Just a week after the Small Business

Administration celebrated record-breaking

contract awards to small business owners eligible for government set-asides,

a longtime critic filed

suit in federal court for an injunction to force SBA to halt some of the

practices used in measuring its success.

The Petaluma, Calif.-based American

Small Business League, in an injunction addressed

to Administrator Marie Contreras-Sweet filed in Federal District Court in San

Francisco, argued that the SBA's "illegal policies" have "defrauded small businesses

and small businesses owned by women, minorities and disabled veterans out of

hundreds of billions of dollars in government contracts."

It quotes the Small Business Act's

language noting that "the governmentwide goal for participation by small

business concerns shall be established at not less than 23 percent of the total

value of all prime contract awards for each fiscal year." And within

that category, the goal states 5 percent for women-owned small businesses, 5

percent for minority-owned firms, and 3 percent for disabled veterans.

But the SBA, the group's argument goes,

"has created a policy they call the 'exclusionary rule' and 'small business eligible dollars' that

uses a significantly lower federal acquisition budget number to calculate the

percentage of contracts awarded to all categories of small businesses."

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Among the types of contracts defined as

"excluded," according to the brief, are those involving contracts

performed outside of the United States; acquisitions by agencies on behalf of

foreign governments, entities or international organizations; and all contracts

involving the following agencies: the Federal Deposit Insurance Corp., the U.S.

Postal Service, the Bureau of Engraving And Printing, the U.S. Mint, the Office

of the Comptroller Of The Currency, the Office Of Thrift Supervision, the

Transportation Security Administration, the Federal Aviation Administration,

the Tennessee Valley Authority, the Administrative Office of the U.S. Courts,

the Architect of the Capitol, Bankruptcy Courts, the Central Intelligence

Agency, the Congressional Budget Office, the Court Services and Offender

Supervision Agency, the Pretrial Services Agency, the Federal Judicial Center,

the Overseas Private Investment Corp., the Supreme Court, TRICARE, and the

Centers for Medicare & Medicaid Services.

"The SBA cannot claim it has met its

small business participation goals unless a significant portion of the total

contracts are ignored, some contracts are declared exempt, despite the act's

crystal clear use of the phrase all prime contracts," the injunction concludes.

"I am confident," said league

President Lloyd Chapman, "the court will find the

SBA's policies violate federal law and the SBA has blatantly falsified federal

small business contracting data and cheated small businesses out of billions of

dollars."

An SBA spokesman told Government

Executive, "We don't have any comment and aren't aware of any

complaint."

To view full article, click here: http://www.govexec.com/management/2016/05/group-sues-sba-says-government-defrauded-small-businesses/128084/

Law360, Washington (May 4, 2016, 5:09 PM ET)-- The American Small Business League on Tuesday accused the U.S. SmallBusiness Administration of "creative accounting" in a California federal courtlawsuit seeking to block the agency from demonstrating small businessparticipation goals in government contracts by leaving out some agencies andcounting major corporations as small.

The Small Business Act explicitly requires 23 percent of total federal primecontract award dollars go to small businesses, but according to the ASBL, theagency was only able to show a 25.75 percent participation in fiscal year2015...

To view full article, click here: http://www.law360.com/publicpolicy/articles/792651/small-biz-org-accuses-sba-of-creative-accounting-

A small business advocacy group is suingthe Small Business Administration for what it calls "creative accounting" andmisrepresentation of federal contracting goals.

The American Small Business League(ASBL) filed a lawsuit  May 3 againstthe SBA, claiming the agency has adopted the practice of awarding smallbusiness contracts to Fortune 500 companies and "inflating the percentage ofawards to small businesses to fabricate the government's compliance with thesmall business goals by using a much lower acquisition budget."

"As has been the case in all previousyears in which the SBA has released an annual goaling report, the SBA'sassertion that the percentage of the total value of all prime contract awardsawarded to small businesses met or exceeded the congressional mandate of 23percent is false," court documents state. "SBA can only make this statement bycreating, through agency fiat, a class of government contracts which are,solely in the view of the SBA, subject to exclusion from being considered aspart of 'the total value of all prime contract awards' as stated in the SmallBusiness Act. Although the language of the statue is crystal clear, every yearthe SBA redefines 'total value' as meaning total value minus the contracts SBAdecides to exclude from the equation."

