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SBA Stalls Releasing Latest Small Business Contracting Numbers

by | May 3, 2007 | Press Releases

Press Release

SBA Stalls Releasing Latest Small Business Contracting Numbers

Small business contracting data overdue at SBA.

May 3, 2007

Petaluma, Calif.- The Small Business Administration has yet to release its latest statistics on the specific volume of federal contracts awarded to small businesses in 2006. The SBA has had the information for several months. Federal law requires a minimum of 23 percent of the total value of all federal contracts and subcontracts be awarded to small businesses.
 
SBA critics believe the SBA is stalling the release of the current statistics until the dust settles from a series of embarrassing investigative stories by ABC, CBS and CNN on the actual recipients of Federal small business contracts. All three investigations found the SBA had significantly inflated the statistics by including billions of dollars in contracts to corporate giants like Boeing, Lockheed, Northrop-Grumman, Rolls Royce, Wal-Mart and L3 Communications.
 
SBA Administrator Steven Preston is attempting to implement a policy that will allow the SBA to continue to report federal contracts to Fortune 500 firms as small business contracts until the year 2012. Some small business advocates believe the SBA may also be withholding the release of the latest statistics to avoid more controversy and attention on the issue until the policy goes into effect on June 30th.
 
In March Eagle Eye Publishers, a Virginia firm that analyzes federal contracting data, released its latest report on 2006 federal contracting data. They found the federal government had missed the congressionally mandated 23 percent small business goal for the seventh consecutive year. A 2005 report by Eagle Eye Publishers, found the top recipient of federal small business contracts for that year was L3 Communications, a Fortune 500 defense contractor that received over $650,000 million in federal small business contracts.
 
 Last year, Preston refused requests from small business groups and the media to release the specific names of firms the SBA had included in their 2005 small business contracting statistics.
 
 Small business supporters predict that when the SBA finally releases the latest federal small business contracting statistics it will again be dramatically inflated by including billions of dollars to Fortune 500 firms and their subsidiaries.
 
 Investigations into the actual firms that have received federal small business contracts by the American Small Business League found that approximately $65 billion a year in federal government small business contracts actually wind up in the hands of the top two percent of large firms in the United States.
 
To date, no legislation has been passed by congress to stem the flow of government small business contracts to Fortune 500 firms.
 
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New House Bill Lets Fortune 1000 Firms Keep Federal Small Business Contracts

by | Apr 26, 2007 | Press Releases

Press Release

New House Bill Lets Fortune 1000 Firms Keep Federal Small Business Contracts

New small business bill benefits Fortune 1000 firms.

April 26, 2007

Petaluma, Calif.- The House Small Business Committee has unanimously passed H.R 1873, titled " Small Business Fairness in Contracting Act."  Iowa Representative, Bruce Braley introduced the bill which lacks a re-certification provision to stop the flow of federal small business contracts to Fortune 1000 companies and their subsidiaries.

Small business groups like the American Small Business League say that the bill does not contain any provisions that will stop the flow of federal small business dollars to the hundreds of Fortune 1000 firms that currently have federal small business contracts.  As early as 2003, the Small Business Administration, the Office of Federal Procurement Policy, the Office of Management and Budget and the SBA Office of Inspector General all supported the annual recertification of all firms claiming small business status for federal small business contracts. In 2006, the Senate Small Business Committee voted unanimously in favor of annual re-certification for all firms claiming small business status.

An annual re-certification policy that would halt the flow billions of dollars in federal small business contracts to firms like Lockheed, Boeing, Halliburton, IBM, Rolls Royce and AT&T is not included in H.R 1873.

 "This bill has absolutely no provisions of any kind that would stop hundreds of Fortune 1000 firms that have received federal small business contracts from continuing to receive billions in federal small business contracts for years to come," American Small Business League President Lloyd Chapman said. "Congressman Braley needs to answer one question; will current small business contracts awarded to Fortune 1000 firms still be counted as small business contracts if this legislation passes?"  The correct answer is, yes they will.

The ABC, CBS and CNN networks have all recently aired investigative reports on a federal investigation released in 2006 that found over $12 billion in federal small business contracts actually went to a "who's who" of Fortune 1000 firms in America.  To date, over 12 federal investigations have all found billions of dollars in government small business contracts actually ended up in the hands of some the largest corporations in America.  Two investigations found fraud as one of the many reasons large businesses have received government small business contracts.

The SBA's own Inspector General referred to the diversion of billions in federal small business contracts to large corporations as, "One of the most important challenges facing the Small Business Administration and the entire Federal Government today."

The absence of an annual re-certification policy that includes re-certification by all firms with existing small business contracts will allow large firms to continue to receive billions of dollars in federal small business contracts.

SBA Resurrects Unpopular Five-Year Grandfathering Plan

by | Apr 24, 2007 | Press Releases

Press Release

SBA Resurrects Unpopular Five-Year Grandfathering Plan

SBA renames unpopular five-year grandfathering plan to five-year recertification.

April 24, 2007

Petaluma, Calif.- The Small Business Administration has renamed and resurrected their very unpopular, “grandfathering” proposal from 2004 in the form of five-year recertification, which goes into effect June 30.
 
