House bill clears way for VCs


House bill clears way for VCs

By Laura Theis
Long Island Business News
November 9, 2007

A new bill that would allow more small businesses with venture capital backing to tap into federal grants is facing stiff opposition from groups that argue VCs could take advantage of loans designed to help the mom and pops.

The Small Business Investment Expansion Act of 2007, approved by the House of Representatives, would open up small companies that are majority-owned by venture capitalists to use Small Business Administration research grants.

Currently, the law doesn’t allow small businesses that are more than 49 percent owned by VCs to apply for the grants unless the company and venture capitalist employee fewer than 500 employees combined.

The Small Business Administration opposes the proposed changes because funding is supposed to help entrepreneurs, not big VC funds.

Edsel Brown, assistant director of the office of technology at the SBA in Washington, said the proposals also don’t take into account if the entire company is controlled by various venture capitalists. What happens, Brown asked, if three VC funds own a combined 90 percent of a company?

“We are concerned about firms getting financing,” Brown said, “but we feel this bill will have an adverse effect on small businesses.”

Lloyd Chapman, president of the American Small Business League, added that the bill hides behind the ruse of helping startups get capital.

But the bill’s advocates said the bill helps small businesses tap into more government resources. Ellen Sandles, president of the Tri-State Investor Network in New York City, said she supports broader availability of capital for small businesses. Sandles, however, warned that the new rules could lead to abuse because the grants would be used by groups that could just as well turn to the private sector.

Roslyn Goldmacher, president of the Long Island Development Corp., said she is for any plan that would bring additional funding to Long Island’s 98,000 smaller companies.

As a small-business-funded economy, Long Island needs as much access to small business cash as possible, she said.

“Our growth on Long Island is not major companies locating here, it’s entrepreneurs starting from here ground up,” she said.


Senate close to approving bill that would aid small contractors


Senate close to approving bill that would aid small contractors

By Louis Llovio
Daily Record
November 8, 2007

A U.S. Senate committee has approved a bill that senators say would improve the process in which small businesses in Maryland are awarded federal government contracts.

If signed by the president, the bill would improve oversight of the contracting process for small businesses and expand opportunities for companies owned by minorities, women and the service-disabled, Sen. Ben Cardin, D-Md., said in a telephone interview with The Daily Record Thursday.

The bill, S 2300, was unanimously approved by the Committee on Small Business and Entrepreneurship Wednesday and will now go to the floor of the Senate for a vote, which is expected before Thanksgiving.

A similar bill has passed the U.S. House of Representatives.

The two chambers would then meet in a conference committee to reconcile differences in the legislation and create a bill that would then go to the president.

Cardin, who co-sponsored the bill with Massachusetts Democratic Sen. John Kerry and Sen. Olympia Snowe, R-Maine, said the legislation had wide bipartisan support and should pass fairly easily.

Problems with the procurement process are of particular interest in Maryland because of the large number of firms in the state that do business with the federal government. It will become even more relevant as the effects of BRAC — the military base realignment and closure process — become reality.

According to a 2005 federal government procurement report, Maryland is the fourth largest receiver of government contracts in the U.S. It trails California, Virginia and Texas and receives 6 percent of all federal government contracts, worth $20 billion.

More than half of that, $10.8 billion, comes from defense contracts.

The U.S. Department of Health and Human Services and the National Aeronautics and Space Administration also handed out more than $1 billion in government contracts to Maryland-based companies.

Cardin said the bill was written to address complaints from small business owners that government set-aside programs were not working.

The bill would create greater oversight and transparency in the procurement process and guarantee that federal agencies are meeting requirements set by the U.S. Small Business Administration, he said.

“Too many barriers exist for small, minority and women-owned businesses, and I want to ensure a level playing field in the federal contracting process,” Cardin said.

Leutrell Osborne agrees that the way contracts are handed out is broken, but he disagrees that legislation is needed to fix it.

Osborne, an Annapolis government contracting consultant and former chairman of the Federal Office of Small Disadvantaged Business Utilization Directors Interagency Council, said enforcing laws on the books would solve the problems.

“They are just reacting to pressure,” he said. “They are creating more laws for nothing and they want the SBA to do more with less.”

Federal law, he said, mandates that agencies give a percentage of their contracts to small businesses.

