DOD Must Give Sikorsky Contract Data To Small Biz Group


DOD Must Give Sikorsky Contract Data To Small Biz Group

By Khadijah M. Britton
November 26, 2014

Law360, New York (November26, 2014, 2:42 PM ET) -- A California federal court has ordered the Pentagon tocough up never-seen subcontracting data on Sikorsky Aircraft Corp. to anorganization representing small businesses, saying the information was notexempt from Freedom of Information Act disclosure because it did not exposeprivileged financial or business information about Sikorsky. 


In his order, U.S. DistrictJudge for the Northern District of California William Alsup told the U.S. Department of Defense ithad to release Sikorsky's Comprehensive Subcontracting Plan to the American SmallBusiness League by Dec. 3 or appeal his decision to the Ninth Circuit.


"We are thankful thatthe court rejected the vague 'confidential commercial or financial information'claim raised by the Department of Defense," ASBL attorney Robert Belshawtold Law360. "Hopefully the results of this decision will go a long waytowards revealing the extent to which large defense contractors are complyingwith the Small Business Act's mandate that women-, veteran- and minority-ownedsmall business subcontractors receive a fair share of the billions of federalfunds annually allocated to defense spending."


On Aug. 9, 2013, ASBL filedan FOIA request for Sikorsky's 2013 master Comprehensive Subcontracting Planfor participation in the Department of Defense's Comprehensive SubcontractingPlan Test Program, or CSPTP.


According to the ASBL'sbrief, the Small Business Act of 1953 would normally require large contractorsto submit individual subcontracting reports and summary subcontracting reportsto show how government contracts and subcontracts are being awarded to smallbusinesses.


However, since 1990, whenCongress passed the "test program" as part of a defense appropriations bill,some large defense contractors have been able to do away with these reports andinstead file comprehensive subcontracting plans, which are meant to identify"all subcontract amounts awarded to small businesses on all governmentcontracts the prime contractor fulfills," according to the ASBL.


The organization's FOIArequest sought access to Sikorsky's version of this document, to see if itdoes, indeed, show awarding of subcontracts to eligible small businesses.


The organization accusedthe test program of "eliminat[ing] all transparency on publicly available smallbusiness subcontracting information and any penalties for Pentagon primecontractors that failed to comply with federally mandated small businesssubcontracting goals" in a statement to Law360.


After the Pentagon placedthe ASBL's request in its complex processing queue, thus indefinitelypostponing the agency's response, the organization brought suit on May 12.


The ASBL then soughtsummary judgment on whether the documents it requested could be disclosed, "inwhole or in part." The DOD retorted that the organization's motion was mootbecause the agency had determined that the requested plan could not bereleased, applying the FOIA exemption for trade secrets and privileged orconfidential commercial or financial information.


As Judge Alsup noted, theagency did not attempt to apply any other FOIA exemptions in any of itspre-trial motions.


"Neither the lodgeddocument nor [Sikorsky's representative's] declaration adequately shows how theredacted information is 'likely to cause substantial competitive injury' ifdisclosed," Judge Alsup said.


Further, Judge Alsuprejected the DOD's raising of a second FOIA exemption after briefing, sayingthe contact information for Sikorsky staff was available online, and as such,amounted to a "trivial privacy interest" for which an FOIA exemption could notapply.


If the agency appeals, theASBL says it could open the door for the organization to access all othersimilar subcontracting plans and help it in its mission to uncover whethergovernment money is going to small businesses or merelybeing held up in larger businesses whose subsidiaries are"grandfathered in" under the law because they were acquired within the lastfive years.


"We have the opportunity toestablish some useful precedent in the Ninth Circuit," Belshaw told Law360."A favorable ruling by that court would definitely ease the way to gettingthese documents released."


Current participants in theCSPTP include the Boeing Co., BAESystems PLC, GE Capital Aviation Services, General Dynamics Corp., HamiltonSundstrand Corp., Harris Corp., L-3 CommunicationsHoldings Inc., Lockheed Martin Corp., Northrop Grumman Corp., United Technologies Corp.'saircraft engines subsidiary Pratt & Whitney, RaytheonCo., and Sikorsky.


According to the ASBL, theorganization promotes the interests of small businesses through socialmarketing and policy review along with monitoring federal contracts that areawarded to large corporations rather than to small businesses.