Like the SBA’s grandfathering plan, their five-year recertification plan will allow the SBA to count small business awards already awarded to hundreds of Fortune 500 firms and other large businesses towards the congressionally mandated 23 percent small business contracting goal for five more years. 
 
When the SBA originally announced their grandfathering plan in 2004 and began to take public comment on the proposal, they received the largest volume of comments from the public in SBA history. Over 95 percent of the responses received by the SBA were against grandfathering, many of which were directed to the SBA by thousands of small business owners, small business organizations and Chambers of Commerce across the nation.
 
Both the grandfathering plan and the SBA’s new five-year recertification plan do not take into consideration the diversion of small business contracts to large businesses. An oversight, which unchecked, could allow large businesses that received small business contracts through computer glitches, miscoding, vendor deception, false certifications and even blatant fraud to keep the contracts for five more years or through 2012.
 
The National Federation of Independent Businesses with over 600,000 members nationally was opposed to the SBA grandfathering plan.
 
 “Were the SBA to do this, it would undercut one of the primary reasons for engaging in a review of the existing size standards: access to government contracts for legitimate small businesses,” said Bruce Phillips, senior fellow at the NFIB Research Foundation, in a letter to the SBA. 
 
In the same letter Andrew Langer, NFIB’s manager of regulatory policy, expressed the NFIB viewpoint, “The NFIB does not support ‘grandfathering’.”
 
Under the SBA’s five-year recertification plan, Fortune 500 firms and other large businesses will not be required to recertify their small business status until 2012. A 2005 Congressional investigation found that Fortune 500 firms had received over $12 billion in federal small business contracts. Other investigations by small business advocacy groups such as the American Small Business League have found that the top two percent of US firms received over 50 percent of all federal small business contracts. The Center for Public Integrity found the Defense Department had awarded over 47 billion in small business contracts to some of the nation’s top Fortune 1000 defense contractors.
 
The American Small Business League projects that if the SBA passes its five-year recertification policy, American small businesses dealing in office products, computers, manufactured goods and hundreds of other industries could lose as much as $300 billion in federal small business contracts over the five-year timeframe.
 
 
 
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SBA decides size really does matter

by | Apr 20, 2007 | ASBL News

News

SBA decides size really does matter

By Ambrose Clancy
Long Island Business News
April 20, 2007

It’s all part of a Small Business Administration effort to figure out if small businesses are really getting their fair share of federal contracts. While the SBA tries to steer about a quarter of federal business to small business, an estimated $12 billion in contracts has apparently been going to large corporations mistakenly identified as small businesses.
 
New SBA rules that go into effect June will require small companies with federal contracts to recertify their size and inform the SBA if the small business is purchased or merged with another business.
 
The rules stem from a little political bickering between the Bush Administration and Democrats on the House Small Business Committee. While Bush staffers trumpeted that small businesses had received 25.3 percent of total federal contracts issued in 2006, the Dems argued that the figure was actually only 21.5 percent when you factor in “miscoding” that gives large corporations small-company status.
 
A chief culprit: large fish gobbling up small fish through mergers and acquisitions, then holding onto federal contracts earmarked for the small businesses, according to SBA critics.
 
Lloyd Chapman, president of the American Small Business League and a longtime SBA critic, said standard operating procedure has been no oversight at all.
 
“For example, a small company gets a contract to provide office furniture for a federal agency, and the next day they’re bought by some big box outlet,” Chapman said.
 
The SBA got the message. In November, the administration announced the new regulations would kick in at the end of June, according to SBA spokesman Mike Stamler.
 
The government defines small businesses as manufacturers with up to 1,500 employees, wholesalers and distributors with up to 100 employees and service industry businesses that take in up to $30 million over three-year periods. Under those guidelines, there are 90,000 small businesses on Long Island, according to Sol Soskin, a director at the Long Island Development Corp., which helps arrange loans for small businesses. Soskin had no data on how many had federal contracts.
 
Norman Hunte, manager of SBA’s Long Island office, said the new policy “is a good thing.” He referred other questions to Stamler, who said critics were correct when they suggested big companies looked for small, connected companies with lucrative federal deals.
 
“Fortune 500 companies have acquisition strategies based on acquiring small businesses with long-term federal contracts,” Stamler said.
 
There are still plenty of cases where small companies become large through fair and simple growth. The five-year recertification will not necessarily mean existing contracts will be voided, Stamler said, but at the end of their run or when an option is due, deals will be reevaluated.
 
The House Small Business Committee, under a Democratic majority since January, will highlight miscoding in public hearings next week in New Orleans, according to committee spokeswoman Austin Bonner. The committee will look into further “reforming federal contracting practices,” Bonner added.
 
Lisa Dolan, president of Queens-based Securit, a private investigation and security company with 88 employees and federal contracts, was unaware of the new regulations, but considers them a good move.
 
“I’ve seen many times where they say they’re small, and when the government gets around to doing their homework – if they ever do – they find they’re huge,” Dolan said.
 
Still, the arduous paperwork and red tape is worth the time investment, according to Dolan.
 

“If you’re not involved with the government,” she warned, “the government will run your business.”