In August, the SBA issued a status report that rated agencies on a “stoplight scale.” It found that when it came to handing small-business contracts, DoD, NASA and DHS failed to meet the basic standards. All three received a red rating for how they do business, meaning they did not meet any of the SBA’s goals.

Gloria Berthold, president of TargetGov at Marketing Outsource Associates Inc., a Baltimore government procurement consultant, said that while she said she applauded the Senate’s efforts, the bill lacked teeth.

She said government agencies are too short-handed and underfunded to do the oversight required by the new law or the existing ones.

The shortage in procurement officers also makes it easier for short-handed agencies to “bundle” contracts and let the big companies handle subcontracting.

Bundling is where small contracts are included in larger ones that are picked up my prime contractors, like Northrop Grumman Co.

In theory, the smaller contracts would trickle down to small business that would do the work as subcontractors.

But that doesn’t happen, she said.

The SBA did not return calls Thursday.


Senate Moves Forward With S. 2300 to Remove Large Firms from Federal Small Business Contracting Programs

Press Release

Senate Moves Forward With S. 2300 to Remove Large Firms from Federal Small Business Contracting Programs

November 7, 2007

Petaluma, Calif. – The Senate Committee on Small Business and Entrepreneurship voted on and passed S. 2300, the Small Business Contracting Revitalization Act of 2007 through Committee this morning. The bill includes a provision for annual re-certification via the Central Contractor Registration database that will finally remove Fortune 500 firms and other large businesses from federal small business contracting programs. S. 2300 will now move on to the floor for full consideration.

In the past, annual re-certification has been endorsed by: the American Small Business League, the Small Business Administration, the Office of Federal Procurement Policy, SBA Inspector General Eric Thorson and the Senate Committee on Small Business and Entrepreneurship.
In an effort to preclude the federal government from awarding billions of dollars in federal small business contracts to some of the largest companies in the United States and Europe, Senators Kerry (D - MA) and Snowe (R - ME) have mirrored their annual re-certification provision after policies that already exist in the CCR.
According to the official policies of the CCR, “You must renew your registration at least every 12 months from the date you previously registered.” All firms registered on the CCR are required to renew their registration annually and have been required to do so for more than 20 years.
“It's a pretty straight forward process,” CEO and founder of Open Integration Consulting, David Gonzales said. “In all, the re-certification process takes about 20 minutes.”
In the past, annual re-certification and any other attempt to remove large businesses from small business contracting programs has been opposed by large businesses in the D.C. area that are currently receiving a lion's share of federal small business contracts. Lobbyists for big businesses have tried to claim annual re-certification is burdensome and time consuming. In reality, annual re-certification is a simple online process.   
Beyond the simplicity of the actual process, S. 2300 states that the SBA Administrator, with assistance from the SBA Inspector General and the Chief Counsel for Advocacy of the Administration, produce regulations to ensure that the annual re-certification process incur the least possible regulatory burden on small businesses.
The ASBL plans to continue their efforts to completely close any and all loopholes that have allowed large businesses to receive federal small business contracts by introducing legislation to preclude the federal government from reporting awards to large businesses as small businesses contracts and require the SBA to release the names of all firms that are coded as small businesses each year. The ASBL expects their bill to be introduced shortly.
“The ASBL and its members have lobbied long and hard for annual re-certification and I am really glad to see that it is on its way to becoming law,” ASBL President Lloyd Chapman said.

Senate follows House in taking up small business contracting bill


Senate follows House in taking up small business contracting bill

By Elizabeth Newell
Government Executive
November 7, 2007

Legislation aimed at expanding contracting opportunities for small businesses by updating and expanding existing programs passed the Senate Small Business Committee Wednesday.

Similar legislation passed the House last week.

The Small Business Contracting Revitalization Act (S. 2300) was drafted by Sens. John Kerry, D-Mass., and Olympia Snow, R-Maine, the chairman and ranking member of the committee. It includes provisions to unbundle contracts, enforce protections for subcontractors and expand opportunities for minority, women and service-disabled veteran owners of small businesses. Many of the provisions were taken directly from legislation that passed the committee last year but did not reach a vote in the full Senate.

A key provision aims to reduce contract bundling, in which several contracts are consolidated into one offering, by improving reporting and oversight. Lawmakers and small business advocates have argued that bundling creates a disadvantage for small businesses in competing for awards.

