Petaluma, Calif. – Members of the House Committee on Small Business are being accused of selling out America's 26 million small businesses in exchange for contributions from wealthy venture capitalists. During 2008, members of the House Committee on Small Business have been targeted with a slew of campaign contributions from the National Venture Capital Association (NVCA). According to Opensecrets.org, 13 members of the committee have received contributions from NVCA this year alone. Additionally, Rep. Velázquez has been the top committee recipient of funds from NVCA during 2008.

 

This is the second time in less than a year that a proposal has come out of the House Committee on Small Business that will divert billions of dollars in federal contracts earmarked for small business into the hands of the nation's wealthiest venture capitalists.

 

Last week, Nydia M. Velázquez (D - NY) the Chair of the House Committee on Small Business introduced H.R. 5819, the “SBIR/STTR Reauthorization Act.” If H.R 5819 is passed, the bill will create a loophole for venture capitalists, by amending the 55 year-old Small Business Act to eliminate the most basic safeguard in the law requiring that small businesses be "independently owned.” Under Velazquez's bill, a venture capital firm with billions of dollars in managed assets would be allowed to own up to 49.9 percent of a business and still qualify for government programs designed to assist small businesses. 

 

Opponents of the bill believe it would essentially repeal the Small Business Act and cost small businesses in every state billions of dollars in federal contracts.

 

During 2007, the House Committee on Small Business passed H.R. 3567, the "Small Business Investment Expansion Act of 2007." Title V of H.R. 3567 contains a nearly identical loophole to Title II of H.R. 5819. H.R. 3567 fizzled in the Senate after receiving opposition from the American Small Business League (ASBL), the Small Business Administration, the White House, the National Small Business Association and the U.S. Chamber of Commerce.

 

"The American people have had it with a government that is run by special interests that couldn't care less about the average working family. This is the worst example I have ever seen of members of Congress supporting legislation that is detrimental to their constituents in exchange for political contributions. Considering the pattern of the contributions by the National Venture Capital Association, this is clearly a prime example of special interests trying to buy legislation for financial gain," President of the ASBL, Lloyd Chapman said. 

 

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Petaluma, Calif. – Congresswoman Nydia M. Velázquez (D - NY) is trying to push a bill through the House Committee on Small Business that could spell disaster for millions of small businesses across America. If this bill becomes law, small businesses will be forced to compete with firms controlled by the nation’s wealthiest venture capital firms. Legitimate small businesses could find themselves in head-to-head competition with billionaire venture capitalists for the more than $135 billion the federal government spends with small businesses every year.

 

The Small Business Innovation Research (SBIR) Program Re-authorization Act would amend the 55-year-old Small Business Act by changing the definition of a small business from “independently owned” to include companies owned up to 49.9 percent by venture capital firms.

 

This is the second time in the past 12 months that Representative Velázquez and the House Committee on Small Business has tried to pass legislation that could divert billions of dollars in government small business contracts to wealthy investors.

 

During 2007, the House of Representatives passed H.R 3567, which contained virtually identical legislative language to this new draft legislation. However, after the bill received opposition from the American Small Business League (ASBL), U.S. Small Business Administration, the White House, National Small Business Association and the U. S. Chamber of Commerce, H.R. 3567 fizzled in the Senate Committee on Small Business and Entrepreneurship.

 

Since 2006, Congresswoman Velázquez has appeared on CBS and CNN denouncing Bush Administration policy that allows Fortune 500 firms to receive federal contracts earmarked for small businesses. As chair of the House Committee on Small Business, Velázquez could have proposed legislation to stop the flow of government small business contracts to Fortune 500 firms. However, Velázquez has proposed no such legislation. Instead, she has proposed legislation that will make the situation even worse for small business owners by allowing multi-billion dollar venture capital firms to compete for federal small business contracts.

 

If the bill becomes law, it could force thousands of small businesses to close their doors and would pull billions of dollars away from the middle class economy.

 

Critics of the new bill view it as an attempt to reward wealthy venture capitalists that have been major supporters of the Democratic Party. The National Venture Capital Association has been among Congresswoman Velázquez's biggest campaign contributors.

 

The bill is expected to be fast tracked by House leaders to avoid scrutiny from small business advocates and media attention. The ASBL (www.asbl.com) encourages concerned citizens and small business owners to contact their congressional representatives and ask them to oppose changing the definition of a small business in the Small Business Act. Small businesses should remain “independently owned” and operated. 

 

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Petaluma, Calif. – The following is a statement from the American Small Business League:

A new bill set to come out of the House Committee on Small Business will allow the largest venture capital firms in the nation to participate in federal programs designed to assist small businesses.

 

On its surface, the bill appears to be designed to expand the federal government’s Small Business Innovation Research program (SBIR). However, opponents believe the actual purpose of the bill is to create a new loophole that will allow multi-billion dollar venture capital firms to receive billions of dollars in federal small business contracts every year.

 

Critics of the new bill say it will essentially repeal the Small Business Act and could have devastating consequences for thousands of small businesses across the country. The key provision of the bill will amend the Small Business Act by changing the definition of a small business as “independently owned and operated” to include firms owned up to 49.9 percent by a venture capital firm.

 

Current federal law requires that 23 percent or approximately $135 billion a year in federal contracts and subcontracts be awarded to small businesses. Small business advocates are concerned that the bill will allow a small number of firms backed by billionaire investors to dominate federal small business contracting programs, and force thousands of legitimate small businesses out of business in every state.

 

This will be the second time in less than a year that the House Committee on Small Business chaired by Congresswoman Nydia M. Velázquez (D – NY) has proposed legislation that could allow the nation’s wealthiest venture capital firms to participate in federal small business contracting programs. In September of 2007, Rep. Velázquez and the House Committee on Small Business passed H.R. 3567, the Small Business Investment Expansion Act of 2007, through the house in record time.

 

In its original form, H.R. 3567 would have allowed venture capital firms to own a controlling interest in a firm, while still allowing those firms to participate in federal small business programs. H.R. 3567 appears to have stalled out in the Senate after dozens of small business groups around the country voiced strong opposition to it.

 

The American Small Business League led the fight against H.R. 3567 and strongly opposed Velázquez's efforts to allow venture capital firms to participate in federal small business programs. The ASBL has launched a national campaign to defeat this new bill.

 

"This is the second time Rep. Velázquez has tried to create a loophole that will allow billionaire venture capitalists to steal federal small business contracts," said Lloyd Chapman, President of the ASBL. “Velázquez is masquerading as a small business advocate while taking contributions from the National Venture Capital Association and then trying to pass legislation to give them billions of dollars in federal small business contracts. When congress passed the Small Business Act, I guarantee you that it was not their intention to allow billion dollar venture capital firms to receive federal small business contracts. This is a prime example of what the American people hate about Congress and the special interest groups. Representative Velázquez and the billion dollar venture capital firms that think they can buy legislation to steal federal small business contracts from America's 26 million small businesses are in for a fight."

 

 

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