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Federal Judge Orders Pentagon To Release Secret Contracting Data

Press Release

Federal Judge Orders Pentagon To Release Secret Contracting Data

Pentagon Loses Landmark Legal Battle To ASBL's Lloyd Chapman

By Lloyd Chapman
American Small Business League
November 26, 2014

PETALUMA, Calif., Nov. 26, 2014/PRNewswire-USNewswire/ -- The Pentagon has lost a landmark legal battle overnever seen contracting data submitted by many of their largest primecontractors.  San Francisco Federal District Court Judge, William Alsup, has ordered the Pentagon to release subcontracting data submittedby Sikorsky under the Comprehensive Subcontracting Plan Test Program(CSPTP). The American Small Business League (ASBL) requested the informationunder the Freedom of Information Act (FOIA.)

"In the hearing Judge Alsup expressed the opinion Pentagoncontracts are paid for by tax dollars and the American people have the right tosee how their tax dollars are being spent. I couldn't agree more," saidASBL attorney Robert Belshaw.

Judge Alsup's ruling will establish a legal precedent that willultimately lead to the release of all the subcontracting reports that have beensubmitted to the CSPTP by all of the Programs participants. Boeing, BAE Systems, GE Aviation,General Dynamics, Hamilton Sundstrand Corporation, Harris Corporation, L3Communications, Lockheed Martin, Northrop Grumman, Pratt & Whitney,Raytheon and Sikorsky are current participants of the CSPTP.

"This case will pave the way for the the release of datathat will prove the Pentagon has falsified subcontracting data for 25 years andcheated American small businesses out of well over a trillion dollars insubcontracts," stated ASBL President Lloyd Chapman.

The Pentagon adopted the CSPTP in 1990 under the guise of "increasing subcontracting opportunities for small businesses."In reality the program eliminated all transparency on publicly available smallbusiness subcontracting information and any penalties for Pentagon primecontractors that failed to comply with federally mandated small businesssubcontracting goals.

Congress has renewed the CSPTP for 25 years even though thePentagon has consistently refused to release any data on the program. A 2004 GovernmentAccountability Office investigation reported, "Although the TestProgram was started more than 12 years ago, DOD has yet to establish metrics toevaluate the program's results andeffectiveness."       

In September, Professor Charles Tieferreleased a legal opinion of the CSPTP that stated, "The programis a sham and its extension will be seriously harmful to vital opportunitiesfor small business to get government contracting work… There is no doubt in mymind the CSPTP has significantly reduced subcontracting opportunities for smallbusinesses. It should not have gotten its 25 years of extension as anever-tested 'Test Program.' Let it expire."

The language in Chairman's Mark in the House Armed ServicesCommittee of the 2015 National Defense Authorization bill stated, "However,after nearly 24 years since the original authorization of the program, the testprogram has yet to provide evidence that it meets the original stated goal ofthe program..."

Both the House and the Senate have voted to renew the CSPTP intoits twenty-eighth year of testing as part of the 2015 National DefenseAuthorization Act (NDAA.) The ASBL has launched a national campaign to block the renewal of the CSPTP.

For more information contact ASBL attorney Robert Belshaw (415) 956-9590, ASBLCommunications Director Steve Godfrey (707) 789-9575, or SikorskySupplier Diversity Manager Martha Crawford(203) 386-3241.

ASBL documentary trailer

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Pentagon Loses Landmark Legal Battle Over Subcontracting Data

Press Release

Pentagon Loses Landmark Legal Battle Over Subcontracting Data

By Lloyd Chapman
American Small Business League
November 26, 2014

PETALUMA, CA--(Marketwired - Nov 26,2014) - The Pentagon has lost a landmark Freedom of Information Act (FOIA)case to the American Small Business League (ASBL). San FranciscoFederal District Court Judge William Alsup has ordered the Pentagon to release the small businesssubcontracting data that has been submitted by Sikorsky under theComprehensive Subcontracting Plan Test Program (CSPTP).

The Pentagon had refused to release the dataclaiming that it contained "confidential financial information."Judge Alsup disagreed and denied both of their motions for summary judgment andordered the Pentagon to release the information to the ASBL by December 3,2014.

"Judge Alsup's ruling will be thebasis for the American Small Business Leagues efforts to ensue thesubcontracting information that has been submitted by all of the participantsof the Comprehensive Subcontracting Plan Test Program will be made publiclyavailable," said ASBL's attorney Robert Belshaw.

Current participants of the Pentagon's CSPTPinclude, BAE Systems, Boeing, GE Aviation, General Dynamics, Hamilton SundstrandCorporation, Harris Corporation, L3 Communications, Lockheed Martin, NorthropGrumman Electronics Systems, Pratt & Whitney, Raytheon Company and SikorskyAircraft Corporation.

