Feds Short-changed Small Businesses Out of $200 Billion in Contracts in 2015 Alone, Says Advocacy Group


Feds Short-changed Small Businesses Out of $200 Billion in Contracts in 2015 Alone, Says Advocacy Group

By Nash Riggins
Small Business Trends
October 31, 2016

The UnitedStates government agency responsible for supporting entrepreneurs has beenaccused of short-changing small business owners out of $2 trillion infederal contracts over the last ten years.

Federal lawcurrently dictates that small businesses must receive a minimum of 23 percentof all government contracts granted, and the Small Business Administration (SBA) is responsible forhelping to ensure that target is met by connecting government agencies withbusiness owners.

Yet accordingto advocates at the AmericanSmall Business League (ASBL), the SBA has been "falsifying" thegovernment's 23 percent target compliance by using inaccurate budgetingfigures.

In 2015, the Congressional Budget Office (PDF) reported anacquisition budget of $1.2 trillion. This would mean that small businessesshould have been legally entitled to receive a minimum $276 billion worth ofgovernment contracts that year. But according to the ASBL, the SBA only used anacquisition budget of $370 billion in its figures — thus "inflating theirnumbers" to show that small businesses received 24.9 percent of all federalcontracts in 2015.

As a result,the ASBL asserts small business owners received just $40 billion of the $276billion in contracts that should have been set aside for them last year,landing them with just three percent of all federal contracts.

In addition,the ASBL accused the SBA of diverting billions of dollars in federal contractsto larger companies thanks to a grandfathering rule that continued to classbusinesses that had grown substantially in size over time as "small".

Thoseaccusations led to the ASBL filing a controversial injunction against the SBAin May, although Federal District Judge Vince Chhabria ultimately tossed out the injunction (PDF) on October 18. Heargued that, if the SBA has indeed falsified meeting its target requirements,it should be Congress not the courts that hold the agency to account.

In anrelease, ASBL President Lloyd Chapman said the court's decision isdisappointing setback in the group's battle to hold the SBA responsible.

"If thelawsuit had been allowed to get its rightful day in court on the merits, thelawsuit would have required the SBA to give all small businesses —and doubly so for minority, women-owned, and disabled veteranbusinesses — a larger and proper share of federal procurement," Chapmansaid.

"Dismissingthe suit frustrates the legitimate rights of small businesses to their propershare of the true scale of government contracting."

The SBA hasyet to issue a statement following the court's decision to toss out theinjunction. The ASBL has said it plans to appeal.

To view fullarticle, click here: https://smallbiztrends.com/2016/10/sba-fabricate-small-business-contracting-numbers.html


SBA Joins ASBL in Opposing McCain's Defense Bill

Press Release

SBA Joins ASBL in Opposing McCain's Defense Bill

American Small Business League
October 26, 2016

PETALUMA,Calif., Oct. 26, 2016 /PRNewswire-USNewswire/ -- On September 14, 2016 the ASBLwaged a nationalcampaign opposing language in the 2017 National Defense Authorization Act(NDAA) that would cripple Federal small business contracting and subcontractingprograms. Thousands of American small businesses will lose billions of dollarsin Federal contracts if Senate Armed Services Committee Chairman, Senator JohnMcCain, is allowed to include his anti-smallbusiness language in the 2017 NDAA.

Thefirst provision in Senator McCain's version of the 2017 NDAA would make thePentagon's controversial 27-year-old Comprehensive Subcontracting Plan TestProgram (CSPTP)permanent. The CSPTP was adopted in 1989 under the guise of "increasing subcontracting opportunities for small business"after the Pentagon was forced to release small business subcontracting reportsthat indicated Pentagon prime contractors were not complying with federal smallbusiness subcontracting laws and regulations.

Pentagonspokeswoman Maureen Schumann supported the ASBL's assertion that the CSPTP isineffective, commenting in an article for The Washington Post in September 2014 that the program"Has led to an erosion of the [the agencies] small business industrialbase." Schumann commented again later that year in The Blaze, "Although well intended, the program hasnot produced quantifiable results. The Department of Defense position is to nothave Congress extend the CSP."

ProfessorCharles Tiefer, one of the nation's leading experts on federal contracting law,released a legal opinion on the CSPTP describing it as a "sham." In his legal opinion Professor Tiefer stated, "The program is a sham and its extension will be seriouslyharmful to vital opportunities for small business to get government contractingwork... Let it expire."

TheNDAA bill (S.2943) includes two additional provisions, the first ofwhich would allow the Pentagon to fabricatecompliance with the federal government's 23% small business contractinggoal by merging first and second tier subcontracts with prime contracts

Thethird provision would exclude small businesses from participating in allforeign contracts. Criticism over the lackof transparency in federal overseas contracting extends back to 2004, witha GAO reportstating "Without accurate and complete information on subcontracts tofirms performing outside the U.S., (the Department of Defense) cannot makeinformed decisions on industrial base issues."

TheASBL's national campaign against the NDAA provisions has caught on in Washington.On September 30th, weeks after the ASBL launched their campaign, the SBA'sAssociate Administrator for Government Contracting, John Shoraka, told Forbes that they are in agreement with the ASBL's sentimentthat section 838 would have a negative impact on small businesses.

