Congress to Renew Failed Pentagon Test Program Into Its 28th Year

Press Release

Congress to Renew Failed Pentagon Test Program Into Its 28th Year

By Lloyd Chapman
American Small Business League
May 28, 2014

PETALUMA, CA--(Marketwired - May 28,2014) - According to the American Small Business League, an April 2004 reportfrom the Government Accountability Office (GAO), Report GAO-04-381, found no evidence of any kindthat the Pentagon's Comprehensive Subcontracting Plan Test Program (CSPTP) was achieving itsgoal of improving subcontracting opportunities for small businesses and yet the"Test" Program was renewed for another ten years until the end of2014.

The Comprehensive Subcontracting PlanTest Program (CSPTP) began in 1990 and has now been in effect for almost 25years and yet no test results of any kind have ever been released to thepublic. Even the language in the bill admits there is no evidence it has achieved any of its goals.Now President Obama and Congress want to extend what critics believe is ananti-small business loophole for prime contractors into its 28th year, 2017.

The American Small Business League (ASBL)believes the GAO investigation proves the 25 year old ComprehensiveSubcontracting Plan Test Program is a significant loophole in federalcontracting law created by the Pentagon. The CSPTP has allowed the Pentagon'slargest prime contractors to circumvent the federal law that requires 23% ofall federal contracts and subcontracts to be awarded to small businesses sincethe program began in 1990.

The stated mission of the CSPTP was toimprove subcontracting opportunities for small businesses with Pentagon primecontractors. The CSPTP contained two dubious provisions that seemed to be incomplete contradiction to its stated mission. First, prime contractorsparticipating in the program were no longer required to submit quarterlysubcontracting reports that were available to the public. This precludedjournalists, Congress and the public from having access to documents todetermine if prime contractors were in compliance with small businesssubcontracting goals.

Second, prime contractorsparticipating in the CSPTP were exempt from any penalties for non-compliancewith their subcontracting goals such as liquidated damages.

The Pentagon refused to implement theGAO 2004 recommendation to "develop metrics to assess the overall resultsof the Test Program."

The Pentagon is now refusing to complywith Freedom of Information Act requests from the American Small BusinessLeague for copies of the annual subcontracting reports submitted by primecontractors participating in the program and for a complete copy of the most recentevaluation of the effectiveness of the program.

The CSPTP participantsinclude, BAE Systems, Boeing Company, GE Aviation, General Dynamics, HarrisCorporation, L3 Communications, Lockheed Martin, Northrop Grumman, Pratt &Whitney, Raytheon and Sikorsky.

The ASBL filed a Freedom of Information Act case against thePentagon on May 12, 2014 in federalDistrict Court in San Francisco.

ASBL President Lloyd Chapman stated,"The fact Congress wants to extent a failed Pentagon test program into its28th year is absolutely insane. The Pentagon's refusal torelease any data on the program is a clear indication they have somethingsignificant to hide and I think it's billions of dollars in federal contractingfraud."


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How one small word change could mean many more contracting dollars for small businesses


How one small word change could mean many more contracting dollars for small businesses

By J.D. Harrison
The Washington Post
May 25, 2014

By J.D. Harrison May 25

Sometimesit's the nuance in a phrase that matters most. For small governmentcontractors, that appears to be the case in the federal procurement rulebook.

TheFederal Acquisition Regulation, a long list of contractingrules established by the heads of several agencies, requires alllarge companies bidding on prime contracts to specify what percentage of themoney awarded would flow through to small-business subcontractors.

The ruleis meant to ensure that small firms "have the maximum practicable opportunityto participate in performing contracts," according to the compendium, and tohelp the government meet its annual goalof awarding 35.9 percent of all subcontracting dollars to small companies.Collectively, federal agencies have missed that mark each of the past fiveyears.

Bob Justissays that one odd word on Page 1,343 in the rulebook isn't helping.

