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Public Citizen Report: Federal Data on Small Business Share of Procurement Is Wrong_x000D_

by | May 6, 2015 | ASBL News

News

Public Citizen Report: Federal Data on Small Business Share of Procurement Is Wrong

SBA Appears to Be Flouting the Law; Political Factors May Be at Play

By Taylor Lincoln
Public Citizen
May 6, 2015

WASHINGTON,D.C. – Claims in recent years by the U.S. Small Business Administration (SBA)that the government has met or nearly met a requirement to make 23 percent ofits purchases from small businesses are misleading and rely on methodologiesthat conflict with federal law and regulations, according to a new Public Citizen report.

For example, in 2013, seven of the 10 largest federal contractors received atleast one contract that the SBA counted toward fulfillment of small businessgoals, according to the report "Sleighted:Accounting Tricks Create False Impression That Small Businesses Are GettingTheir Share of Federal Procurement Money, and the Political Factors That MightBe at Play." The release of the report coincides with NationalSmall Business Week, which President Barack Obama proclaimed is designed tocelebrate America's small businesses, which he called the backbone of theeconomy.

In the report, Public Citizennotes several political factors that could be motivating a bias toward largebusinesses in contracting and inhibiting outcry from members of Congress. Theseinclude the vast number of jobs that large defense contractors provide tomembers' constituents; defense contractors' lucrative employment opportunitiesto former military officials; contractors' significant political campaigncontributions and lobbying expenditures; and, potentially, influence garneredthrough undisclosed contributions contractors make to nonprofit groups thatengage in electioneering activities.

Public Citizen and others are encouraging Obama to issue an executive orderrequiring government contractors to disclose political spending made viathird-party groups. "This report shows that the deck is already stacked infavor of large contractors," said Lisa Gilbert, director of Public Citizen'sCongress Watch division. "At a minimum, we should know if contractors are usingsecret purse strings to line up even more advantages."

SBA Administrator Maria Contreras-Sweet said in congressional testimony in 2014that contracts held by very large businesses could count toward small businessgoals because of a rule allowing small businesses that are acquired by largebusinesses to have their small business status "grandfathered in" for up tofive years.

In response to questions from Public Citizen that cited applicable federalregulations, a spokeswoman for the SBA acknowledged last week that "in the caseof a merger or acquisition, the agency should be notified within 30 days andthe small business credit should be discontinued."

Aside from counting contracts with large businesses toward small businessgoals, the SBA's data create an inflated impression of the government'spercentage of purchases from small businesses by excluding whole categories ofprocurement from its calculations. This methodology conflicts with the SmallBusiness Act's stipulation that procurement from small businesses shall be "notless than 23 percent of the total value of all prime contracts" issued by thefederal government.

"This program is vital because small businesses are better job creators andmore engaged in their local economies," said David Levine, CEO of the AmericanSustainable Business Council. "More effective implementation and oversight willdeliver many times over the return on investment in job growth as well ascommunity revitalization."

Many observers have leveled allegations over the years that the government hasfailed to adequately police its small business contracting programs:

·        Everyyear since fiscal year 2006, the SBA's Office of Inspector General has listedprocurement flaws that "allow large firms to obtain small business awards" asthe first item in its annual enumeration of challenges facing the SBA.

·        Largebusinesses received $13.8 billion out of $50 billion (or nearly 28 percent) inprocurement that was categorized as going to small businesses in 2001, the U.S.General Accounting Office (now called the Government Accountability Office) reported.

·        Ofthe 100 contractors receiving the most federal dollars counted toward smallbusiness goals in 2012, 71 did not meet the government's standard to qualify assmall businesses, according to the American Small Business League (ASBL), aPetaluma, Calif.-based watchdog group. The ASBL report concluded that these 71businesses received 56 percent of procurement payments made to the top 100purported small business contractors.

To view full Public Citizen press release,click here: http://www.citizen.org/pressroom/pressroomredirect.cfm?ID=5503

 


Inspector General Uncovers SBA Encouraged Fraud for Over 20 Years

by | May 6, 2015 | Press Releases

Press Release

Inspector General Uncovers SBA Encouraged Fraud for Over 20 Years

ASBL Uncovers Over 20 Years of Fraud Investigations at the SBA

By Lloyd Chapman
American Small Business League
May 6, 2015

PETALUMA, Calif., May 6, 2015/PRNewswire-USNewswire/ -- As early as 1995 the Small BusinessAdministration (SBA) Inspector General uncovered rampant fraud in federal small businesscontracting programs. The American Small Business League (ASBL) reviewed 20 years ofinvestigations that found the SBA clearly knew about rampant fraud, butadopted policies that encouraged fraud and protected fraudulent firms to inflate small businesscontracting data.