"I'mglad the SBA has finally decided to join us in opposing  what can only bedescribed as anti-small business language included by McCain in the 2017NDAA," stated ASBL President Lloyd Chapman. "These three provisionswould devastate the middle class economy, putting millions of small businessesout of business."

To view fullpress release, click here: http://www.prnewswire.com/news-releases/sba-joins-asbl-in-opposing-mccains-defense-bill-300351346.html

Here's Why It's So Hard to Start a Business in the U.S.


Here's Why It's So Hard to Start a Business in the U.S.

A new report from the World Bank ranks the United States 51st in the world when it comes to the ease of launching a new company. So what's making life so difficult for the nation's entrepreneurs?

By Leigh Buchanan
October 26, 2016

Hey, at least we beat the crap out of Malta.

In the WorldBank's annual report on the ease of doing business, the United States rankseighth out of 190 countries. But it was all the way down at No. 51 on the easeof startinga business, a ranking that weighs factors like procedures, time, and costs.That's a drop of six places from last year, the country's biggest decline inany category.

Comparable economies including Canada, Hong Kong, and the UnitedKingdom fared much better. Among benchmark nations, only Germany did worse.

Startup rates have, in fact, been rising in the U.S. for twoyears, with roughly 550,000 launches per month in 2015, according to the KauffmanFoundation. (Kauffman expects similar findings for 2016.) But that doesn't meanwe make it easy.

TheWorld Bank report measures elements related to regulations, licensing, andtaxes, which--along with access to capital--are the most oft-citedentrepreneurial bugbears. The Affordable Care Act has emerged as the greathonking bull's-eye of critics' dartboards. However, just a small percentage ofU.S. companies are large enough to fall under its purview, so that's not themain problem. And some companies have capped their work forces at 49 tosidestep the requirement to offer employee health coverage. But that's a growthissue, not a startup issue.

Minimum wage, paid sick leave, and other regulations are abroader concern. (Company owners who haven't yet considered the implications ofthe federal overtime rule that goes into effect this December: tick, tick,tick....) But it's less any individual regulation than the accretion offederal, state, and local requirements--some of them contradictory--that makesentrepreneurship in the U.S. so daunting. According to a recent study by BabsonCollege, company owners spend, on average, four hours a week dealing withgovernment compliance.

The mere act of registering a business, which should be simple,often isn't. In bad times the relevant state or municipal offices may be onshort hours or even furlough days. (When you're starting a business whileholding down another job, free time to visit city hall may be nonexistent.)Just figuring out whether an area is zoned for a particular use can be ahassle. Fee calculations are typically dispersed, so the total cost ofownership is elusive. What, no one told you about that grease trap permit? Openingday postponed...

Keep in mind that this is a ranking. America's decline is also afunction of other nations' rise. In other words, we may not be getting worse somuch as other countries are getting better, faster. Interest in andfacilitation of entrepreneurship has been expanding internationally for years,as documented by Babson's Global Entrepreneurship Monitor and other sources.Countries putting in functional regulatory and legal infrastructures for thefirst time can operate without the decades-old albatross of existingregulations weighing down the United States. That potentially makes them morecompetitive.

The World Bank report includes a table listing countries that,in the past year, reduced regulatory complexity or strengthened legal institutionsin more than 60 areas. Many of those improvements would benefit startups. Socongratulations to Egypt and Niger for merging startup processes intoone-stop-shops; to San Marino for allowing companies to benefit from a 50percent corporate income tax reduction for their first six years of operation;and to Brazil for implementing an online portal for business licenses.

From the chart of significant improvements, the United States isnoticeably absent.

For the full article click here: http://www.inc.com/leigh-buchanan/why-its-so-hard-to-start-a-business-in-the-us.html



Judge Says Only Congress Can End Small Business Fraud

Press Release

Judge Says Only Congress Can End Small Business Fraud

American Small Business League
October 20, 2016

PETALUMA, Calif.,Oct. 20, 2016 /PRNewswire-USNewswire/ -- The American Small BusinessLeague's (ASBL's) injunction against the Small Business Administration (SBA)was dismissed Tuesday October 18th for lack of subject matterjurisdiction.

Federal DistrictJudge Vince Chhabria has granted the SBA's motion to dismiss the case stating, "The upshot isthat Congress enacted a statute requiring the Small Business Administration toprovide information about the participation of small businesses in federalcontracting. If the Small Business Administration is giving Congress badinformation, then Congress can do something about it, either in an oversight orlegislative capacity."  

"This isnot unexpected," says ASBL President Lloyd Chapman,"This case would uncover billions in fraud in federal small businesscontracting programs. If the Federal courts cannot stop fraud in federal smallcontracting, where do you go?"

The SmallBusiness Act mandates small businesses receive a minimum of 23% of all federal contracts. Within that goalare separate goals for small businesses owned by women, minorities andservice-disabled veterans.

