SANFRANCISCO - The American Small Business League's (ASBL) request for aninjunction against the Small Business Administration (SBA) for giving federalcontracts to Fortune 500 firms was thrown out by the Northern District ofCalifornia Oct. 18, 2016.

OnMay 3, 2016, the ASBL filed for an injunction against the SBA asking the courtto prevent it "from continuing to misrepresent the attainment of small businesscontracting goals to Congress and the American public."

Inits complaintthe ASBL contends the Small Business Act was enacted to promote the publicpolicy of "preserving and promoting a competitive free enterprise economicsystem" by ensuring that a reasonable amount of federal contracts are awardedto small businesses, and small enterprises owned by women, minorities, veteransand disadvantaged entrepreneurs. It claims the SBA is awarding contracts toFortune 500 firms rather than small businesses.

ASBLalleges the SBA used creative accounting in its reports to show it was meetingthe threshold of contracts awarded to small businesses when, according to SBAreports, it awarded $276 billion in federal contracts to large businesses in2015. An amount the ASBL claims is 90 percent of the federal contracts awardedby the SBA for the fiscal year.

 "TheSBA has released an annual goaling report, the SBA's assertion that thepercentage of the total value of all prime contract awards awarded to smallbusinesses met or exceeded the congressional mandate of 23 percent is false.Although the language of the statute is crystal clear, every year the SBAredefines 'total value' as meaning total value minus the contracts SBA decidesto exclude from the equation. Using this deceptive practice, the SBA has, foryears, been able to boast that the government has attained or exceeded the 23percent minimum goal based on 'all prime contract awards' when in fact, ithasn't. This creative accounting will continue to thwart the purposes of thestatute," the complaintstates.

ASBLargues that the SBA is using this creative accounting to avoid burdensomerequirements of "identifying, analyzing and developing remedial plans triggeredwhen the government fails to meet its goals."

Thecomplaint includes examples of contracts awarded by the SBA in 2015:

VerizonCommunications ($108,742,478.00)

LockheedMartin ($2,241,065.00)

Raytheon($1,891,266.00)

JohnsonControls ($2,987,330.00)

Thecomplaint also argues the SBA characterized a total of 151 Fortune 500companies as small businesses in order to claim that 25.75 percent of the totalvalue of all prime contract awards went to small businesses.

TheASBL contends because of what it deemed as the SBA's "unlawful actions" smallbusinesses may not be receiving the percentage of total government primecontract awards, which they would otherwise receive under the mandates of theSmall Business Act.

ASBLrequested the court issue an injunction barring the SBA from continuing itsalleged deceptive actions and to amend its 2015 goaling reports to conform tothe Small Business Act's requirements.

SBA'sMotion to Dismiss

Inits motion todismiss the SBA argued the court lacked jurisdiction stating, "TheAdministrative Procedure Act does not allow federal courts to review everythingan agency does. It only permits judicial review of final agency action. If theSmall Business Administration is giving Congress bad information, then Congresscan do something about it, either in an oversight or legislative capacity.Having requested the report, Congress, not the judiciary, is in the bestposition to decide whether it's gotten what it wants."

Thecourt agreed and dismissed ASBL's case earlier this month.

Lloyd Chapman, President of ASBL, told the NorthernCalifornia Record, "The purpose of the Small Business Act is to ensuresmall businesses receive 23 percent of federal contracts.When you look at thelast paragraph of the ruling, you'll notice the judge didn't quote the SBA, hesaid congress passed the law, but he wasn't quoting it. The judge dismissed itsaying only congress can do something about it. Well, congress only passeslaws. When you don't pay taxes, congress doesn't come after you, the IRS does.The justice department should be the one deciding on this. Congress passes lawsand the judicial branch enforces them. But he didn't even address that part ofmy complaint." Chapman said explaining that the dismissal was based onallegations he challenged the SBA's reporting, not on the actual claims he madeagainst the government for violating the Small Business Act.

"Here'sa way to describe it; say you hire me to paint your house a specific color andto put down and take away drop cloths. Then, I paint one wall of your house hotpink, but I put down and remove the drop cloths. If you sued me for breach ofcontract it would be like a judge throwing out your case against me because Iremoved the drop cloths," Chapman said.

"Whatthe judge should have done is say the Small Business Act says small businessesshould receive 23 percent of all contracts and the actions of the SBA are indirect conflict with the law because all Fortune 500 companies are not smallbusinesses. It's against the congressional intent of the law and the motionshould not have been granted," Chapman told the Northern California Record.

Chapmansaid the government put a spin on his complaint stating it was about how thegovernment reported the contracts. "So they claimed since I was challenging theway SBA reports, the court had no jurisdiction. The judge agreed that it wasnot the court's position to rule on how it reported. But, my lawsuit was tostop the SBA from giving federal contracts to Fortune 500 firms and to stopthem from claiming they gave 23 percent to small businesses. The judge doesn'teven mention those two things," he said.

Heexplained the Small Business Act states small businesses shouldn't have morethan 500 employees, businesses must report all employees of parent andaffiliate companies, and they shouldn't be dominate in their field. He saidnone of these Fortune 500 companies meets those requirements, yet thegovernment provided them with billions in contracts.