The investigation found the SBA Press Office responded to thedamming Inspector General reports by claiming the fraud was the result of miscoding,computer glitches, anomalies and simple human error. They even releasedpress releases claiming the fraud was a "myth."

The Inspector General suggested in Report 5-14, "If SBA had put as much effort intoverifying whether the company currently met the award's size standard as it putinto trying to find ways to earn credit towards its small business goals, thenperhaps the contract action would have been awarded to a company that waslegitimately small at the time of award."

A 1995 SBA Inspector General investigation found evidence of a"particular fraudulent practice" where large businessescontinued to illegally misrepresent themselves as small to hijack federal smallbusiness contracts. The Inspector General recommended the SBA to publish a listof all the fraudulent firms and circulate the list to all federal agencies toprevent the fraudulent firms from continuing to receive small businesscontracts.

The SBA refused to adopt the Inspector General'srecommendations.  As a result, the fraudulent firms continued to receive billionsof dollars in federal small business contracts. The investigationsrevealed the SBA has continued to knowingly include contracts to fraudulentfirms in their annual small business contracting data for over 20 years.

In 2005, the SBA Inspector General released Report5-15 that stated, "One of the most important challenges facing theSmall Business Administration (SBA) and the entire Federal Government today isthat large businesses are receiving small business procurement awards andagencies are receiving credit for these awards."

Report 5-14 uncovered 66 percent of the high dollar procurements the SBA itselfhad reported as going to small businesses actually went to large businesses.One of those firms was Dutch corporate giant Buhrmann NV with over 26,000employees around the world.

Report 5-16 uncovered the SBA knew large businesses werecommitting felony federal contracting fraud by making "false certifications" and "improper small business self-certifications."

A series of federal investigations have all found fraud andabuse in federal small business contracting programs. In 2009, the GovernmentAccountability Office essentially accused the SBA of encouraging fraud. NBC, CBS, ABC, CNN, CNBC, Fox Newsand RTTVhave all reported on the abuses.

For 20 years the SBA has refused to adopt policies to halt thefraud, but recently finalized the "safe harbor from fraud penalties" policy that helpsprotect fraudulent firms that are caught hijacking federal small businesscontracts.

To view full press release, click here: http://www.prnewswire.com/news-releases/inspector-general-uncovers-sba-encouraged-fraud-for-over-20-years-300078284.html?tc=eml_cleartime

 


Obama Administration Achieves Media Blackout on SBA Closure Plan

by | May 5, 2015 | Press Releases

Press Release

Obama Administration Achieves Media Blackout on SBA Closure Plan

ASBL Opposes SBA Closure Plan

By Lloyd Chapman
American Small Business League
May 5, 2015

PETALUMA, Calif., May 5, 2015/PRNewswire-USNewswire/ -- To date it has gone unreported in themainstream media that President Obama's 2016 Budget proposal to combine the SmallBusiness Administration (SBA) and the Department of Commerce is a mirror imageof Ronald Reagan's plan to permanently close theSBA and bring an end to all federal programs to assist the nation's 28 millionsmall businesses.

When Ronald Reagan tried to close the SBA it created anuproar that was reported on national television.

American Small Business League President LloydChapman first predicted President Obama would attempt topermanently close the SBA using Reagan's plan in November of2008.

Chapman also believes former Defense Intelligent Agency PublicRelations Officer, Terry Sutherland, was "assigned" to quietly take over the SBA Press Officewith the express purpose of blocking any media coverage of the plan to shutterthe SBA.

President Obama's first attempt to close the SBA came in January of 2012 when he announced plans to combine the SBA with the Department of Commerce. Chapmanlaunched a national media campaign to bring attention to the issue and releaseda barrage of blogs and press releaseson the issue.

Chapman appeared on Fox Newsand international news network RTTV tosound the alarm on President Obama's intention to close the SBA. Several journalists agreed with Chapman that the plan to combine the SBA and Commerce Department was actualitya plan to close the SBA.

A 2014 article in Forbes stated, "I agree with Lloyd Chapman, head of the American SmallBusiness League, when he warns that this is just another attempt to shutter oneof the only government agencies in place to help the nation's nearly 30 millionsmall businesses."