The Congressional Budget Office reported an acquisition budgetof $1.2 trillion in 2015. Twenty-three percent (what small businesses arelegally entitled to) would equal a minimum of $276 billion. In 2015, the SBAonly used an acquisition budget of $370 billion, a major decline from the $1.2trillion. The ASBL estimates that as opposed to the $276 billion legitimatesmall businesses should have received in 2015, they likely received between $35to $40 billion or just 3% of all federal contracts.

A GovernmentAccountability Office investigation uncovered the SBA had falsified thegovernment's compliance with the 23% small business contracting goal byincluding  billions of dollars in federal small business contracts to over5,300 Fortune 500 firms and other large businesses.

Professor CharlesTiefer, one of the nation's leading experts in federal contracting law andformer Commissioner of Wartime Contracting in Iraq and Afghanistan, submitted adeclaration in support of the ASBL case. "If the lawsuit had been allowedto get its rightful day in court on the merits, the lawsuit would have requiredthe SBA to give all small businesses -- and doubly so for minority,women-owned, and disabled veteran businesses -- a larger and proper shareof federal procurement."

The ASBL will beappealingthe case to the 9th Circuit Court of Appeals.

To view fullpress release, click here: http://www.prnewswire.com/news-releases/judge-says-only-congress-can-end-small-business-fraud-300348238.html#continue-jump

Claims Feds Misclassify Small Businesses Dropped


Claims Feds Misclassify Small Businesses Dropped

By Nicholas Iovino
Courthouse News Service
October 20, 2016

SAN FRANCISCO(CN) - A federal judge dismissed a lawsuit claiming the U.S. government falselyreported that billions of dollars in public contracts for large corporationswere going to small businesses.
     The American Small Business League sued the U.S.Small Business Administration (SBA) in May, alleging the federal agency fudgednumbers in its annual report to make it look like the government met its targetof awarding 23 percent of contracts to small businesses.
     According to the SBA's 2015 report,the U.S. government doled out $352.2 trillion in contracts last year with 25.75percent, or $90.7 billion, going to small businesses.
     However, the Small Business League says thosenumbers are false because the SBA improperly excluded "a significant numberof contracts" when calculating the total value of prime contracts. Theleague also claims the SBA wrongly counted huge corporations, includingVerizon, Lockheed Martin and Raytheon, as "small businesses" in itsreport.
     In an interview, the league's president andfounder, Lloyd Chapman, alleged that more than half of the $90.7 billion incontracts reportedly awarded to small businesses actually went to "Fortune500 companies."
     Chapman stressed how those government contractscan impact the American economy, pointing out that small businesses createdmore new jobs than large corporations in recent years.
     Small enterprises and entrepreneurs createdtwo-thirds of newjobs in 2014 and accounted for 7 million of the 11 million jobs addedduring the recovery period following the Great Recession of 2007 to 2009,according to the Small Business Administration.
     The Small Business Act requires the SBA to createa remediation plan detailing how it will work toward awarding more contracts tosmall businesses if it fails to meet the 23 percent goal.
     In a three-page ruling issued Tuesday night, U.S.District Judge Vince Chhabria found the federal court for the Northern Districtof California lacks jurisdiction to review the validity of the SBA's annualreport because it does not qualify as a "final agency action" underthe Administrative Procedure Act.
     "The report does not carry penalties for anagency's failure to meet the small business participation goal," Chhabriawrote. "It does not bind agencies to comply with any proposed remediationplan."
     Chapman said he was disappointed in the rulingand complained that his side was not given a chance to argue against thegovernment's motion to dismiss in open court.
     "We didn't have our day in court,"Chapman said. "If we could have gone in and had our oral arguments, thatwould have been different. The fact that they didn't let us do that istroubling."
     Earlier this month, the judge cancelled a hearingon the motion to dismiss scheduled for Oct. 6, stating that he would insteadissue a ruling based on written arguments.
     Chhabria did not immediately respond to a phonecall seeking clarification on why he vacated the hearing, but the judge'sbrief, three-page ruling indicates he may have viewed the motion to dismiss asa clear-cut matter of law.
     The judge cited a 1998 Ninth Circuit ruling, Guerrerov. Clinton, which held the court lacked jurisdiction to require theDirector of the Office of Insular Affairs to issue annual reports on the impactof a 1985 compact on Pacific islands, including Hawaii, Guam and the NorthernMariana Islands.
     Because Congress passed the law requiring thatreport be issued every year, the Ninth Circuit found that "Congress, notthe judiciary, is in the best position to decide whether it's gotten what itwants."
     Chhabria applied that same interpretation to theadequacy of the SBA's annual reports to Congress on government contractspending.
     "The upshot is that Congress enacted astatute requiring the Small Business Administration to provide informationabout the participation of small businesses in federal contracting,"Chhabria wrote. "If the Small Business Administration is giving Congressbad information, then Congress can do something about it, either in anoversight or legislative capacity."
     SBA spokeswomen Carol Wilkerson and HannahKelley-Bell did not immediately respond to phone calls seeking comment.
     Chapman said his organization plans to appeal theruling.

To view fullarticle, click here: http://www.courthousenews.com/2016/10/20/claims-feds-misclassify-small-businesses-dropped.htm