A bigger Voice for Small Business

SBA ordered to reveal names of companies that got federal small business contracts

by | May 21, 2008 | ASBL News

News

SBA ordered to reveal names of companies that got federal small business contracts

Central Valley Business Times
May 21, 2008

Click here to listen or download  (asbl-sba.mp3, 6.40 MB)  

•  Federal judge gives SBA two weeks to comply

•  American Small Business League suspects money really went to biggest corporations

•  Updated at 11:50 a.m. with audio interview

The Small Business Administration has two weeks to release the names of the companies that got federal small business contracts in 2005 and 2006, says a federal judge.

U.S. District Court Judge Marilyn Patel issued her ruling Tuesday evening in a Freedom of Information lawsuit filed by the American Small Business League of Petaluma.

It’s the fourth time the ASBL has sued the SBA over releasing information and the fourth time it has won, the organization says.

(ASBL President Lloyd Chapman talks about the suit and why he sees it as important to America in a CVBT Audio Interview. Please click on the link below to listen or to download the MP3 audio file to your computer or iPod)

 In the latest lawsuit, the ASBL wants the specific names of the firms that were coded as small businesses for fiscal year 2005 and the specific dollar amounts that were awarded to those firms.

The contract total for firms from FY 2005 should total $75.1 billion as released by the Small Business Administration, the ASBL says.

It also wants the specific names of firms that were coded as small businesses for fiscal year 2006 and the specific dollar volume of contracts that were awarded to those firms.

The contract for firms from FY 2006 should total $77.7 billion as released by the Small Business Administration, ASBL says.

“We believe that this information will prove that billions of dollars in federal small business contracts actually went to many of the largest corporations in the United States and Europe during those years,” the ASBL says.

ASBL filed suit against the SBA after the agency refused to comply with the Freedom of Information Act request.

The SBA did not immediately respond to an e-mail request for comment.

Source:  http://www.centralvalleybusinesstimes.com/stories/001/?ID=8802


HUD Secretary Appointee to Field Tough Questions From the Senate Committee on Banking, Housing and Urban Affairs

by | May 19, 2008 | Press Release

Press Release

HUD Secretary Appointee to Field Tough Questions From the Senate Committee on Banking, Housing and Urban Affairs

May 19, 2008

Petaluma, Calif. – The Senate Committee on Banking, Housing and Urban Affairs is scheduled to hold hearings Tuesday, May 20th on the pending nomination of current Administrator of the Small Business Administration (SBA), Steven Preston as Secretary of Housing and Urban Development. Small business advocates expect the committee, which is chaired by Christopher J. Dodd (D – CT), to challenge Administrator Preston on his poor track record on small business.
 
On July 10, 2006, Mr. Preston was sworn in as Administrator of the SBA, assuming the position after the resignation of former SBA Administrator Hector Baretto. Baretto’s tenure has been severely criticized by small business groups, the press and Congress for allowing billions of dollars in federal small business contracts to be diverted to large corporations. Prior to Preston’s confirmation, a series of federal investigations and private studies found that many of the actual recipients of federal small business contracts were Fortune 500 corporations and their subsidiaries.
 
Despite a mountain of evidence pointing to the diversion of federal small business contracts to large corporations produced prior to his confirmation, Mr. Preston has failed to recognize or implement policies to stop such abuses.
 
The first congressional investigation into the diversion of federal small business contracts to large corporations was held on May 7, 2003. Since then there have been more than 400 stories in nearly every major newspaper and mainstream media outlet across the United States. Investigative reports by ABC, CBS and CNN have all found that billions of dollars in federal contracts intended for small businesses have actually gone to firms like: Lockheed Martin, Boeing, Rolls Royce, L3 Communications, British Aerospace Engineering (BAE) and Raytheon. (www.asbl.com)
 
Specifically, the American Small Business League and its members expect that Mr. Preston be held accountable for the continued diversion of federal small business contracts to large corporations during his tenure at the SBA.
 