President Obama claims closing the SBA will "streamline the government."  Chapman has pointed out the SBA's budget is just .0001% of the totalfederal budget and closing the SBA would have a statistically undetectableimpact of the overall cost of government.

It has been widely reported trillions of dollars are unaccountedfor at the Pentagon. Chapman believes addressing those significantfinancial abuses would be a much more effective means to streamline governmentspending than closing the tiny SBA.

Chapman contends President Obama's true motivation to shutter the SBA is to cover up the rampant fraud and abuse that has beenuncovered at the SBA in a series of federal investigations. NBC, CBS, ABC, CNN, CNBC, Fox News,and RTTVhave all reported on the fraud and abuse at the SBA.

Every year of the Obama Administration the SBA Inspector Generalhas named the diversion of federal small business contracts to large businessesas theagency's number one problem.

The House Small Business Committee has requested an investigation into fraud in federal smallbusiness contracting programs based onresearch done by Chapman's ASBL.

Chapman has begun filming a documentaryon his efforts to save the SBA and its programs.

To view full press release, click here: http://www.prnewswire.com/news-releases/obama-administration-achieves-media-blackout-on-sba-closure-plan-300077296.html?tc=eml_cleartime

 


ASBL Finds SBA Policies That Cheat Small Business Are Illegal

by | May 4, 2015 | Press Releases

Press Release

ASBL Finds SBA Policies That Cheat Small Business Are Illegal

By Lloyd Chapman
American Small Business League
May 4, 2015

PETALUMA, Calif., May 4, 2015 /PRNewswire-USNewswire/ -- The American Small Business League(ASBL) has completed a twelve-month investigation and analysis of threepolicies the Small Business Administration (SBA) has used to circumvent theSmall Business Act and defraud legitimate American small businesses out ofhundreds of billions in federal contracts.

Those SBA policies include miscoding, the SBA's exclusionaryrule and their five-year rule.

The ASBL'sresearch has been aided by legal opinions and counsel from ProfessorCharles Tiefer, one of the nation's leading experts on federal contracting law.

1.    Miscoding, computer glitches and anomalies - For over twelveyears the SBA has claimed the diversion of federal small business contracts toFortune 500 firms and their subsidiaries is the result of random errors mostcommonly referred to as "miscoding." The ASBLfound the supposed random "miscoding" errors did not have a random pattern ofdistribution but in fact always resulted in the diversion of federal smallbusiness contracts to large businesses. The ASBL also concluded itwas mathematically impossible for the "miscoding" to be actual randomerrors. The ASBL concluded the misreporting of federal contracts to largebusinesses and was clearly willful and intentional efforts by the SBA tofalsify the true volume and percentage of federal contracts awarded to smallbusinesses.

2.    The Five Year Rule – The SBA has used the "five yearrule" to justify the inclusion of billions of dollars in federal contractsto Fortune 500 firms, their subsidiaries, thousands of clearly large businessesand even foreign owned corporate giants like Rolls-Royce and British AerospaceEngineering (BAE). The SBA's "five year rule" has absolutely no basisin law and is in fact in direct violation of every provisionof the Small Business Act that established the legal definition of asmall business. Since no language in the Small Business Act supports the SBA's"five year rule" it is blatantly illegal.

3.    The Exclusionary rule - The SBA's "Exclusionary Rule"has been fabricated to dramatically inflate thepercentage of federal contracts to legitimate small businesses byusing a federal acquisition budget that is significantly lower than the actualtotal annual federal acquisition budget. The 23.39% of federal contracts theSBA claimed small businesses had received in FY 2013 used a total eligibledollar figure of just $355 billion. The SBA's "ExclusionaryRule" has no basis in law and is in fact in direct violation of the SmallBusiness Act that stipulates that small businesses shall receivea minimum of 23% of the total value of all prime contract awards. Alegal opinion by Professor Charles Tiefer found the actual total annual federalacquisition budget to beapproximately one trillion dollars.

The ASBL study concluded thatif all provisions of the Small Business Act were followed, the actualpercentage of federal contracts awarded to legitimate small businesses would beno more than 5% for FY 2013 and not the 23.39% claimed by the SBA.

To view full press release, click here: http://www.prnewswire.com/news-releases/asbl-finds-sba-policies-that-cheat-small-business-are-illegal-300076248.html?tc=eml_cleartime