"Out ofall your planned subcontracting dollars, you're required to set aside somepercentage of that for small businesses," said Justis, head of JustisConsulting, a contracting proposal development firm based in Washington."However, it's required to be stated as a percentage of your total subcontractdollars — not as a percentage of the total contract dollars."

It's asubtle but important distinction, Justis said, because a large prime contractorcan, based on that rule, pledge to commit 40 percent of its subcontractingdollars to smallbusinesses. If the company then handles all the work itself,resulting in a subcontracting spend of zero, it still met its small-businesssubcontracting goal.

After all, 40 percent of nothing is nothing.

More often, Justis said, the wording leads toconfusion between agencies and their prime contractors. Contracting officersexpect to see, for example, a $10 million contract with a 40 percentsmall-business subcontracting goal to deliver $4 million to small companies. However,the total often comes in much lower, because the prime contractor is shootingfor a goal based on a different formula.

"It makes a very big difference as to how muchmoney ultimately goes to small businesses," Justis said.

The push to tweak the language comes aspolicymakers and federal agencies are looking for ways to reserve moregovernment work for small companies.

The House last week passed a defense spendingbill that included several changes to long-
standing small-business contracting rules. Most notably, the proposal wouldlift the government's annual small-business contracting target from 23 percentto 25 percent and its total subcontracting goal from 35.9 to40 percent.

The legislation would also streamline some ofthe bidding requirements for small firms, with the intent of saving them timeand money, and take new steps to prevent federal departments from bundlingcontracts into projects that are too large for competition by small businesses.

House Small Business Committee Chairman Sam Graves(R-Mo.), a co-author of some of the proposals, called them ­"common-sensereforms that will provide opportunities for small companies trying to breakinto the federal marketplace."

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National Defense Authorization Bill Includes 24 Year Old Failed Test Program

Press Release

National Defense Authorization Bill Includes 24 Year Old Failed Test Program

By Lloyd Chapman
American Small Business League
May 22, 2014

PETALUMA, CA--(Marketwired - May 22,2014) - According to the American Small Business League, the 2015 NationalDefense Authorization Bill (H.R. 4435) includes anextension of the 24 year old Comprehensive Subcontracting Plan Test Program(CSPTP). Under the current bill, the CSPTP would be extended until the end of2017 even though there has never been any data that found the Test Programachieved its goals.

The CSPTP was supposed toincrease federal government subcontracting opportunities for small businessesworking with prime contractors. In reality, the Test Program has two dubiousprovisions that dramatically reduce subcontracting opportunities for smallbusinesses.

The first provision allowsparticipating prime contractors to avoid quarterly subcontracting reports thatwere once available to the public. The second provision eliminates anypenalties for non-compliance with subcontracting goals.

A 2004 investigation by the GovernmentAccountability Office (GAO) found that the Pentagon was unable to produce anydata to show the CSPTP had achieved any of the stated goals of improvingsubcontracting opportunities for small businesses. Report GAO-04-381 stated, "Although the Test Program wasstarted more than 12 years ago, DOD has yet to establish metrics to evaluatethe program's results and effectiveness."

Even the language in the currentDefense Authorization Bill acknowledges the failure of the 24 year old TestProgram stating, "However, after nearly 24 yearssince the original authorization of the program, the test program has yet toprovide evidence that it meets the original stated goal of the program..."

The American Small Business League(ASBL) believes the CSPTP was created after the Ninth Circuit Court of Appealsruled subcontracting reports were releasable to the public under the Freedom ofInformation Act. The ASBL believes the CSPTP is an intentional loophole thatallows prime contractors to circumvent federal contracting law that requiressmall businesses receive a minimum of 23% of all federal contracts andsubcontracts, and then withhold any evidence of contracting fraud.

The Pentagon has refused to complywith Freedom of Information Act requests from the ASBL for specificsubcontracting data on prime contractors participating in the Test Program. On May 12, 2014 the ASBL sued the Pentagonunder the Freedom of Information Act in federal District Court in San Franciscofor refusing to provide subcontracting data on Sikorsky.