But John Shoraka, SBA's associateadministrator of Government Contracting and Business Development, told FederalNews Radio that SBA's exclusion practice is:

• A continuation of the previous administration's rules.

• Being updated to be more inclusive.

"When we came in as an administration in2009, we wanted to be able to continue to measure apples to apples to apples,to see if we're actually progressing," Shoraka said. "We kept those exclusionsas they stood when we arrived, to make sure we weren't accused of sort offiddling with the numbers and making it look like we were having success."

'Misrepresent and fabricate'

SBA in March released its annual report card on smallbusiness federal contracting. Fiscal 2015 was a record-setting year, accordingto the report, with the government for the first time reaching its 5 percentwomen-owned small business [WOSB] contracting goal since the bar was setin 1996.

The government spent $17.8 billionworking with WOSBs, according to the report. The government also reached —and in fact surpassed — its 23 percent overall small business procurementgoal by spending 25.75 percent, or $90.7 billion on small business contracts.

As a whole, the government received an"A" on its report card for fiscal 2015.

If the SBA doesn't meet its goals, thelawsuit said, under the Small Business Act the agency must report on why itfailed to meet the goals, as well as provide a plan to achieve them the nextyear.

Lloyd Chapman, ASBL president, said inan interview with Federal News Radio the administration's practice of excludingcertain contracts is a way to "misrepresent and fabricate" compliance with thosegoals.

"As a result, failed goals are notreported, no analysis is done, no remediation plans are created, and Congress'sclear directive that the SBA continue to monitor and improve its small businessparticipation programs is left unheeded," the lawsuit states.

But the SBA is monitoring small businesspolicies, Shoraka said. When the National Defense Authorization Act of2013 came out, it directed SBA to re-evaluate all exclusions.

"There were a number of things that wereeventually put back in," Shoraka said. "For whatever reason, there werereally small agencies that had been included on this exclusion list. Thatwas the first thing we adjusted. Then the other thing we noticed is that leaseshad been excluded … leases like commercial vehicle leases. Those had beenexcluded and we put that back in, in 2015."

Shoraka said overseas contractsalso needed re-evaluation. SBA consulted its Office of General Counsel onwhat, if anything, should still be excluded under that category.

Other than two instances with theDefense Department — contingency operations and the Status of ForcesAgreement — the overseas contracts category  was removed fromthe exclusion list.

"We worked with all of our sisteragencies, especially the ones that are going to be impacted most significantly,like the Department of Defense, U.S. Agency for International Development, theState Department," Shoraka said. "And we made sure that their acquisition folksunderstood what the change meant, how that change would be implemented and weworked very closely with the Office of Federal Procurement Policy in thetiming; just announcing ahead of time so nobody's surprised, phasing it in andmaking sure that it became effective for 2016."

This will be applied to the 2016 report,Shoraka said, and will likely have a  negative 1.5 percent tonegative 2 percent impact on the overall percentage of small businessgovernment contracts.

Artificial inflation

Chapman and the small business leaguearen't the only ones who've put small business contracting under amicroscope.

Rep. Steve Chabot (R-Ohio), chairman ofthe Small Business Committee, introduced legislation to change the way SBAcounts agency spending with small firms.

Tony Franco, a partner with the law firmof PilieroMazza in Washington, said he looked at the methodology of the SBAreport, and said it was confusing in part because it appears the agency iscounting contracts under multiple categories, such as an 8(a) [small,disadvantaged] business being counted for both the 8(a) pool and small businesspool.

To view full article, click here: http://federalnewsradio.com/contractsawards/2016/05/lawsuit-calls-sba-stop-deceptive-practices-reaching-compliance-goals/

A small business advocacy group is suing

the Small Business Administration for what it calls "creative accounting" and

misrepresentation of federal contracting goals.

The American Small Business League

(ASBL) filed a lawsuit  May 3 against

the SBA, claiming the agency has adopted the practice of awarding small

business contracts to Fortune 500 companies and "inflating the percentage of

awards to small businesses to fabricate the government's compliance with the

small business goals by using a much lower acquisition budget."

