How 8,500 large companies will become small businesses overnight

News

How 8,500 large companies will become small businesses overnight

By J.D. Harrison
The Washington Post
June 17, 2014

When the clock strikes midnighton Sunday, July 13, thousands of relatively large companies will — poof —suddenly become small businesses.

It's not magic. It's just thefederal government at work.

The Small Business Administration has announced plans to updatethe size standards used to determine which firms are eligible for the federalgovernment's small-business lending and contracting programs. Coming on theheels of series of tweaks to individual industries over the past few years,this will be the first broad update based on inflation the department has madesince 2008.

In some industries, the cutoff is measured in total number of employees. Inothers, it is measured in terms of a company's total assets or annual revenue.In this case, the updates will apply to nearly 500 sectors for which sales orassets are the standard.

Under the new caps, which takeeffect July 14, the agency estimates that roughly 8,500 additional companieswill be considered a small business by the federal government.

Others might not consider themthat way.

For example, after the update,a travel agency or a locksmith would qualify as small if they have annualrevenues of less than $20.5 million, up from $19 million. A family clothingstore or software publisher, meanwhile, could soon bring in up to $38.5 milliona year and still apply for small business support.

This sweeping update comesafter the agency has made a number of smaller changes to various sectors;namely those for which the department instead uses employee count to determineeligibility. As a result, certain sectors, like telecommunications and airtravel, now have a small-business threshold of 1,500 workers.

In a recent column, Chuck Blakerman, an author and entrepreneur,called those size limits "absurd" and described the past five years as "thelargest expansion of the definition of 'small' in the 61-year history of theSBA."

"Their small isn't our small,"he added.

Members of Congress have takensimilar issue with the agency's perceived expansion of the type and size ofbusiness the agency supports. In multiple hearings before the House SmallBusiness Committee, the agency has been criticized for what some lawmakers worry is a shiftaway from helping mom-and-pop businesses to instead support mid-sized firms.

But the agency hasn't backeddown, insisting, in part, that companies in certain sectors have to competewith multibillion-dollar corporations. In that case, a company with merely tensof millions of dollars in sales warrants small-business support.

In addition, SBA officialsargue in the text of the rule that the changes will allow some firms that havelost access to contract set-asides or loan programs due to inflation toregain their status. Others that are about to eclipse the limit for theirindustry will also be able continue taking advantage of those programs.

Moreover, the agency added,"federal agencies will have a larger pool of small businesses from which todraw for their small business procurement programs." Heightened competition,they say, will help drive down prices and lead to a better return fortaxpayers.

To view article, click here: http://www.washingtonpost.com/business/on-small-business/how-8500-large-companies-will-become-small-businesses-overnight/2014/06/16/ae81ada8-f567-11e3-8aa9-dad2ec039789_story.html

 


Small Business Administration adjusts standards, makes big businesses small

News

Small Business Administration adjusts standards, makes big businesses small

By Tucker Echols
Washington Business Journal
June 17, 2014

Such is the power of inflation that thousands of largecompanies will become "small" next month. Taking into considerationwhat's happened since 2008, the Small Business Administration has revised itssize standard — which is usually stated in number of employees or averageannual receipts — used to determine if a business can be classified as a smallbusiness for SBA and federal contracting programs.

SBA announcedThursday that due to the changes, more than 8,400 additional businesseswill gain small business status under the adjusted size standards and becomeeligible for SBA's financial and federal government procurement programs. TheSBA expects the changes could possibly lead to more than $150 million to $200million in additional federal contracts awarded to small businesses and 80additional loans totaling about $30 million.

The changes are effective July 14.

So what is "small?" The definition varies byindustry, according to the SBA, and is the largest size that a business(including its subsidiaries and affiliates) may be to remain classified forassistance. For instance, according to the new guidelines, a funeral home maynot have revenue of more than $7 million while cemeteries and crematories canhave revenue up to $19 million. Appliance repair businesses are capped at $14million in revenue but footwear repair shops can only have revenue of $7million.

