A bigger Voice for Small Business

Fraud hits disabled veterans

by | Nov 25, 2009 | ASBL News

News

Fraud hits disabled veterans

A government investigation found that fraud and abuse are diverting millions of dollars in contracts intended to go to businesses owned by service-disabled veterans.

By Jim Wyss
Miami Herald.com
November 25, 2009

Millions of dollars worth of government contracts designated for service-disabled veterans are being siphoned off by fraud and abuse, according to a recent government report.

In a case-study of 10 firms, including one Florida company, the Government Accountability Office found ineligible companies had won about $100 million worth of contracts earmarked for service-disabled veteran-owned companies.

The ``program is vulnerable to fraud and abuse, which could result in legitimate service-disabled veterans losing contracts to ineligible firms,'' according to the report, which was presented to Congress last week.

Florida is home to 1,421 service-disabled veteran-owned businesses, according to the government's Central Contractor Registry. And while the government has a mandate to set aside 3 percent of all federal contracts for such firms, it often misses the mark.

During fiscal year 2008 -- the latest data available -- service-disabled small businesses won $3.3 billion worth of federal contracts, or about 1 percent. But the GAO study suggests that even those modest results are overstated.

In one case, the GAO found a full-time Department of Defense contractor, who was disabled and worked at MacDill Air Force Base in Tampa, was passing along a $900,000 contract to manufacture furniture to his wife's company. She, in turn, passed it along to another manufacturer that actually completed the work.

The investigation found that while officials at MacDill were aware of the illegal ``pass through,'' they approved the contract anyway.

In another case, a Las Vegas company won a $7.5 million contract to maintain trailers in the wake of Hurricane Katrina. Even after it was discovered the owners were not service disabled, they continued to receive service-disabled contracts, the investigation found.

``Although ineligible firms have been identified through bid protests, firms found ineligible do not face real consequences, can be allowed to complete the contracts received, and are not suspended or debarred,'' the report found.

Govanny Nancy Flores was in the U.S. Coast Guard for 21 years before retiring with a medical disability. Her Miami company, DD&F Industries, does light construction, security and IT work and has won contracts earmarked for veterans.

``When a project comes out and it is designated as service disabled I say `Thank you God,''' she said. ``But to think that someone is utilizing a title that is not theirs is offensive. That basically takes bread out of my mouth or someone else who is even more disabled than I am.''

Among the problems identified by the report: The government has no process to validate a firm's eligibility for the program. While the Veterans' administration is working on such a database, it is not used by other contracting agencies.

The federal government has a poor track record of controlling government spending. A Miami Herald study of federal small business contracts performed in the state in 2008 found that massive billion-dollar companies, including General Electric and Boeing, had soaked up at least $76 million that were reported as going to small firms.

Source:  http://www.miamiherald.com/business/story/1350590.html

American Small Business League: Obama 'short Change'

by | Nov 24, 2009 | ASBL News

News

American Small Business League: Obama 'short Change'

By Resources for Entrepreneurs Staff
Gaebler.com
November 24, 2009

The American Small Business League has criticized President Obama for not fulfilling his promises to small businesses.

The American Small Business League sharply criticized President Obama for what it said were unfulfilled campaign promises to help small business owners get a fair share of the economic pie.

"A year after being elected, President Barack Obama's small business policies don't seem to match his campaign promises to America's 27 million small businesses," the group said.

The ASBL - founded in 2004 out of a group called the Microcomputer Industry Suppliers Association - lists four main grievances with the Obama administration over campaign pledges, including a promise to fully restore the Small Business Administration's (SBA) budget and staffing.

The group said Obama has not followed through with a pledge he made in February 2008 on the campaign trail to "end the diversion of federal small business contracts to corporate giants," which ASBL said includes billions of dollars in contracts going to Fortune 500 companies.

"American small businesses need more than speeches from President Obama," said ASBL President Lloyd Chapman, who also broke the bad news for small business owners in a recent appearance on CNN with host Lou Dobbs.

Obama has been focused in recent days on small business lending and healthcare reform, but financial experts fear banks are not lending due to federal requirements for government-backed loans.

Source:  http://www.gaebler.com/News/Small-Business-Finance/American-Small-Business-League:-Obama-%27short-change%27-19446205.htm


Report: Fraud and abuse in SBA program for disabled vets

by | Nov 24, 2009 | ASBL News

News

Report: Fraud and abuse in SBA program for disabled vets

By Staff
Central Valley Business Times
November 24, 2009

•  Taxpayers cheated of at least $100 Million

•  Few if any consequences

A program designed to help small businesses owned by military veterans where were injured when serving their country is riddled with fraud and abuse, says the Government Accounting Office.
Millions of dollars in federal contracts meant for the small businesses through the Service-Disabled Veteran-Owned Small Business Program have gone instead to foreign companies and other firms that should not have gotten the federal contracts, the GAO says in a new report.
(Download a copy of the report by clicking on the link below.)
In one case, the GAO investigators found $5 million in a contract for construction and janitorial services going to a firm that “utilizes employees from a large non-SDVOSB foreign-based corporation, which reported almost $12 billion in annual revenue in 2008, to perform contracts.”
Cheaters get away with it without fear of consequences, the report suggests.
“Although ineligible firms have been identified through bid protests, firms found ineligible do not face real consequences, can be allowed to complete the contracts received, and are not suspended or debarred,” the GAO report says.
It’s just another example of unchecked fraud, says a critic of the SBA, the American Small Business League of Petaluma.
“Since 2002, there have been more than 24 other federal investigations, which have found fraud, abuse, loopholes and a lack of oversight in small business contracting programs under various federal agencies,” the ASBL says.