Like the House bill (H.R. 3867), the Senate legislation would mandate the implementation of existing programs and augment them, not create new ones. Small business contracting goals are already well defined and promoted through several programs, but agencies are by and large failing to meet them.

"Currently, small businesses are eligible for $340 billion in federal contracting dollars, yet they receive only $77 billion," Snowe said in a statement.

The Senate bill mandates that the Small Business Administration implement the women's procurement program within 90 days. The program, created by Congress seven years ago to help agencies award 5 percent of contracting dollars to women-owned small businesses, still has not been fully implemented and has been the subject of renewed scrutiny recently. In announcing passage of the House legislation, Rep. Nydia Velazquez, D-N.Y., said the women's program has "languished in the current administration's endless delays" and urged immediate implementation.

In early October, lawmakers and the Women's Chamber of Commerce criticized SBA for initiating a new round of rulemaking for the program. The SBA defended that decision in a U.S. District Court of the District of Columbia status hearing Wednesday, arguing that further interagency review was necessary to ensure all aspects were legal and could be practically implemented. The Women's Chamber, however, maintains that the latest regulatory step was an unnecessary delaying tactic. The court ruled against the SBA in a 2005 case brought by the Women's Chamber, calling the program delay "unreasonable" and ordering the agency to develop and meet deadlines for implementation.

Judge Reggie B. Walton said he was "not happy with the pace of how the program has proceeded" and scheduled a follow-up hearing in late January. Walton said he hoped by that time the Office of Management and Budget will have finished the review process and the SBA could report on implementation.

Small business advocates, including the American Small Business League, lauded the recent legislation.

"I am pleased to see that S. 2300 includes all of the changes that have been recommended by the ASBL since 2002," ASBL President Lloyd Chapman said in a statement. "Every small business in the country needs to realize that they owe Senators Kerry and Snowe a debt of gratitude for drafting this legislation."

The ASBL has launched a national campaign in support of the Senate bill, asking its members and all small business owners to encourage their representatives to vote in favor of the legislation.

Kerry spokeswoman Kathryn Seck said it is unclear when the legislation will be considered. "Sen. Kerry is working with members who still have concerns about the bill and will address them before bringing the bill up for full Senate consideration," she said. She said a vote is extremely unlikely before Thanksgiving recess but that Kerry is hopeful the legislation will be considered before the end of the year.


Senate Drafts Legislation to Remove Large Firms From Federal Small Business Contracting

Press Release

Senate Drafts Legislation to Remove Large Firms From Federal Small Business Contracting

November 6, 2007

Petaluma, Calif. – On Monday, the Senate Committee on Small Business and Entrepreneurship announced that a public markup of S. 2300 the, “Small Business Contracting Revitalization Act of 2007,” will be held on Wednesday, November 7th, 2007 at 9:30 a.m. The bill - drafted by Senators John Kerry (D-Mass.) and Olympia Snowe (R-Maine), the Chairman and Ranking Member of the Committee - includes provisions that the American Small Business League has been lobbying for since 2002.

The bill is designed to improve oversight in federal contracting, reduce contract bundling, prevent misrepresentation in subcontracting, help service-disabled veteran-owned small businesses access to contract and subcontract opportunities, direct the Small Business Administration to implement women-owned small business program, extend the 8(a) contracting program through 2012 and strengthen the government’s ability to enforce the size and status standards for small business certification, according to a Monday press release.
In May 2007, the ASBL launched a national campaign to encourage chambers of commerce across the country to contact their representatives in Washington - in particular Senators Kerry and Snowe - to support stemming the flow of federal small business contracts to large corporations.
In 2002, the ASBL was the first organization to expose the diversion of federal small business contracts to large corporations. Information supplied by Lloyd Chapman, Present and Founder of the ASBL prompted the first GAO investigation and the first congressional hearing on this subject, which took place on May 7th, 2003. Since that time, there have been more than a dozen federal investigations that have found fraud, abuse, loopholes and a lack of oversight in federal small business contracting.
“I am pleased to see that S. 2300 includes all of the changes that have been recommended by the ASBL since 2002,” President of the American Small Business League Lloyd Chapman said. “Every small business in the country needs to realize that they owe Senators Kerry and Snowe a debt a gratitude for drafting this legislation.”
The ASBL intends to launch a national campaign to encourage its members and all small business owners to contact their representatives in support this legislation.