New SBA Head Could Spell More Trouble for Middle-Class Firms

Press Release

New SBA Head Could Spell More Trouble for Middle-Class Firms

June 30, 2008

Petaluma, Calif. – Last week, President Bush announced that Santanu "Sandy" Baruah, head of the Commerce Department's Economic Development Administration, would be the third Bush appointee to head the U.S. Small Business Administration (SBA). Like his successor Steven Preston, Baruah has no experience or background working with small businesses and hails from a corporate background. Small business advocates are concerned that Baruah will continue the Bush anti-small business policies that have been the status quo with the Bush Administration's previously appointed administrators.

In 2001, Hector Barretto was President Bush's first appointee to the position. During his tenure, a series of federal investigations ( uncovered the Bush administration had reported billions in awards to Fortune 1000 corporations as small business awards. In 2005 the SBA's own Inspector General issued three reports, 5-14, 5-15, 5-16, ( that confirmed that corporate giants were in fact, getting federal small business contracts. Barretto responded to the diversion of federal small business contracts to large corporations by attempting to explain it as miscoding and harmless computer errors.

Administrator Steven Preston's time at the SBA was marked by his refusal to release the names of actual recipients of federal small business contracts. He attempted to describe the diversion of federal small business contracts to large corporations as a "myth." Like Barretto, Preston also refused to implement the 5 percent women owned set-aside goal, which was passed by Congress in 2000. During his tenure at the SBA, Preston removed the annual revenue and total employee fields from the government's database of federal contractors, effectively preventing the public from determining whether a federal contractor is small or large.

On June 30, 2007, Preston adopted an unpopular SBA policy originally proposed as a grandfathering policy that will allow Fortune 500 firms to keep their federal small business contracts through 2012. Critics of the Bush Administration are concerned that Baruah will try to further dismantle programs for middle class firms by increasing the federal definition of a small business to allow large businesses to take contracts meant for legitimate small businesses.

During his administration, President Bush has cut the SBA's budget and staffing in half. Each successive administrator has adopted policies that have continued to dismantle programs that were designed to help American small businesses.

The American Small Business League (ASBL) thinks that this third administrator will continue the practices and policies of Barretto and Preston in undermining federal small business programs. ASBL is concerned that before leaving office, President Bush will make one last attempt at closing the SBA and ending federal programs that assist small business owners by combining the SBA with the United States Department of Commerce.

"Small businesses need to stand together and make sure that the Bush Administration does not continue to erode programs designed to help America's 27 million small businesses," President of the ASBL, Lloyd Chapman said. "I am confident that if Senator Obama becomes president he will restore the SBA's budget and staffing, and undo virtually everything the Bush Administration has done to dismantle programs designed to help veteran, women, and minority owned firms and the small businesses where most Americans work. I cannot imagine an Obama Administration allowing Fortune 500 firms to continue to receive federal small business contracts."



Kevin Baron on America's Work Force

Kevin Baron on America's Work Force

The ASBL's Director of Government Affairs Kevin Baron discusses contracting data obtained from the SBA as a result of the ASBL's 4th legal victory against the agency.

June 30, 2008

Can't hear the audio? Download it here

SBA Response to New York Times Doesn't Add Up

Press Release

SBA Response to New York Times Doesn't Add Up

June 23, 2008

Petaluma, Calif. – The American Small Business League (ASBL) takes exception to statements made by the Jovita Carranza, Acting Administrator of the U.S. Small Business Administration (SBA) in a June 19, 2008 letter to the editor of The New York Times. ( - Due to length of URL, Please copy and paste link into browser. Remove the space if one exists.)  

In the letter entitled, "The Small Business Administration's Comeback," Carranza stated:

"The S.B.A. helps small businesses get government contracts. In 2006 (the last year with published data), small businesses reached a record level of federal contracts. Small businesses owned by women experienced their largest year of growth and hit a record level. Small disadvantaged businesses (generally minority-owned) hit a record level.

The S.B.A. has also led tough-minded efforts to improve the integrity of small business contracting data and to tighten the rules to qualify, reducing the value of contracts coded as small business by more than $10 billion, increasing new opportunities."

