A bigger Voice for Small Business

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

Few Attend Obama National Small Business Conference

by | Nov 19, 2009 | Press Release

Press Release

Few Attend Obama National Small Business Conference

Only Seven Small Businesses Invited to Attend Obama National Small Business Conference

November 19, 2009

Petaluma, Calif. -  After announcing that the Obama Administration would, "convene a conference…that will bring together regulators, congressional leaders, lenders and small businesses," to discuss the flow of credit and capital to small businesses, on Wednesday, November 18, the Obama Administration held a five hour small business "forum" with a mere seven hand-picked small business owners on the docket.

The American Small Business League (ASBL) points to yet another example of the staggering disparity between President Obama's rhetoric and his administration's actions for our nation's 27 million small business owners.

Small businesses are the backbone of our nation's economy. According to the U.S. Census Bureau, small businesses are responsible for over 50 percent of our nation's Gross Domestic Product (GDP), 50.2 percent of the non-farm private sector work force and 97 percent of net-new jobs. With that in mind, the ASBL maintains small businesses deserved a more substantial seat at the table.

During the 2008 election cycle, President Obama promised to:

-  End the diversion of federal small business contracts to corporate giants.  http://www.barackobama.com/2008/02/26/the_american_small_business_le.php      

- Restore the Small Business Administration's (SBA) budget and staffing.  http://obama.3cdn.net/d14eb1b3649c4d6745_0evzmv02w.pdf   

-  Restore the SBA Administrator to a cabinet level position.  http://sbc.senate.gov/press/record.cfm?id=307468   

-  Implement the congressionally mandated 5-percent set-aside goal for women owned firms. http://www.barackobama.com/pdf/SmallBusinessFINAL.pdf    

More than a year after the 2008 presidential election, the Obama Administration has failed to honor its promises to the small business community. 

The ASBL maintains that honoring President Obama's promise to "end the diversion of federal small business contracts to corporate giants" alone, would save thousands of small businesses and countless American jobs by redirecting over $100 billion a year in federal contracts to small businesses in the middle class economy. 

The diversion of federal small business contracts to corporate giants was not discussed during Wednesday's forum.

"As we predicted, President Obama's forum ignored what the SBA Inspector General has referred to as the SBA's #1 challenge for five consecutive years," ASBL President Lloyd 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."

-###-

Please click here to watch a short clip about the ASBL's concerns regarding the Obama Administration's small business conference: http://www.youtube.com/watch?v=7JvT7Btd_9s  

Review Finds Fraud in Contracts Awarded in Disabled Veterans' Program

by | Nov 19, 2009 | ASBL News



News


Review Finds Fraud in Contracts Awarded in Disabled Veterans' Program


By James Dao


New York Times




November 19, 2009



A program intended to help disabled veterans win government business awarded at least $100 million in contracts to firms that were either ineligible or committed fraud to obtain the work, a federal review has found.


Related



In one case, a Nevada firm won a $7.5 million contract from the Federal Emergency Management Agency even though its majority owner was not a disabled veteran, the review by the Government Accountability Office said.


In two other cases, businesses that won contracts were owned by disabled veterans who were also full-time state government employees, making them ineligible. And in at least three other cases, companies owned by disabled veterans did little or none of the contracted work, simply passing it on to subcontractors not owned by disabled veterans.


The report concludes that the program lacks procedures to verify that applicant businesses are owned by disabled veterans. And even when fraud is uncovered, usually as a result of protests from competing companies, punishment is rarely meted out, allowing guilty firms to continue receiving federal contracts, the report says.


The report is scheduled to be released on Thursday in time for a hearing on the disabled veterans program before the House Committee on Small Business.


Representative Nydia M. Velázquez, a Democrat from New York who is chairwoman of the committee, said, “Fraud in this program means that honest veterans who own a small business lose out on projects to impostors who, in many cases, aren’t small businesses or even veterans.”


The Small Business Administration, which oversees the program, declined to comment on the report. But in a letter to the accountability office, an agency official asserted that problems with screening applicants and monitoring fraud were the responsibility of the federal agencies that issue the contracts, not the Small Business Administration.


“The S.B.A. is only authorized to perform eligibility reviews in a protest situation,” the official, Joseph G. Jordan, wrote. “In this area, the S.B.A. believes it has been diligent and responsible.”


Both Ms. Velázquez and the accountability office disputed that, saying that federal rules authorize the Small Business Administration to administer the program.


“For these kinds of procurement issues, the Small Business Administration has the appropriate expertise,” Ms. Velázquez said.