ASBL President Lloyd Chapman stated,"A 24 year old Test Program is insane. The Comprehensive SubcontractingPlan Test Program is a loophole that allows the nation's largest primecontractors to violate federal contracting law and cheat American smallbusinesses out of billions of dollars a year in federal contracts. The fact thePentagon is refusing to release any subcontracting data proves the Test Programis a scam and was intended to legalize contracting fraud. It should beeliminated, not extended."

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Pentagon sued for refusing to release contracting data


Pentagon sued for refusing to release contracting data

By Editorial
Strategic Defense Intelligence
May 16, 2014

A non-profit organisation representing small businesses in theUS is suing the Pentagon under the Freedom of Information Act (FOIA).

TheAmerican Small Business League has filed suit after the Pentagon refused torespond to an FOIA request for subcontracting data on Sikorsky under theComprehensive Subcontracting Plan Test Program.

ASBLsays the Comprehensive Subcontracting Plan Test Program – which allows fifteenprime contractors to avoid submitting quarterly subcontracting reports – is an"intentional loophole" and allowed the Pentagon to "cheat" legitimate smallbusinesses out of trillions of dollars.

ASBLPresident Lloyd Chapman said: "This is the biggest scam in the history offederal contracting at the Pentagon and we plan to shut it down."

"You canjust imagine what happened to the volume of subcontracts awarded to smallbusinesses once these prime contractors no longer had to submit reports thatwere available to the public. There were no negative consequences for failingto achieve their small business contracting goals," he added.

Theorganisation believes that what the fraud and corruption lawsuit will exposewill be "unprecedented".

The Comprehensive Subcontracting Plan Test Program began in 1985and authorises fifteen of the Pentagon's largest sub-contractors to avoidsubmitting quarterly subcontracting reports that would otherwise be availableto the public.

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Army Refuses to Release Controversial Contracting Data on SAIC

Press Release

Army Refuses to Release Controversial Contracting Data on SAIC

By Lloyd Chapman
American Small Business League
May 15, 2014

PETALUMA, CA--(Marketwired - May 15,2014) - According to the American Small Business League, the United States Armyis refusing to release subcontracting reports on Science ApplicationsInternational Corporation (SAIC) under the Freedom of Information Act (FOIA).The Army will not give any explanation for their refusal to provide thedocuments. The reports could show that SAIC may be in violation of theircontracts with the Army and may have failed to comply with their subcontractingrequirements.

The American Small Business League (ASBL)has filed a case against the Army in Federal District Court in San Franciscounder the Freedom of Information Act. The case was filed after the Army refusedto comply with a FOIA request from the ASBL for the most recent subcontractingreports for SAIC.

The ASBL believes the Army's refusalto comply with their FOIA request could be an indication that the SAICsubcontracting reports may contain fraudulent information relating to theircontracts with the Army.

The ASBL has won dozens of FOIA casesagainst the Pentagon in the past forcing the release of thousands of pages ofgovernment documents that exposed fraud and abuse in federal contractingprograms. This issue has been the subject of dozens of federal investigations.

The Office of GovernmentAccountability released Report 10-108 that stated, "By failing to hold firmsaccountable, SBA and contracting agencies have sent a message to thecontracting community that there are no penalties or consequences forcommitting fraud."

Every year for the last nine years theOffice of Inspector General for the Small Business Administration has named thediversion of federal small business contracts to corporate giants like SAIC tobe the number one management problem at theSBA.

A recent legal opinion byProfessor Charles Tiefer, one of the nation's leading experts on federalcontracting law, found small businesses have been fraudulently cheated out ofbillions of dollars in federal contracts.

ASBL President Lloyd Chapman stated,"The fact that the Pentagon has consistently refused to release smallbusiness subcontracting data is a clear indication they are still trying tohide the rampant fraud and abuse in contracting programs that have beenuncovered in dozens of federal investigations and reports in the mainstreammedia."

The ASBL expects to prevail in thiscase since the Ninth Circuit Court of Appeals ruled in 1994 that subcontractingreports are releasable under the Freedom of Information Act.

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