The first congressional hearing on the diversion of federal small business contracts to large corporations was held in May of 2003. Since then, the SBA and the Bush Administration have failed to stop the giveaway of federal small business contracts to large corporations. In fact, the Bush Administration has done everything it can to dismantle programs designed to assist small businesses from nearly every socio-economic background. For example, in 2006, the Bush Administration closed the office at the SBA solely dedicated to helping veteran-owned small businesses; and for the last 7 years it has refused to implement the congressionally mandated women-owned set-aside program. (

Since 2003, there have been a series of federal investigations that have all found that the SBA has included billions of dollars in contracts to Fortune 500 corporations, and even companies in Europe, towards its small business contracting statistics. (

In fact, in 2005 the SBA's own Inspector General released Report 5-15, which states, "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." (

To the contrary of Ms. Carranza's statements, 2006 was anything but a record setting year. In fact, on May 19, 2008, United States District Court Judge Marilyn H. Patel ruled in favor of the ASBL and ordered the SBA to provide the ASBL with more than 10,000 pages of data that listed the names of all firms that received federal small business contracts for fiscal years 2005 and 2006. In a review of the data, the ASBL uncovered that the SBA had included billions of dollars in awards to Fortune 500 corporations in its small business contracting data. The list of large firms within the SBA's 2006 small business contracting statistics includes firms like: Dyncorp, Battelle Memorial Institute, Hewlett Packard, Government Technology Services Inc (GTSI), Bechtel, Lockheed Martin, General Dynamics, General Electric, Northstar Aerospace, Booz Allen Hamilton Inc. and Raytheon. (

Regarding Ms. Carranza's statements surrounding the SBA's efforts to improve the integrity of small business contracting data and increase contracting opportunities, the ASBL would like to draw attention to the SBA's poor record of actually implementing policies to do so. On June 30, 2007, former SBA Administrator and current Secretary of HUD, Steven Preston, implemented a grandfathering/5-year re-certification policy going against recommendations made by both the current and former SBA Inspector General for an annual re-certification policy. The SBA's grandfathering/5-year re-certification plan will allow contracts to Fortune 500 corporations to be counted as small business awards through 2012. ( 2004/pdf/04-26609.pdf - Due to length of URL, Please copy and paste link into browser. Remove the space if one exists.)

We predict that before President Bush leaves office he will to continue to dismantle small business programs and modify the definition of a small business to include companies that have no legitimate claim to federal small business contracting programs.




Small Business Set-Aside Reform More Likely


Small Business Set-Aside Reform More Likely

Critics of the federal program to channel contracts to small business will use a recent court victory to push for laws to fix abuses.

By Tosin Mfon
Kiplinger Business Resource Center
June 20, 2008

Pressure to fix the small business set-aside program is mounting. Half the federal contracts designated for small businesses in 2005 and 2006, about $100 billion a year, went to big firms, including multinational corporations. That's according to documents the Small Business Administration (SBA) handed over to the American Small Business League (ASBL) under court order this month.

Stricter controls are likely next year. Certification procedures have already been adjusted once by the SBA to cut down on abuses, but Congress and small business groups want the agency to do a lot more.

Specifics of widespread abuses of the program were revealed under the May 19 order of a California federal judge, the fourth legal victory the small business league has garnered in federal court against the SBA.

In May 2005, the ASBL filed suit against the SBA, demanding to see an agency report that detailed large businesses receiving over $2 billion in small business contracts through a practice termed "vendor deception." According to the ASBL, SBA officials had argued the report was exempt from the Freedom of Information Act (FOIA), but the court ruled otherwise.

To spur economic growth and aid start-ups, the set-aside program awards 23 percent of federal contracts to small businesses, with a sub-set designated for specific groups like firms owned by women and disabled veterans. The contracts range in value from a few hundred dollars to as much as $100 million with life spans of a few months all the way up to several decades.

April 2006 was the culmination of an 18-month legal battle between the parties. ASBL wanted documents that detailed hundreds of small business protests against large companies that allegedly hid their true size to receive set-asides.

The SBA dismissed protests against lax enforcement and argued that information about it was exempt from FOIA standards. The court ruled otherwise, and resulting information showed the agency dismissing complaints about violations of size standards to 102 small businesses over an 18-month period.

The SBA was hauled back into court in December 2006, when the ASBL demanded the name of a large firm recommended for debarment from federal contracts because it had consistently received set-aside contracts, even though it was far too large to qualify. Under court order, the SBA revealed that GTSI Corp., headquartered in Chantilly, Va., had outgrown its qualifications as a small business in 1998, but continued to nab some of the SBA's largest contracts for years after.

SBA officials say the recertification program is a success at blocking loopholes. The legacy of outgoing SBA president Steve Preston, it requires businesses to inform government procurement officers of mergers that disqualify them from set-asides within 30 days of the triggering event. Critics counter that firms still have five years to let existing contracts run out, even after their size disqualifies them from future contracts.

Both the House Small Business Committee and the Senate Committee on Small Business and Entrepreneurship have endorsed annual recertification that would require businesses to prove their size status every year. And the ASBL says it will return to court to publicize that reform is needed.