The ASBL originally requested the databecause they believed the CSPTP was designed tocreate a loophole in federal contracting law that has allowed manyof the Pentagon's largest prime contractors to circumvent federal lawestablishing small business subcontracting goals.

When the Pentagon implemented theCSPTP in 1990 it eliminated any publicly available information on smallbusiness subcontracting goals and any penalties that Pentagon contractors couldface for refusing to comply with their small business subcontracting goals.Although the CSPTP eliminated all transparency and penalties for primecontractors, the stated mission of the program was to "increase subcontractingopportunities for small businesses."

In 2004 the Government AccountabilityOffice (GAO) released the results of an investigation into the CSPTP thatstated, "Although the Test Program wasstarted more than 12 years ago, DOD has yet to establish metrics to evaluatethe program's results and effectiveness."

Professor Charles Tiefer, one of thenation's leading experts on federal contracting law released a legal opinion on the CSPTPthat stated, "The program is a sham and its extension will be seriouslyharmful to vital opportunities for small business to get government contractingwork... There is no doubt in my mind the CSPTP has significantly reducedsubcontracting opportunities for small businesses. It should not have gottenits 25 years of extension as a never-tested 'Test Program.' Let itexpire."

"Think of the lunacy of removingall transparency and penalties for small business subcontracting programs forthe Pentagon's largest prime contractors and test it for 25 years to see of itincreases subcontracting opportunities for small businesses. It's anunparalleled example of fraud and corruption at the Pentagon. We expect Judge Alsup'sruling to lead to the eventual release of data on all firms participating inthe CSPTP that will prove the Pentagon has cheated American small businessesout of well over a trillion dollars in subcontracts," stated ASBLPresident Lloyd Chapman.

For more information contact ASBLattorney Robert Belshaw (415) 956-9590, ASBL Communications Director SteveGodfrey (707) 789-9575, or Sikorsky Supplier Diversity Manager Martha Crawford(203) 386-3241.

ASBL documentary trailer

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Lloyd Chapman Fills Void in Washington To Protect Small Business Programs

Press Release

Lloyd Chapman Fills Void in Washington To Protect Small Business Programs

By Lloyd Chapman
American Small Business League
November 18, 2014

PETALUMA, Calif., Nov. 18, 2014/PRNewswire-USNewswire/ -- On Sept. 10, the Small Business Administration (SBA) proposed to change the small business size standard forInformation Technology Value Added Resellers, North American IndustryClassification System (NAICS) code 541519 that would have forced up to 12,000small businesses out of the federal marketplace.

If the SBA policy were adopted small businesses in the IT Industrywith as few as ten employees would lose their status as small businesses and bereclassifiedas large businesses.  At the same time the SBA would continue to includebillions of dollars in federal contracts to Fortune 500 firms as small businesscontracts as they have done for over 15 years.

No Washington, D.C.based organization that claims to represent the interests of small businessesopposed the new SBA policy in any way. No Washingtonbased organization released any public statements of any kind opposing theanti-small business policy.  The SBA accepted public comments on theproposed rule from Sept. 10 until Nov. 10, and yet no Washingtonbased organization that claims to represent small business interests posted acomment opposing the new rule in the allotted time.

The Californiabased American Small Business League (ASBL) was the only national small business advocacy group that opposed thenew SBA policy that could have been devastation to thousands of smallbusinesses.

ASBL President and founder, Lloyd Chapman,launched a nationalcampaign to oppose the SBA's policy change they described as"anti-small business." Chapman began issuing national press releasesand doing radiointerviews opposing the policy. Chapman retained Professor Charles Tiefer, one of the nation's leadingexperts on federal contracting law, to review the new SBA rule to determine ifthe SBA had the legal authority to propose a new rule that would be sodetrimental to small businesses.

"This proposed SBA change breaks the law by violatingCongress's statutory intent in the Small Business Jobs Act of 2010,"Professor Tiefer stated in his comment. "The SBA does not give any marketdata or other persuasive reason for the elimination," adding that thisrule does exactly the opposite of what Congress intended and that if adoptedinto a final rule, "small businesses will be squeezed out of the federalmarketplace."

House Small Business Committee Chairman SamGraves joined Chapman in opposing the SBA's proposed policy.

"This latest SBA anti-small business policy is just thelatest example the ASBL is the only organization in the UnitedStates that opposes federal legislation andpolicies that could be harmful to small businesses. The ASBL is the onlyorganization to oppose the diversion of billions of dollars in federal smallbusiness contracts to Fortune 500 firms that has been uncovered in dozens offederal investigations and investigative reports in the media," Chapmanstated.