To view full article, click here: http://www.bizjournals.com/washington/morning_call/2014/06/small-business-administration-adjusts-standards.html


House Armed Services Committee Extends Failed Pentagon Test Program to 2017

Press Release

House Armed Services Committee Extends Failed Pentagon Test Program to 2017

25 Year Old Pentagon "Test Program" to Be Extended Into Its 28th Year

By Lloyd Chapman
American Small Business League
June 16, 2014

PETALUMA, CA--(Marketwired - Jun 16,2014) - According to the American Small Business League, the House ArmedServices Committee, headed by Congressman Howard P. McKeon, has passed the 2015National Defense Authorization Bill that includes an extension of a 25 year oldPentagon anti-small business test program.

H.R. 4435 includes an extension of theComprehensive Subcontracting PlanTest Program (CSPTP) into its 28th year oftesting. The Pentagon adopted the CSPTP in 1990 under the guise of testingchanges in federal contracting law to determine if those changes would increasesubcontracting opportunities for small businesses.

The changes eliminated anysubcontracting plans and reports that had once been available to the public,along with the elimination of "liquidated damages"for prime contractors that failed to achieve their small businesssubcontracting goals.

The American Small Business League (ASBL)believes the CSPTP was not adopted to increase subcontracting opportunities forsmall business, but to eliminate transparency and penalties for primecontractors that did not comply with federal law establishing small businesssubcontracting goals.

During the 25 years the CSPTP has beentested, the Pentagon has never released any data showing that the eliminationof transparency and penalties for prime contractors has actually increasedsubcontracting opportunities for small businesses.

In fact, the language in Section 811of the Chairman's Mark of theFY15 National Defense Authorization Bill that extends the CSPTP into its 28th year oftesting states,

"However, after nearly 24 years since the originalauthorization of the program, the test program has yet to provide evidence thatit meets the original stated goal of the program..."

A 2004 Government AccountabilityOffice (GAO) investigation into theComprehensive Subcontracting Plan Test Program also concluded there was no evidence the programhad increased subcontracting opportunities for small businesses.

In 2010 several members of Congress requested another GAO investigation into theCSPTP, but the GAO declined to launch the investigation.

The American Small Business Leagueestimates small businesses may have been defrauded out of in excess of onetrillion dollars in subcontracts since the program began in 1990. The ASBL is suing the Pentagon inFederal District Court in San Francisco after the Pentagon refused to releaseany subcontracting data from the CSPTP under the Freedom of Information Act.

The ASBL is also contacting Chambersof Commerce around the country as part of a national campaign to stop the renewal of the CSPTP.

To view full press release, clickhere:  http://www.marketwired.com/press-release/House-Armed-Services-Committee-Extends-Failed-Pentagon-Test-Program-to-2017-1920933.htm

 


Congressman Sam Graves Endorses 25 Year Old Pentagon Anti-Small Business Program

Press Release

Congressman Sam Graves Endorses 25 Year Old Pentagon Anti-Small Business Program

By Lloyd Chapman
American Small Business League
June 3, 2014

PETALUMA, CA--(Marketwired - Jun 3,2014) - According to the American Small Business League, Missouri Congressman Sam Graves isbacking a 25 year old Pentagon programthat allows the Pentagon's 15 largest prime contractors to circumvent federal law that requires 23% ofall federal contracts be awarded to small businesses.

The Comprehensive Subcontracting PlanTest Program was adopted in 1990 after information obtained underthe Freedom of Information Act began to surface that indicated the Pentagon wasfabricating their compliance with the 20% small business subcontracting goalsrequired under federal law at that time. 

The Comprehensive Subcontracting PlanTest Program was disguised as a test plan to increase subcontractingopportunities for small businesses but it was very carefully written to do justthe opposite.

Prime contractors participating in theTest Program no longer had to provide quarterly small business subcontractingplans that could be monitored by Congress, the media and the public to ensurecompliance with their small business subcontracting goals. The Test Programeffectively removed all transparency.

The final provision of theComprehensive Subcontracting Plan Test Program was the elimination of allpenalties such as "liquidated damages"for Pentagon prime contractors that did not comply with their small businesssubcontracting goals.

Once penalties for non-compliance withsubcontracting goals were eliminated, along with the quarterly reports that hadbeen used to monitor compliance with subcontracting goals, prime contractorscould no longer be held accountable in any way for ignoring congressionallymandated small business subcontracting goals.

For 25 years the Pentagon has refusedto provide any data on the Test Program. A 2004 GAO investigation and the language in the 2015 National Defense Authorization Billacknowledges the Pentagon has never released any information that shows theTest Program has achieved any of its goals. The Pentagon is also refusing to release any information on theComprehensive Subcontracting Plan Test Program under the Freedom of InformationAct.