On May 11, 2007, the SBA distributed a press release titled "Myth vs. Fact: SBA and Government Contracting," which stated that it is a myth that, "Large companies, including large, multinational corporations are taking away federal contracts specifically intended for small businesses." Additionally, the press release stated that it was a myth that the SBA had proposed a grandfathering plan that would have allowed large firms receiving federal small business contracts to keep those contacts. (http://www.sba.gov/idc/groups/public/documents/sba_homepage/news_07-30.pdf)    
 
The SBA’s Myth v. Fact press release flies in the face of Report 5-15 from the SBA Office of Inspector general which stated, “One of the most important challenges facing the Small Business Administration (SBA) and the entire federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards." Additionally, information on the SBA’s proposed grandfathering plan can be found in the Federal Register dated December 3, 2004. (Federal Register, volume 69, 70200, No 232) (http://edocket.access.gpo.gov/2004/pdf/04-26609.pdf)
 
During the last two years, Mr. Preston has fostered the continued diversion of federal small business contracts to large corporations. In June of 2007, Preston instituted a policy to allow Fortune 500 firms to keep their small business contracts for 5 more years. The policy was instituted despite recommendations for a policy that would have stopped the abuse in 2008 by: the SBA Office of Inspector General, the Office of Federal Procurement Policy, the Office of Management and Budget and the Senate Committee on Small Business and Entrepreneurship.
 
In addition to these offenses, Mr. Preston has diminished transparency in the reporting of federal contracting numbers by removing the information the general public can use to determine whether a business is small or large in the Central Contractor Registration database, and by consistently refusing to release the names of the actual recipients of federal small business contracts.
 
   
 
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Venture Capital Wants Back Into Small Business Research Grants

by | May 17, 2008 | ASBL News

News

Venture Capital Wants Back Into Small Business Research Grants

By Shawn Zeller
CQ Politics
May 17, 2008

In late April, the House passed an apparently routine bill to reauthorize research grants for small businesses. But the appearance of “small business as usual” was deceiving: The action actually capped a fierce lobbying battle that pitched wealthy venture capitalists’ pet research projects against more modestly funded enterprises in the pursuit of more than $2 billion in federal grant money.

New York Democrat Nydia M. Velazquez, who chairs the House Small Business Committee, sponsored the measure. Should the Senate go along with it, Vel?!zquez’s bill would extend grants and contracts for innovation research and technology transfer through 2010, and in the process allow small businesses backed by venture capital firms to qualify, as long as no single investment firm owned 50 percent or more of a business. Multiple investment firms could collectively own more than half.

Two small-business groups, the American Small Business League and the Small Business Technology Council, charge that Velazquez’s adjustments to grant-funding protocols effectively would bar their members from competing for the annual $2.3 billion of federal outlays in grants and contracts for technology research. Most of the grants come from the Defense Department and the National Institutes of Health.

“This is an attempt by the National Venture Capital Association to buy a piece of legislation for financial gain, and Velazquez and her committee have sold out to them,” complains Lloyd Chapman, president of the American Small Business League.

Chapman’s ally in his lobbying campaign against the bill is Jere W. Glover, a former Small Business Administration official who now heads the Small Business Technology Council, a trade group for companies that receive the grants. Glover says the House bill “radically changes a program that everyone says has worked well.”

The venture capital industry has been trying to persuade Congress to rewrite the law since 2003, after an SBA administrative law judge ruled that under the 1982 law setting up the research grant programs, small businesses owned by venture capitalists were not eligible. Vel?!zquez says her bill simply restores the system to the way it operated before 2003.

“Small firms must not be penalized for accepting the investments they need to advance their R&D efforts,” Velazquez said in a statement e-mailed by her office. The bill, she said, “is not a groundbreaking change.”

Advocates for the venture capital and biotech industries contend that Chapman and Glover are floating hyperbolic charges not borne out by the bill’s likely impact. Ruling out small businesses backed by venture capital, they say, eliminates some of the most promising young companies — those that have been able to attract outside investment.

“Simply because you got venture capital doesn’t mean you hit the jackpot,” says Mark Heesen, president of the National Venture Capital Association, “and it doesn’t mean you are a big business that doesn’t need any kind of assistance.”

James C. Greenwood, a former Republican House member from Pennsylvania who now heads the Biotechnology Industry Organization, says his member companies often need sums far greater than the federal grant program provides, making venture capital funding essential. And he says that only a flawed reading of the statute by the SBA judge has denied the companies participation.

But Glover and Chapman have been able to halt other attempts to change the grant program, and they are relying on Democratic Sen. John Kerry of Massachusetts, chairman of the Senate Small Business and Entrepreneurship Committee, to protect them. In the past, Kerry has voted against expanding the involvement of venture capital companies in the program. (Currently, small investment firms can hold limited stakes in companies seeking the grants.) But the lobbyists also worry that Kerry will be under pressure to compromise because the grant program expires at the end of September.

Kerry might be open to a third approach. Two years ago, he supported a bill by Maine Republican Sen. Olympia J. Snowe , who then chaired the Small Business panel, that would have allowed some grants for firms backed by venture capital, but with an overall funding increase to ensure that existing grantees did not lose anything. However, Velazquez’s bill contains no such provisions.

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