Chapman also launched a nationalcampaign to oppose a "sham" Pentagon program that cheated smallbusinesses out of billions of dollars and the SBA's "safe harbor from fraud" policy. In May, Lloyd Chapman was recognized by AmericanExpress as one of the four biggest voices for small businesses inWashington.

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SBA Proposal Could Change Landscape for IT Resellers


SBA Proposal Could Change Landscape for IT Resellers

By John K. Higgins
E-Commerce Times
November 17, 2014

Doing business with the U.S. government isalways a challenge. In addition to uncertain budgets, political infighting, andthe seemingly endless procurement terms of the Federal Acquisition Regulations(FARs), there are many other special provisions that come into play in governmentcontracting.

One of them is the small business set-asidepolicy designed to ensure that smaller companies can participate in federalcontracting along with larger companies and multibillion-dollar revenue giants.Federal agencies regularly issue requests for proposals (RFPs) that aretargeted exclusively to small firms. In addition, government contracts awardedto really large corporations often require that small firms get a fair share ofsubcontracting business.

Sounds like a simple solution -- but infederal contracting, nothing is simple and the Small Business Administration(SBA) has a formidable set of regulations covering the set-aside policy --starting with the question of deciding how small is "small" forset-aside purposes. Size standards vary by industry, including the informationtechnology sector.

Information Technology Resellers Targeted

The SBA is proposing to revise the sizestandards affecting Information Technology Value Added Resellers (ITVARs) --companies that provide hardware, software or both, as part of projects thatalso involve installation, systems integration and additional IT-relatedservices to federal agencies.

The hardware and software may be acquireddirectly by reseller firms from different vendors and then passed on to thegovernment within the context of adding value through an equipment and servicescontract package related to a federal project.

The ITVARS proposal is part of a number ofreforms covering many industries that SBA revealed in September in response toa 2010 congressional mandate to update business size criteria. More than 240industrial categories are covered in the proposal. SBA accepted comment on theproposals through Nov. 10.

For the IT resellers category, SBA proposedthat companies with more than US$27.5 million in annual revenue no longer beeligible for small business preferences. Under current standards, federalagencies can offer small business status to IT resellers with fewer than 150employees, even if revenues exceed the $27.5 million mark.

Some advocates for small businesses stronglyoppose the SBA reforms.

"This proposed change is a terriblemistake that would have extreme adverse consequences for many smallbusinesses," said Lars Anderson, an attorney with Venable, in comments tothe SBA on behalf of Wildflower International, a small woman-owned IT reseller.

By using the revenue ceiling, SBA wouldexclude a large number of small businesses from the federal IT reseller market,because many such firms could book federal revenues well in excess of theceiling, but essentially remain small operations in terms of number ofemployees.

"We are looking here at some highlyprofessional, qualified firms that provide efficient IT support to thegovernment with proven track records in terms of federal contract performance-- but they just operate with well under 150 employees, unlike the really bigplayers," Anderson told the E-Commerce Times.

The proposed change would impact smaller firmsunfairly, he contended.

The SBA proposal is warranted because theexisting size standards that involve references to both revenue and employeeshave creasted inconsistencies, confusion and misuse, the administration argued.

Contracting officers are not able to identifysize elements in a government data base, which leads to misunderstandings aboutset-aside goals, the SBA pointed out.

The use of employee counts instead of revenuesmay have negatively affected some small businesses, according to theadministration.

SBA Methodology Questioned

Questions have arisen over the documentationfor the SBA's proposal.

Census Bureau data was not used to tabulatecontract award information related to the 150-employee criteria, the SBAacknowledged.

The conclusion that the revenue standard andthe employee standard were about equivalent was based on 2007 data.

"That 2007 economic census data has norelevance to contracts awarded in 2014," Anderson said in his comments toSBA.

In certain categories specifically relatedeither to hardware or services, small business provisions will continue toapply, noted Lamar Whitman, director of public advocacy at TechAmerica.

However, there is a need for adequatedocumentation on the ITVARs proposal, he said.

"What happens if a firm sells a mix ofhardware and services? This is where the term 'value-added reseller' comes in.The SBA regulations carved out an exception for VARs which allows certainproviders to qualify as a small business if the contract in question iscomposed of at least 15 percent but not more than 50 percent of valued-addedservices, excluding hardware," Whitman told the E-Commerce Times.

As to SBA's rationale for its proposedmodification, "without specific data on the revenue typically generated bya 150-person VAR firm, this SBA argument is not supported," he said.

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