl.com.

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Contact: Lloyd Chapman
President
American Small Business League
707-789-9575
lchapman@asbl.com



Kerry to Head Small-Business Committee

News

Kerry to Head Small-Business Committee

Inc.com
November 14, 2006

Nov. 14, 2006 -- Sen. John Kerry (D-Mass.) today was named chairman of the Senate Committee on Small Business and Entrepreneurship.

Kerry, who has served on the committee for 21 years, was previously chairman from 2001 to 2002.

In accepting today's nomination, he pledged to "focus on really fighting for small businesses to have a fair shot, to increase competition, to foster innovation, and to drive our economy."




What the Future Holds for Small Business

News

What the Future Holds for Small Business

Rep. Nydia Velazquez speaks out on how the dramatic midterm election results will impact the future of small business.

By Kristin Edelhauser
Entrepreneur.com
November 13, 2006

Tax cuts, health-care costs and overregulation--these are all pivotal issues that helped drive more than 20 million small-business owners to the polls this midterm election. But will entrepreneurs be satisfied with the outcome of the election? To get an insider’s opinion on how the Democratic shift in Congress will affect the future of small business, we spoke with Rep. Nydia Velázquez (D-NY), current ranking Member of the House of Representatives’ Small Business Committee.

Entrepreneur.com:How will the results of this election impact the SBA?

Rep. Velázquez: Over the past five years, the SBA budget has been cut by 60 percent and has dwindled from a Cabinet-level agency to one that rarely has a seat at the table. As chair of the House Small Business Committee, I will focus on restoring the SBA to the economic powerhouse it once was. 

Entrepreneur.com:Will there finally be a decision on health-care plans?

Velázquez: Today, small businesses suffer disproportionately from escalating health-care costs, and they’re demanding action on this issue. I am motivated to work on a bipartisan basis to develop a solution that will provide small businesses and their employees with affordable health care.

Entrepreneur.com:What sorts of legislation or programs should entrepreneurs expect to see going through the House in the near future?

Velázquez: Entrepreneurs can expect to see a number of legislative initiatives to address their most pressing concerns. We will proactively develop policies aimed at reducing the cost of capital, encouraging greater small business participation in the federal marketplace and, most important, reauthorizing the SBA to ensure that its programs are fully funded and able to meet the needs of small businesses--the engines of our economy.

Entrepreneur.com:When could we expect to begin seeing changes?

Velázquez: I am energized, under our leadership, to undertake a pro-small business agenda immediately. Speaker Pelosi has set ambitious goals for the new Congress, and I look forward to this renewed opportunity to advance the interests of small businesses with vigor and enthusiasm.

Entrepreneur.com:Prior to the election, a Wells Fargo/Gallup poll showed that business owners were expected to vote in record numbers this election. What set this election apart from previous years?

Velázquez: For too many years, small businesses have been promised solutions for the myriad of problems they face--from tax and regulatory burdens to higher costs for health care and energy. They grew tired of waiting for a response and went to the polls to make it clear that they want action.

Entrepreneur.com:Entrepreneurs have expressed concerns regarding the burdens of overregulation and a complex tax code. How do you think election results will impact these issues?

Velázquez: Today, small businesses pay at least 45 percent more to comply with regulations than their corporate competitors, and this burden has become increasingly troublesome over the past five years. Entrepreneurs have especially felt the impact of regulations with regard to the complex tax code that’s currently in place. One of our top priorities will be working with the business community and the IRS to simplify the tax code. An important first step will be requiring the IRS to publish codes and regulations in plain English. We also need to establish initiatives that would provide compliance assistance to small firms and coordinate regulations between the local, state and federal levels of government to reduce regulatory redundancies. Measures such as these will ultimately give small businesses more time to focus on their most important objective--growing their businesses.

Entrepreneur.com:Do you think entrepreneurs will be satisfied with the outcome of the election?

Velázquez: Commitments have been made to give our nation’s small businesses the tools that they need to succeed, and if Congress and the administration work together in a bipartisan fashion, we will effectively address their needs. I intend to uphold my commitment to our nation’s entrepreneurs and help them do what they do best--run their businesses.


Official Records Say Lockheed Is a Small Business

News

Official Records Say Lockheed Is a Small Business

By Warren Corbett
Set-Aside Alert
November 10, 2006

The most successful "small business" contractors are not small, according to an analysis of government procurement data by Eagle Eye Publishers.

The top 30 companies receiving contracts designated as "small business" in 2005 include Lockheed Martin, General Dynamics and Northrop Grumman. L-3 Communications Holdings led the list with more than $650 million in contracts recorded as going to small firms.

The list also includes a large number of Alaska Native Corporations and tribally owned businesses that are officially classified as small no matter what their size.

Eagle Eye's ranking is the latest to highlight the inaccuracy of contracting information gathered by the Federal Procurement Data System-Next Generation, the government's official database.

"The bad news is that the continued, frequent appearance of large businesses in the list of small business vendors suggests the small business procurement figure may be too high," Eagle Eye President Paul Murphy wrote in an open letter. "Further in-depth research is required before analysts can state conclusively…why many large firms appear in the list."

He said Eagle Eye uses publicly available FPDS data and adds parent-company names through its own research.

SBA officials have said in the past that the anomalies are the result of large businesses acquiring small ones, businesses outgrowing their size standard during the life of a contract, or data entry errors.

But Lloyd Chapman, president of the American Small Business League, has charged that some large companies are deliberately misrepresenting their eligibility for small business contracts. The League says SBA has refused to provide a list of all companies that received small business contracts; it has offered $10,000 to anyone who will provide the list.

SBA Administrator Steven Preston and Paul Denett, head of OMB's Office of Federal Procurement Policy, said in September that a new rule on contractor reporting and certifying of size status would be issued "soon." (SAA, 10/13) Three years ago SBA proposed requiring annual recertification of small business eligibility, but it has not published a final rule.

SBA reported that small firms received 25.36% of prime contract dollars in 2005. But Democrats on the House Small Business Committee said they documented $12 billion in "small business" contracts that actually went to large companies, reducing the small business market share to 21.57%. (SAA, 8/11)

The committee's ranking Democrat, Rep. Nydia Velazquez (NY), has written to 2,500 companies asking them to correct the records.