Federal Investigators and Congress Uncover SBA Data Significantly Inflated
American Small Business League Wants GAO and FBI to Investigate the SBA
By Lloyd Chapman
American Small Business League
September 30, 2014
PETALUMA,Calif., Sept. 30, 2014 /PRNewswire-USNewswire/ -- Newinvestigations by the Small Business Administration (SBA) Office of InspectorGeneral have found SBA Administrator Maria Contreras-Sweet'sannouncement that small businesses received 23.39 percent of all federalcontracts was greatly exaggerated.
On September 24, 2014, the SBA Inspector general released Report 14-18 that found over $1.5billion in contract actions where firms that were no longer qualifiedfor the 8(a) and HUBZone programs were included in the 23.39 percent the SBA claimedwas awarded to small businesses.
Ina recent hearing in the House Committee on Small Business SBAAdministrator Contreras-Sweet was confronted with data confirming the SBA hadincluded billions of dollars in federal contracts to Fortune 500 firms in the $83 billion the SBA had claimed was awarded to smallbusinesses. Some of the firms the SBA included in their small businesscontacting data included Northrop Grumman, Raytheon and Chevron.
Themost recent data from the Federal Procurement Data System indicates of the top100 recipients of the highest dollar amount of federal small businesscontracts, over 75% were actually current large businesses.
Thelatest investigation from the SBA Inspector General is in stark contrast to anew policy the SBA recently proposed that would create a "safe harbor from fraud penalties" for largebusinesses that are caught misrepresenting their firms as small businesses toillegally land federal small business contracts.
Undercurrent federal law, any firm that misrepresents its status as a small businessto hijack federal small business contracts can be punished by up to 10 years in prison, a $500,000 fine,or both. Under the "safe harbor from fraud penalties" policy,firms that commit felony federal contracting fraud can avoid any penalties bysimply claiming they "acted in good faith."
Aftera public comment period of eight weeks, the SBA only received two comments thatfavored the new "safe harbor from fraud penalties" policy. Both ofthose comments were from law firms that represent large businesses. Every othercomment received by the SBA was vehemently opposed to the "safe harbor from fraud penalties"policy.
Thefirst SBA Inspector General investigation that uncovered fraud in federal smallbusiness contracting was released in 1995. In 2003 an investigation by theGovernment Accountability Office found over 5,000 large businesses werereceiving federal small business contracts.
TheAmerican Small Business League (ASBL) haslaunched a nationalcampaign to secure a Government Accountability Office (GAO) and FBIinvestigation to uncover the specific individuals that were responsible for thetwo decades of fraud that have been uncovered at the SBA.
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