"As has been the case in all previous

years in which the SBA has released an annual goaling report, the SBA's

assertion that the percentage of the total value of all prime contract awards

awarded to small businesses met or exceeded the congressional mandate of 23

percent is false," court documents state. "SBA can only make this statement by

creating, through agency fiat, a class of government contracts which are,

solely in the view of the SBA, subject to exclusion from being considered as

part of 'the total value of all prime contract awards' as stated in the Small

Business Act. Although the language of the statue is crystal clear, every year

the SBA redefines 'total value' as meaning total value minus the contracts SBA

decides to exclude from the equation."

But John Shoraka, SBA's associate

administrator of Government Contracting and Business Development, told Federal

News Radio that SBA's exclusion practice is:

• A continuation of the previous
  
  administration's rules.

• Being updated to be more inclusive.

"When we came in as an administration in

2009, we wanted to be able to continue to measure apples to apples to apples,

to see if we're actually progressing," Shoraka said. "We kept those exclusions

as they stood when we arrived, to make sure we weren't accused of sort of

fiddling with the numbers and making it look like we were having success."

'Misrepresent and fabricate'

SBA in March released its annual report card on small

business federal contracting. Fiscal 2015 was a record-setting year, according

to the report, with the government for the first time reaching its 5 percent

women-owned small business [WOSB] contracting goal since the bar was set

in 1996.

The government spent $17.8 billion

working with WOSBs, according to the report. The government also reached —

and in fact surpassed — its 23 percent overall small business procurement

goal by spending 25.75 percent, or $90.7 billion on small business contracts.

As a whole, the government received an

"A" on its report card for fiscal 2015.

If the SBA doesn't meet its goals, the

lawsuit said, under the Small Business Act the agency must report on why it

failed to meet the goals, as well as provide a plan to achieve them the next

year.

Lloyd Chapman, ASBL president, said in

an interview with Federal News Radio the administration's practice of excluding

certain contracts is a way to "misrepresent and fabricate" compliance with those

goals.

"As a result, failed goals are not

reported, no analysis is done, no remediation plans are created, and Congress's

clear directive that the SBA continue to monitor and improve its small business

participation programs is left unheeded," the lawsuit states.

But the SBA is monitoring small business

policies, Shoraka said. When the National Defense Authorization Act of

2013 came out, it directed SBA to re-evaluate all exclusions.

"There were a number of things that were

eventually put back in," Shoraka said. "For whatever reason, there were

really small agencies that had been included on this exclusion list. That

was the first thing we adjusted. Then the other thing we noticed is that leases

had been excluded … leases like commercial vehicle leases. Those had been

excluded and we put that back in, in 2015."

Shoraka said overseas contracts

also needed re-evaluation. SBA consulted its Office of General Counsel on

what, if anything, should still be excluded under that category.

Other than two instances with the

Defense Department — contingency operations and the Status of Forces

Agreement — the overseas contracts category  was removed from

the exclusion list.

"We worked with all of our sister

agencies, especially the ones that are going to be impacted most significantly,

like the Department of Defense, U.S. Agency for International Development, the

State Department," Shoraka said. "And we made sure that their acquisition folks

understood what the change meant, how that change would be implemented and we

worked very closely with the Office of Federal Procurement Policy in the

timing; just announcing ahead of time so nobody's surprised, phasing it in and

making sure that it became effective for 2016."

This will be applied to the 2016 report,

Shoraka said, and will likely have a  negative 1.5 percent to

negative 2 percent impact on the overall percentage of small business

government contracts.

Artificial inflation

Chapman and the small business league

aren't the only ones who've put small business contracting under a

microscope.

Rep. Steve Chabot (R-Ohio), chairman of

the Small Business Committee, introduced legislation to change the way SBA

counts agency spending with small firms.

Tony Franco, a partner with the law firm

of PilieroMazza in Washington, said he looked at the methodology of the SBA

report, and said it was confusing in part because it appears the agency is

counting contracts under multiple categories, such as an 8(a) [small,

disadvantaged] business being counted for both the 8(a) pool and small business

pool.

To view full article, click here: http://federalnewsradio.com/contractsawards/2016/05/lawsuit-calls-sba-stop-deceptive-practices-reaching-compliance-goals/