The program, created in 2003, permits federal agencies to set aside a portion of their no-bid or sole-source contracts for small businesses owned by disabled veterans. The rules require that veterans who were disabled during active-duty service not only be majority owners, but also manage and control daily business operations.


Congress set a goal of having 3 percent of all federal contract dollars go to small businesses owned by disabled veterans, though that benchmark has not been reached. In 2007, $4 billion in federal contracts were awarded to firms owned by disabled veterans, about 1 percent of the total.


The review focused on 10 cases where fraud or abuse could be documented; none of the companies were named.


The accountability office recommended that Congress enact rules that punish firms that win contracts through fraud, whether through levying fines, suspending contracts or barring them from receiving future contracts.


Currently, no such penalties are in place, the report said. In one case cited, a company based in Nevada fraudulently described itself as owned by a disabled veteran so it could compete for contracts to maintain trailers for hurricane victims in Louisiana. Yet after the fraud was uncovered, the company was not required to repay $7.5 million it had received, and has not been prohibited from receiving future contracts.


In another case, the accountability office found evidence that a veteran-owned business was a shell company for another firm that actually did the work, involving septic tank service at Army posts. Among other things, the investigators found that the disabled owner worked three days a week at his brother’s bar and lived 1,800 miles from the California job site.


But the company that apparently created the shell business has been allowed to continue doing work on a $1.1 million Army contract, the report said.


The report also calls for a centralized program to certify disabled veteran-owned small businesses. Currently only the Department of Veterans Affairs has a database of firms that are verified to be owned by disabled veterans.


But that database is used only by Veterans Affairs for its own contracts; other agencies allow small businesses to “self certify” that they are owned and controlled by disabled veterans. The report recommends that the database be expanded and made available to all federal agencies.












GAO: Fraud in gov't contracts for disabled vets

by | Nov 19, 2009 | ASBL News

News

GAO: Fraud in gov't contracts for disabled vets

By HOPE YEN
Associated Press
November 19, 2009

WASHINGTON — Companies fraudulently collected at least $100 million in federal contracts from a $4 billion government program designated for disabled military veterans who run small businesses, congressional investigators charge.

The Small Business Administration failed to check if companies were eligible for the no-bid contracts for veterans with service-related injuries, allowing, for example, a contracting employee at a military base in Tampa, Fla., to improperly funnel a $900,000 Air Force contract to his wife's firm.

Moreover, because there are few penalties for companies found ineligible, many were still being handed tens of millions of dollars in government work even after they were found to be flouting the rules, according to the report released Thursday by the Government Accountability Office.

In many cases, small business owners falsely claimed they had a service-related injury to get the federal work — such as a $7.5 million FEMA contract for Hurricane Katrina work — and were only caught when competitors protested. In other situations, the small veteran-owned businesses were legitimate but then improperly passed the work to large or foreign-based corporations.

"Fraud in this program means that honest veterans who own a small business lose out on projects to impostors who, in many cases, aren't small businesses or even veterans," said Rep. Nydia Velazquez, D-N.Y., chairwoman of the House Committee on Small Business, who requested the report.

"Given the sacrifices our veterans have made, we owe them a program that works and helps them compete for their fair share of government contracts," she said.

Responding, the SBA generally agreed with the recommendations but contended it was not obligated to implement fraud controls because it was the contracting officers at the federal agencies who ultimately were responsible for monitoring the contracts.

But in its report, the GAO disagreed, saying federal rules require the SBA to verify a company's eligibility and to impose penalties if a firm misrepresents itself. The GAO also faulted a broader lack of accountability that allowed abuses to continue.

"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," investigators wrote.

Among the cited abuses, based on the GAO's spot review of cases since 2003:

_A Las Vegas firm falsely claimed it was a veteran-owned small business to compete for $200 million in contracting work to maintain trailers for Katrina victims. After a competitor protested, the misrepresentation was uncovered and work was stopped, but the company had already received $7.5 million. The firm received no other punishments.

_Using veteran-owned businesses as a front, a septic tank company in Austin, Texas, received an Army contract for work at Fort Drum, N.Y., and Fort Irwin, Calif. After its status was challenged last year and it was found to be ineligible, the Austin company was allowed to continue work on the Army contract through 2013 for a total value of up to $1.1 million.

_A contracting employee at MacDill Air Force Base in Tampa, Fla., set up a veteran-owned business and then passed along a $900,000 furniture contract to his wife's non-veteran-owned firm, who in turn gave the work to a furniture manufacturer who actually performed the contract. Contracting officials acknowledged they were aware the employee had little involvement or experience in performing the furniture contract when making the award.