 

Drilldown

Download the GAO report here (d10108.pdf, 3.22 MB)

 

Source:  http://www.centralvalleybusinesstimes.com/stories/001/?ID=13696


More Fraud in SBA Managed Small Business Programs

by | Nov 24, 2009 | Press Release

Press Release

More Fraud in SBA Managed Small Business Programs

November 24, 2009

Petaluma, Calif. – In a recent U.S. Government Accountability Office (GAO) investigation into fraud in the Service Disabled Veteran Owned Small Business (SDVOSB) program, investigators stated, "By failing to hold firms accountable, SBA and contracting agencies have sent a message to the contracting community that there is no punishment or consequences for committing fraud or abusing the intent of the veterans program." http://www.gao.gov/new.items/d10108.pdf  

The report, which was presented to Congress on Thursday, November 19, is just the latest example of ongoing abuses in the government's small business contracting programs, finding at least $100 million in federal contracts fraudulently awarded to ineligible firms.

Since 2002, there have been more than 24 other federal investigations, which have found fraud, abuse, loopholes and a lack of oversight in small business contracting programs under various federal agencies. https://www.asbl.com/documentlibrary.html  

In 2005, Report 5-15 from the Small Business Administration Office of Inspector General (SBA OIG) stated, "One of the most important challenges facing the Small Business Administration and the entire Federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards." Since 2006, The SBA OIG has classified this issue as the #1 management challenge facing the agency. https://www.asbl.com/documents/05-15.pdf, http://www.sba.gov/idc/groups/public/documents/sba_homepage/oig_reports_tmc_fy10.pdf   

In 2008, the Department of Interior Office of Inspector General (DOI OIG) released a report titled, "Interior Misstated Achievement of Small Business Goals by Including Fortune 500 companies."  In its report, the DOI OIG found the agency awarded small business contracts to Fortune 500 firms like, Home Depot, John Deere, Dell, Sherwin Williams, Starwood Hotels and Waste Management.
http://www.doioig.gov/upload/2008-G-0024.pdf  

The American Small Business League (ASBL) has estimated that due to these abuses, every year more than $100 billion in federal small business contracts are diverted away from legitimate small businesses and into the hands of Fortune 500 corporations and other clearly large firms around the world. 

In February of 2008, President Obama promised to stop these abuses by stating, "It is time to end the diversion of federal small business contracts to corporate giants."  To date, the Obama Administration has not honored that promise. http://www.barackobama.com/2008/02/26/the_american_small_business_le.php

"It is ludicrous to think President Obama is trying to help small businesses when he has given them a tenth of a percent of the stimulus funds, and his administration has continued to give billions of dollars a month in federal small business contracts to some of the biggest companies in the world," ASBL President Lloyd Chapman said.

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Please click here to watch a short clip about the ASBL's concerns: http://www.youtube.com/watch?v=cX34LddPtHE  


Small-business forum called 'sham'

by | Nov 20, 2009 | ASBL News

News

Small-business forum called 'sham'

By Staff
Huntsville Times
November 20, 2009

Group says redirect $100B in contractsfrom big companies

A White House small-business forum is being criticized by the American Small Business League as "a sham" because the group says the Obama administration has failed to honor its promises to small businesses.

The forum held Wednesday included Small Business Administration Administrator Karen Mills; Treasury Secretary Tim Geithner; U.S. Sen. Mary L. Landrieu, D-La., chair of the Senate Committee on Small Business and Entrepreneurship; and other policymakers, lenders and small-business owners.

The forum explored ideas and strategies for expanding access to financing for small businesses.

"Now that we have stabilized Wall Street, we must jump-start Main Street," Landrieu said. "We can do this by making sure small businesses have access to the capital they need to keep their businesses alive and growing during these tough times."

The lack of access to money has drawn the criticism from the ASBL. Particularly, the group said, diverting "federal small business contracts to corporate giants."

"This is a sham small business forum intended to mislead the media, and the people of the United States with PR as opposed to action," ASBL President Lloyd Chapman said in a prepared statement.

He also said the topic of diverting money was not discussed.

"As we predicted, President Obama's forum ignored what the SBA inspector general has referred to as the SBA's No. 1 challenge for five consecutive years," Chapman said. "We need to quit listening to what he says, and look at what he does.

"Despite the commotion and rhetoric the Obama administration has stirred up regarding its small-businesses forum, it looks like it was just another publicity stunt.

"I'd love to see someone from the mainstream media ask President Obama on national television why he is continuing to give billions of dollars a month in federal small-business contracts to Fortune 500 firms."

After the forum, Landrieu said Congress needs to find additional funding for the American Recovery and Reinvestment Act programs. She said, if passed, the Small Business Access to Capital Act increases small-business loan limits from $2 million to as high as $5.5 million.

"Not only will this change spur small-business growth and aid in our nation's continued economic recovery, over the long term, SBA estimates that raising the limits will be budget neutral," she said. "We cannot wait to make these needed changes.

"That is why I am working with (Senate) Ranking Member (Olympia) Snowe, R-Maine, to pass legislation in the Senate, so our small businesses will have every opportunity to continue to grow, create American jobs and keep our nation competitive in the global arena."

However, Chapman said a House bill would stop the diversion of federal small-business contracts to large corporations and redirect up to $100 billion a year in federal small-business contracts to small businesses in America's middle-class economy.

"If President Obama really wanted to help small businesses," Chapman said, "he would support H.R. 2568, the Fairness and Transparency in Contracting Act of 2009."

Source:  http://www.al.com/business/huntsvilletimes/index.ssf?/base/business/1258712117267650.xml&coll=1