A bigger Voice for Small Business

SBA Response to New York Times Doesn't Add Up

by | Jun 23, 2008 | Press Release

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. (http://www.nytimes.com/2008/06/12/business/smallbusiness/12sba.html?ref=business - 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. (http://www.targetgov.com/Content.asp?id=2313)

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. (https://www.asbl.com/documents/keystatements.html)

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." (http://www.sba.gov/ig/05-15.pdf)

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. (https://www.asbl.com/showmedia.php?id=1059)

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. (http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/ 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.

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Small Business Set-Aside Reform More Likely

by | Jun 20, 2008 | ASBL News

News

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.

 

Source:  http://www.kiplinger.com/

Bush Officials Manipulated Court Ordered Contracting Data

by | Jun 12, 2008 | Press Release

Press Release

Bush Officials Manipulated Court Ordered Contracting Data

Bush Administration Court Ordered Contracting Data Doesn't Add Up

June 12, 2008

Petaluma, Calif. – On May 19, 2008, United States District Court Judge Marilyn H. Patel ruled in favor of the American Small Business League (ASBL) and ordered the Small Business Administration (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.

A preliminary review of the data by the ASBL and two third party experts has uncovered hundreds of dramatic and glaring discrepancies in the data, which indicate that Bush Administration officials manipulated the data to disguise the true volume of government small business contracts that actually wound up in the hands of Fortune 500 corporations and other large businesses.

Since 2002, Bush Administration officials have consistently denied that Fortune 500 firms and other large businesses are receiving federal small business contracts.  The data released by the SBA proves that some of the largest firms in the world were the actual recipients of billions of dollars in federal small business contracts each year.

-  In May of 2007, the SBA went so far as to issue 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.  After reviewing the data, the ASBL and both third party experts all found that the Bush Administration had in fact included billions of dollars in awards to Fortune 500 corporations and other large businesses in the United States and Europe in its small business contracting statistics. The Bush Administration falsified their compliance with the congressionally mandated 23 percent small business contracting goal by including such corporate giants as 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.  (http://www.sba.gov/idc/groups/public/documents/sba_homepage/news_07-30.pdf)

-  The ASBL also discovered that the Bush Administration even included hundreds of millions of dollars in contracts to large corporations in Europe such as British Aerospace Engineering Systems (BAE, British), Buhrmann NV (Dutch) and Thales (French).  BAE is recognized as one of the five largest defense contractors in the world, and has more than 79,000 employees world wide.  Buhrmann NV, headquartered in Amsterdam, has more than 19,000 employees and French defense contractor Thales has 52,000 employees, according to Hoovers.com.

- The ASBL also found that contracting numbers to large corporations were manipulated to make it appear as if some firms had received significantly less small business contracting awards than they had.  For example, the ASBL found that according to the SBA, BAE Systems Analytical Solutions Inc. received $8.5 million in 2005 and $4 million in 2006.  However, Fedmine.us indicates that BAE Systems Analytical Solutions Inc. received small business contracts in excess of $137.6 million in 2005 and $134.5 million in 2006.  Fedmine.us is one of several companies with access to the XML data feed from the Federal Procurement Data System (FPDS-NG). In another example, the SBA reported that Battelle Memorial Institute received $12,801 in 2005, but data from both third party experts indicated that Battelle had actually received more than $900 million during 2005.  The ASBL found a pattern where contracts to large firms were altered in the same way they were with BAE and Battelle.

- The ASBL also discovered that the Bush Administration was forced to make a systematic counter balancing increase in the volume of contracts awarded to legitimate small businesses to prevent the total amount of contracts awarded for 2005 and 2006 from being diminished. Consequently, awards to legitimate small businesses were systematically inflated to equalize the reduction of small business contract dollars awarded to Fortune 500 corporations.  The ASBL found that according to SBA numbers, Circle B Enterprises Inc. received $887.5 million during 2005.  However, Fedmine.us indicates that Circle B Enterprises Inc. received $287.5 million during 2005, which represents a discrepancy of $600 million.  The ASBL found several other instances of significant inflation of small business contracting numbers in legitimate small businesses.

During his time as SBA Administrator, Steven Preston continually denied the fact that large businesses were the recipients of federal small business contracts.  However, in June of 2007, Preston adopted the SBA’s 5-year grandfathering/re-certification policy allowing some of the largest corporations in the United States and Europe to continue receiving billions of dollars in U.S. government small business contracts through the year 2012.

“Based upon a number of federal investigations that have been done on this subject, such as 5-14, 5-15, and 5-16 from the SBA Office of Inspector General and our analysis of this information, it looks like the pattern that we are seeing in 2005 and 2006 will be repeated every year during the Bush Administration.  If that holds true, the Bush Administration will have diverted somewhere between $500 and $800 billion from our nation’s middle class economy,” President of the ASBL, Lloyd Chapman said. “It’s time for Congress to call for a GAO investigation to get to the bottom of this issue. The Bush Administration has consistently tried to paint me as a conspiracy theorist. Based on the release of this data and the fact that I have won five federal lawsuits against the Bush Administration, I expect that will be a more difficult job for them in the future. I would like to see the media report this story accurately and responsibly and start listening to sources outside the SBA’s press office. The facts don’t lie.”

The ASBL intends to continue to review the data and will release a more detailed report on their findings within 30 days. The information is now available on the ASBL’s website, www.asbl.com.

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