The GAO recommended that the SBA work to develop penalties that would prohibit companies from getting federal work if they are found to knowingly misrepresent their status as veteran-owned businesses. It also urged the Veterans Affairs Department to expand its database of validated veteran-owned small businesses, so that the SBA and contracting officials can access it to verify eligibility.

The findings come as President Barack Obama is expected within the next week to sign an executive order aimed at cracking down on government waste and fraud. Officials say part of that order will seek to impose penalties on contractors, such as suspension, if they fail to report and return improper payments made by the government.

Source:  http://www.google.com/hostednews/ap/article/ALeqM5gDeDlnGSLAuIvqpBgEjw18uogQUgD9C2FTN00

Review Finds Fraud in Contracts Awarded in Disabled Veterans' Program

by | Nov 19, 2009 | ASBL News

News

Review Finds Fraud in Contracts Awarded in Disabled Veterans' Program

By James Dao
New York Times
November 19, 2009

A program intended to help disabled veterans win government business awarded at least $100 million in contracts to firms that were either ineligible or committed fraud to obtain the work, a federal review has found.

Related

In one case, a Nevada firm won a $7.5 million contract from the Federal Emergency Management Agency even though its majority owner was not a disabled veteran, the review by the Government Accountability Office said.

In two other cases, businesses that won contracts were owned by disabled veterans who were also full-time state government employees, making them ineligible. And in at least three other cases, companies owned by disabled veterans did little or none of the contracted work, simply passing it on to subcontractors not owned by disabled veterans.

The report concludes that the program lacks procedures to verify that applicant businesses are owned by disabled veterans. And even when fraud is uncovered, usually as a result of protests from competing companies, punishment is rarely meted out, allowing guilty firms to continue receiving federal contracts, the report says.

The report is scheduled to be released on Thursday in time for a hearing on the disabled veterans program before the House Committee on Small Business.

Representative Nydia M. Velázquez, a Democrat from New York who is chairwoman of the committee, said, “Fraud in this program means that honest veterans who own a small business lose out on projects to impostors who, in many cases, aren’t small businesses or even veterans.”

The Small Business Administration, which oversees the program, declined to comment on the report. But in a letter to the accountability office, an agency official asserted that problems with screening applicants and monitoring fraud were the responsibility of the federal agencies that issue the contracts, not the Small Business Administration.

“The S.B.A. is only authorized to perform eligibility reviews in a protest situation,” the official, Joseph G. Jordan, wrote. “In this area, the S.B.A. believes it has been diligent and responsible.”

Both Ms. Velázquez and the accountability office disputed that, saying that federal rules authorize the Small Business Administration to administer the program.

“For these kinds of procurement issues, the Small Business Administration has the appropriate expertise,” Ms. Velázquez said.

The program, created in 2003, permits federal agencies to set aside a portion of their no-bid or sole-source contracts for small businesses owned by disabled veterans. The rules require that veterans who were disabled during active-duty service not only be majority owners, but also manage and control daily business operations.

Congress set a goal of having 3 percent of all federal contract dollars go to small businesses owned by disabled veterans, though that benchmark has not been reached. In 2007, $4 billion in federal contracts were awarded to firms owned by disabled veterans, about 1 percent of the total.

The review focused on 10 cases where fraud or abuse could be documented; none of the companies were named.

The accountability office recommended that Congress enact rules that punish firms that win contracts through fraud, whether through levying fines, suspending contracts or barring them from receiving future contracts.

Currently, no such penalties are in place, the report said. In one case cited, a company based in Nevada fraudulently described itself as owned by a disabled veteran so it could compete for contracts to maintain trailers for hurricane victims in Louisiana. Yet after the fraud was uncovered, the company was not required to repay $7.5 million it had received, and has not been prohibited from receiving future contracts.

In another case, the accountability office found evidence that a veteran-owned business was a shell company for another firm that actually did the work, involving septic tank service at Army posts. Among other things, the investigators found that the disabled owner worked three days a week at his brother’s bar and lived 1,800 miles from the California job site.

But the company that apparently created the shell business has been allowed to continue doing work on a $1.1 million Army contract, the report said.

The report also calls for a centralized program to certify disabled veteran-owned small businesses. Currently only the Department of Veterans Affairs has a database of firms that are verified to be owned by disabled veterans.

But that database is used only by Veterans Affairs for its own contracts; other agencies allow small businesses to “self certify” that they are owned and controlled by disabled veterans. The report recommends that the database be expanded and made available to all federal agencies.