Although Graves has backed a plan toincrease the federal small business contracting goal from 23% to 25%, he hasrefused to back legislation, such as H.R. 1622 The Fairness andTransparency in Contracting Act, that would stop Fortune 500 firms from qualifying as smallbusinesses.

The American Small Business League (ASBL)estimates during the 25 years of the Comprehensive Subcontracting Plan TestProgram, American small businesses have been cheated out of well over onetrillion dollars in federal subcontracts.

ASBL President Lloyd Chapman stated,"Congressman Graves' 25% small business contracting goal is a ruse. Whatdifference does it make what the small business contracting goal is whenfederal policies allow Fortune 500 firms to land small business contracts? Theycould make it 100% and it still wouldn't mean anything. His support for thePentagon's 25 year old anti-small business Test Program is why the ASBLconsiders him to be one of the most anti-small business members inCongress."

To view full Press Release, clickhere: http://www.marketwired.com/press-release/congressman-sam-graves-endorses-25-year-old-pentagon-anti-small-business-program-1916550.htm

 


Pentagon Failed Test Program Dodged Media Coverage for 25 Years

Press Release

Pentagon Failed Test Program Dodged Media Coverage for 25 Years

By Lloyd Chapman
American Small Business League
June 2, 2014

PETALUMA, CA--(Marketwired - Jun 2,2014) - According to the American Small Business League, thefailed Pentagon Comprehensive Subcontracting PlanTest Program has been in place for 25 years and yet not onejournalist from the mainstream media has ever reported on the controversial andsecretive program.

The Pentagon quietly adopted theComprehensive Subcontracting Plan Test Program in 1989 after journalists andCongress uncovered the fact that the Pentagon had falsified data on the actualpercentage of federal subcontracts that had been awarded to small businesses,including minority-owned firms. Congress also found the Pentagon was notcomplying with federal law, the Small Business Act of 1953 that requires aminimum of 20% of all federal contracts and subcontracts be awarded to smallbusinesses and 5% to small, minority-owned firms.

In one example, the House ArmedServices Committee investigated the Air Force F-22 Stealth Fighter contract.The Committee found that as opposed to the minimum 20% small business goalrequired by law, the Air Force had given Lockheed Martin a small businesssubcontracting goal of just .016%. A story in the Washington Post by StevenPearlstein began, "The Pentagon's biggest new weapons program -- the F-22stealth fighter -- is proving to be as invisible to small and minority-owneddefense firms as it is to enemy radar." The Air Force was forced toallocate an additional $501 million to small businesses.

To avoid another embarrassingCongressional investigation the Pentagon enacted the ComprehensiveSubcontracting Plan Test Program. The program was disguised as a plan to increase subcontractingopportunities for small businesses. In reality it was carefullywritten to do just the opposite. Under the Comprehensive Subcontracting PlanTest Program the public, Congress and the media would no longer have access toindividual subcontracting plans and the quarterly reports that could be used totrack a prime contractor's compliance with their subcontracting goals.

In addition to the elimination ofreports, all firms participating in the program were also exempt from federallaw that required prime contractors to pay "liquidated damages"for failing to achieve their small business subcontracting goals.

In 2004 a Government AccountabilityOffice investigation, Report GAO-04-381, found no evidence that the TestProgram had achieved any of its goals. That fact went unreported in themainstream media.

Even the language in the 2015 NationalDefense Authorization Bill that proposes to extend the Test Program into its 28th yearacknowledges there is no evidence the Test Program hasever worked. This fact has also gone unreported in the mainstreammedia.

During the last 25 years the Pentagonhas refused to release any data that showed the Test Program achieved any ofits goals. The Pentagon is currently refusing torelease any data on the Test Program under the Freedom of InformationAct. This is yet another fact that has gone unreported in the mainstreammedia.

The American Small Business Leagueestimates that over the last 25 years American small businesses have beencheated out of over one trillion dollars in subcontracts as a result of theComprehensive Subcontracting Plan Test Program.

To view full Press Release, click here: http://www.marketwired.com/press-release/Pentagon-Failed-Test-Program-Dodged-Media-Coverage-for-25-Years-1916354.htm