The Small Business Administration is stepping up its efforts to ensure contractors aren't fudging the truth in order to win government deals.

The SBA in fiscal year 2010 visited more than 1,000 small business contractors participating in its popular HUBZone program, up from some 700 visits the year before and fewer than 100 in 2008. The program is aimed at linking small firms in economically distressed areas with federal contracting opportunities.

"We need to go out and see that these firms are who they say they are," said Joseph Jordan, the SBA's associate administrator for government contracting and business development. "The vast majority of these firms are well-intentioned and well-behaved, but occasionally you find a bad actor."

In the first half of 2009, the SBA conducted just seven site visits, but it began increasing surveillance activity in the second half of the year, visiting an additional 700 firms. The visits are part of a wider SBA effort to combat fraud connected with its growing contracting programs.

The SBA earlier this year suspended one of the government's most prolific IT contractors, GTSI Corp., accusing it of scheming to get a piece of government contracts for which it was ineligible.

"It was actually the first time we saw a top 50 contractor suspended for doing something they'd been doing for years," said Chris Gunn, a spokesman for the American Small Business League, a small business advocacy group.

The SBA and GTSI, which did not return phone calls seeking its comments, eventually reached an agreement under which several top executives resigned and the suspension was lifted. But similar cases against other companies are emerging.

"There is a tremendous volume of additional firms who are doing very similar things," Mr. Gunn said.

The SBA earlier this month told biotech firm Siga Technologies Inc., which was on the verge of winning a $2.8 billion smallpox-drug contract, that it did not qualify for the award because it is owned by the same large firm that owns such companies as Revlon Inc.

SIGA is appealing the ruling, saying the smallpox-drug contract should not be awarded as a small business set-aside. In a statement this week, SIGA suggested it could be "the only supplier that capable of delivering the requested 1,700,000 courses of therapy in a timely manner."

Still, similar rulings from the SBA could be on the horizon.

The Government Accountability Office in 2009 issued a report citing widespread fraud in the SBA's HUBZone program.

Of a review of 36 firms in four cities, the GAO found 19 weren't actually eligible for the contracts they won.

"One Alabama firm listed its principal office as 'Suite 19,' but when GAO investigators performed a site visit they found the office was in fact trailer 19 in a residential trailer park. The individual living in the trailer had no relationship to the HUBZone firm," the report said.

Combined, the 19 companies were improperly awarded $30 million in HUBZone contracts in 2006 and 2007, the GAO said.

Write to Meena Thiruvengadam at meena.thiruvengadam@dowjones.com

Source: http://online.wsj.com/article/SB10001424052748704170404575624922645150544.html

In 1990, the Pentagon established the Comprehensive Subcontracting Plan Test Program, which was intended to offer 14 of the country’s largest defense contractors various incentives in hopes of creating greater subcontracting opportunities for small businesses.

 The idea was to see if the incentives, such as fewer reporting requirements, led to more small businesses getting defense subcontracts.

Great idea ... the only problem is that it’s never been evaluated to see if it’s meeting the stated goals.

1st District Rep. Chellie Pingree, D-Maine, has sent a letter signed by four other members of Congress, asking the Government Accountability Office to conduct that long-overdue investigation.

“Small businesses are the backbone of our nation’s economy,” Pingree wrote in the letter. “Congress must ensure that federal small-business contracting programs are functioning properly to provide maximum opportunities to our small businesses.”

Given that the 1990 test program has been reauthorized three times without ever being evaluated to see if it actually works, Pingree’s request is more than reasonable. The GAO should conduct the requested review without delay; one way or the other, its findings should prove useful to the Pentagon, small businesses and taxpayers alike.

Source: http://www.timesrecord.com/articles/2010/11/15/opinion/editorials/doc4ce17a0f02a4d975409137.txt

The National Commission on Fiscal Responsibility and Reform, launched by President Barack Obama to find ways to cut federal deficit spending, has released its recommendations. It suggests making sweeping cuts to Medicare, simplifying the tax code, increasing the age for receiving Social Security benefits to 69, slashing a third of military bases, eliminating earmarks and reducing the number of employees in the federal government by 10 percent. The Commission says its recommendations would save $3.8 trillion.