"Theyare trying to suppress the evidence," Chapman said, "A federal judge, accusedthe government of suppressing evidence in another case of mine; Judge WilliamAlsup said about my case against the Pentagon's 27-year old test program, 'Soit would be more like a David and Goliath. You get to come in there and be theunderdog against the big company and against the big government, they aretrying to suppress the evidence,' so I agree with him. The government issuppressing evidence. Alsup said another quote in a case I won against thePentagon, 'The purpose of the Freedom of Information Act is so the public cansee how our government works. Congress passed this law to make the smallbusinesses have access to some of these projects, and here is the United Statescovering it up,' Judge Alsup accused them, not me, but I agree."

Chapmansaid when Eisenhower signed the act in 1958 it wasn't his intention to givesmall business contracts to Verizon. He said according to the U.S. censusbureau over 90 percent of US firms have fewer than 20 employees.

"Picturea pie chart," Chapman said as he drew one while speaking, "Picture a big circleand cut a slice that represents 1 percent. That tiny line represents 1 percentof firms. That 1 percent is businesses with over 500 employees, according tothe census bureau. The other 99 percent have 500 employees or less. So, we havethis gigantic slice and federal says this tiny sliver gets 90 percent of thecontracts. What do you think about the government taking your tax dollars andspending it with Fortune 500 companies that aren't creating new jobs? What doyou know about Fortune 500 not paying taxes? 77 percent of federal spending isgoing to these companies, most who are not paying taxes, and not creating anynet new jobs. In reality that little tiny sliver gets about 95 percent offederal spending. The giant slice gets 5 percent. They are giving the federalcontracts to Fortune 500 firms. Think about it, ninety-five percent of allfederal spending goes to 1 percent of US firms that haven't created a net newjob since 1980 and don't pay the taxes you pay."

"Howdoes this benefit the government? What happens as a result of this? I'll onlyspeak to facts,"Chapman said. "The World Bank came out recently, theydid a study on the ease of starting a new business in different countries; theUSA ranked 49th. We're 20 trillion in debt and America is 49th in the ease ofstarting a new business. The result of 20 years of anti-small business policieshave devastated the middle class. Home ownership is at a 48 year low; povertyis at a 12 year high, 45 million Americans live below poverty. Birth rates aredown six consecutive years because of economic concerns. More people betweenthe ages of 25 and 35 are living at home. Economic recovery is at the slowestrate since 1949. The $276 billion given by SBA (to the large businesses) wouldbe the largest economic stimulus program for middle class in history. But yearafter year they divert it to Fortune 500 companies who don't pay taxes,"Chapman told the Northern California Record.

The SmallBusiness Act provides penalties and prison time for a company thatrepresents itself as small business. The SmallBusiness Jobs Act of 2010 added to the penalties formisrepresentations by firms providing, " The law establishes a legalstanding of "presumption of loss" when a business misrepresents its ownershipstatus or size in winning a government contract. This allows a federal agencyto claim a loss on the purchase, enabling those agencies, including theDepartment of Justice, to vigorously pursue fraudulent firms."

Chapmansaid, "The (law) says for every dollar they get is a dollar indamages.  If I go to court and show a Fortune 500 misrepresented one oftheir divisions as a small business, every dollar would be applicable underfalse claims act, there would be treble damages, punitive damages and legalfees," Chapman said. "My lawsuit was largest lawsuit ever filed against theU.S. because of number of people being attacked by it and the volume of money.My lawsuit would redirect trillions back to the middle class economy over thenext 10 years. This is the largest lawsuit filed against the U.S. governmentand it's unreported in the media. Think about it."

Hesaid the government also approved a policy in 2015 that provides a loophole forlarge businesses to escape liability for misrepresenting they were a smallbusiness to obtain contracts called Safe Harbor fromFraud Penalties. It reads, " An individual or business concernwill not be subject to the penalties imposed under 15 U.S.C. 645 (a)where it acted in good faith reliance on a small business status advisoryopinion accepted by SBA under §?121.109."

"Now,to get out of trouble for obtaining federal contracts illegally all you have todo is say you acted in good faith. This goes to show you how far they'll go toprotect what they're doing. The SBA is supposed to represent small businessesand they aren't. But I am."

Chapmancompared his lawsuit to Edward Snowden.  "I think I'm more controversialthan Snowden," Chapman said. He said no one was criminally prosecuted inSnowden's case, no one lost their jobs and no one was imprisoned over thegovernment tapping Americans' wireless devices. " Nothing happened, if mylawsuit went forward, for all of these companies and defense contractors whohave misrepresented their firm as a small business, there would be jail timeand fines. We are talking about billions in criminal penalties and people goingto prison."

Chapmansaid he is going to appeal the decision soon. He also said he has additionalplans on fighting the government. 

"Theysaid I don't have the legal authority to challenge the way they report onthings, but I do have the ability to challenge final rules. So, I am going tochallenge every final rule the SBA has put out for the last decade."

Chapmansaid when he reviewed the final rules he found each rule reduces the volume ofcontracts that goes to legitimate small businesses and increases the volumethat goes to big businesses and that is what he intends to challenge.  

"My lawyers tell me I'vewon over 100 legal battles against federal governments," Chapman told the NorthernCalifornia Record. "I started filing them around 1989. The government willtell you that I am a conspiracy nut and con man and nothing I say is true. But,you can't win that many if you're a conspiracy nut. What else would you expectthem to say, though? Admit that I'm right?"

To view full article,click here: http://norcalrecord.com/stories/511036354-court-tosses-case-against-sba-for-awarding-billions-in-small-business-contracts-to-fortune-500-firms

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

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

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