The Commission suggests folding the Small Business Administration into the Department of Commerce. Although the list of cuts was just released a few hours ago, criticism on eliminating the SBA in order to reduce government spending has already started to pop up.

"The Small Business Administration (SBA) is the only federal agency that exists for the expressed purpose of assisting America’s chief job creators, its 27 million small businesses. Trying to save money by combining the SBA with the U.S. Department of Commerce not only has the potential to be devastating to the nation’s small businesses, but it is exactly what small businesses don’t need in these difficult economic times," says Lloyd Chapman, president of the American Small Business League.. [via California’s CVBT]

Dow Jones Newswires reports that the outgoing Speaker of the House, Nancy Pelosi [D-CA], declared that the commission's recommendations were "simply unacceptable."

The Committee is co-chaired by former head of the Small Business Administration Erskine Bowles (D) and retired Wyoming Senator Alan Simpson (R). The proposal needs to have the approval of 14 of the 18 members in the Committee before it can be introduced into the House and Senate in the process of becoming law.

Source: http://www.bluemaumau.org/obama_commission_suggests_folding_sba_commerce_dept

Welcome to another edition of Security Digest, folks. We try hard here to deliver news updates that haven’t mostly been pounded out elsewhere (no shortage of examples). There’s still plenty of amazing material for us to work with, week in and week out. Case in point: An intriguing counterterrorism story from Japan that’s received little attention so far in the states.

One of Japan’s largest newspapers reported Nov. 2 that authorities there accidentally leaked highly sensitive information onto the Internet, including the names of people who have cooperated in anti-terrorism investigations, requests for help from the FBI, security procedures used during a major global summit and more.

According to the daily Asahi Shimbun, bank account information for people associated with foreign embassies in Japan was also vulnerable:

Sources at Tokyo’s Metropolitan Police Department said officials suspect the highly confidential information was included in more than 100 documents leaked through file-sharing software. They are studying the contents of the leaked documents while questioning officers involved to determine how the information got out.

Another major city in the United States is turning its back on the use of public safety surveillance devices. This time, voters in Houston killed a network of red-light cameras, which officials argue are critical for nabbing traffic violators and controlling unsafe driving. The cameras have generated hundreds of thousands of tickets and enabled the city of Houston to collect $44 million in fines over four years.

As we’ve written before, Arizona’s Department of Public Safety abandoned its use of traffic cameras after angry residents covered them with boxes and Post-it notes, destroyed them with axes and wore masks to stymie attempts at driver identification.

Potential health risks from full-body X-ray scanners now being used in airports across the country to stop terrorists from hiding explosives are “extremely small,” says the Food and Drug Administration. A group of scientists publicly expressed concern earlier this year about how radiation emissions from the imagers could impact seniors, children and women prone to breast cancer.

Experts continue to complain about the overwhelming array of congressional committees and subcommittees that have jurisdiction over homeland security spending and policy in Washington. The conservative Heritage Foundation on Nov. 4 called upon lawmakers to reform the massive web of overseers in Congress that leads senior homeland security officials to spend much of their time testifying on Capitol Hill rather than protecting the nation from terrorists and natural disasters:

Homeland security oversight is both proper and necessary. … [But] this debilitating proliferation of congressional review has significant adverse effects on national security. It frustrates the ability of Congress to provide guidance on how the homeland security enterprise should operate while draining precious departmental resources.

A California group representing small companies that do business with the government is suing the Department of Homeland Security to make public records describing its costly border surveillance program, SBInet. Information DHS officials have so far refused to release in documents may prove bureaucrats tried to ignore rules requiring that a portion of government contracts be awarded to small businesses, according to the American Small Business League.

The group says it has won similar cases before and that Washington is continually granting “small business” contracts to major defense firms such as Northrop Grumman and Lockheed Martin.

Source: http://www.centerforinvestigativereporting.org/blogpost/20101110securitydigestourlistofsecuritystoriesthatmatternov17