A small-business advocate has won a dayin court with Pentagon attorneys to argue whether the Defense Department shouldrelease shielded internal documents that the plaintiff argues will reveal agovernment bias against small defense contractors.

Lloyd Chapman, founder of the Petaluma,Calif.-based American Small Business League, for years has sought to expose theworkings of the 28-year-old ComprehensiveSubcontracting Plan Test Program designed to "determine if comprehensivesubcontracting plans on a corporate, division or plant-wide basis [instead offor individual contracts] would lead to increased opportunities for smallbusinesses."

Chapman argues the program covers upways in which large contractors get work intended for eligible smallbusinesses, and even the Pentagon has expressed a desire for Congress toterminate the program as not effective in organizing contact awards.

On April 12, the small business leagueannounced a new stage in its ongoingsuit against the helicopter maker Sikorsky Aircraft Corp. (acquired by Lockheed Martin in 2015) and the DOD. U.S. District Court Judge WilliamAlsup of the Northern District of California, last weekset December as the time for a full trial that will include discovery andas many as 10 depositions from the Defense Department on the mysteriousprogram. "The ASBL believes the release of the information will prove thePentagon has defrauded small businesses out of over two trillion dollars insubcontracts since the program was established in 1989," the league said.

Sikorsky had appealed a 2014 loss indistrict court to the 9th Circuit, which this January ruled in favor of thecompany and the Pentagon. During the litigation, the league reported, Sikorskyargued that parent company Lockheed Martin was a competitor that would gain anunfair advantage with the release of the information submitted to the CSPTP.

But when the 9th Circuit Court remandedthe case back to the District Court this January, the league was given anopportunity by the Justice Department to press for a trial—considered unusualin FOIA cases. "So it would be more like a David and Goliath," the districtjudge said in a 2014 hearing described by the league. "You get to come inthere and be the underdog again against the big company and against the biggovernment. They are trying to suppress the evidence."

A spokesman for Sikorsky told GovernmentExecutive that "at this time Sikorsky is not a party to the ongoing caseand has no additional comment."

A Pentagon spokesman said the departmentdoes not comment on pending litigation.

Chapman told Government Executivethat he is emotional over what he called a "historic" development.

For the full story, click here: http://www.govexec.com/contracting/2017/04/pentagon-headed-court-against-small-business-advocate/136980/#disqus_thread

 

 

NewSmall Business Administration (SBA) chief Linda McMahon soon will be facing aquestion that goes to the heart of the agency's mission: Are smaller federalcontractors getting their fair share of contract awards?

The SBAin recent years has touted the successes of its "goaling reports" and"scorecards" — measures by which it monitors whether federal agencies have mettheir obligations to dole out at least 23 percent of prime contract awards tosmall businesses. The federal government in 2015 reached its small-businesscontracting goals for the third consecutive year, according to a2016 SBA report.

However,the SBA faces a wide range of skeptics who claim that the methodologies theagency uses allow it to fudge the percentage of contracts small businesses winfrom the federal government.

McMahon,the former CEO of World Wrestling Entertainment, will be addressing the issueon a number of fronts over the next few months.

Congressis set to hear from McMahon directly at an oversight hearing slated for nextweek, and may raise the issue in new legislation.

The SBAis preparing to release its next small-business goaling report so the publiccan see whether government agencies are reporting that they're meeting theirsmall-business targets. At the same time, agency leaders will be working toaddress the chronic concerns from the SBA Inspector General's office, which hastaken the agency to task on the topic in each of the past 10years.

Andnone of this is to mention the ongoing lawsuit filed by the American SmallBusiness League (ASBL), a persistent SBA critic, which is demanding that thecourts issue an injunction to revise how the agency counts which contractingbusinesses are actually "small" and which aren't. The case was dismissed infederal district court on jurisdiction grounds, but ASBL officials said they'reconfident their appeal will succeed.

It'sunclear whether the change in presidential administrations will result in arethinking of small-business contracting policy, Charles Tiefer, a Universityof Baltimore School of Law professor helping the ASBL with its case, toldBloomberg BNA.

"Nobodyknows what the new head of the SBA is going to do," Tiefer said. "Maybe she'lldecide to wrestle with the Lockheed Martin types. We just don't know."

DefendingSmall Contractors

An SBAspokeswoman declined to shed light on McMahon's plans, including whether sheplans to tinker with the agency's goaling methodologies. SBA watchers likewisesaid McMahon's contractor-related aims remain unclear.

Duringher Jan. 24 Senate confirmation hearing, McMahon said she looked forward toserving as an advocate for small contracting businesses, so that they "reallyhave that fair shot" at winning contracts over larger competitors. But sheprovided few details as to how she might accomplish that goal.

Thatmay soon change. The House Small Business Committee will be holding its firstoversight hearing with McMahon on April 5, Kelley McNabb, the committee'scommunications director, told Bloomberg BNA.

Smallcontractor goaling has been a persistent issue in previous hearings and willlikely be raised again next week, a committee source said.

Thepanel also is likely to pursue legislation to address the issue, at leastaround the edges. A bill co-sponsored by Committee Chairman Rep. Steve Chabot(R-Ohio) and the panel's ranking member, Nydia Velazquez (D-N.Y.), last sessionwould have revised the Small Business Act to increase prime federal contractingopportunities for small-business concerns.

Thebill died in committee, but certain sections were rolled into the 2017 NationalDefense Authorization Act. There's a strong chance that the parts of theprevious bill that didn't find another vehicle may again be put forth thisyear, the committee source said.

Thereason for the renewed effort is clear, Chabot told Bloomberg BNA in a writtenstatement. "Federal dollars are a limited resource," he said. "Awardingineligible firms federal contract awards means eligible small businesses do notget those contracts."

'WidespreadMisreporting.'

Thereis no evidence of "substantial intentional misrepresentation" among federalagencies, an SBA spokeswoman told Bloomberg BNA in a written statement.Anomalies are more likely caused by human error, she said — an understandableoccurrence, given that thousands of contracting officers enter data aboutcontracts, including contractor size, millions of times per year.

Yet,reports from various agencies "have shown widespread misreporting by procuringagencies, since many contract awards that were reported as having gone to smallfirms have actually been substantially performed by larger companies," said theSBA IG's annual report, issuedlast October, on the most serious "SBA management challenges."

The IGhas used similar language in management challenges reports since at least 2007.The watchdog, over the past decade, requested that SBA make several changes toimprove the accuracy of its goaling and scorecard reports, many of which theagency has made.

The SBAshould focus on modernizing its information systems and improving dataintegrity, acting SBA IG Hannibal "Mike" Ware told Bloomberg BNA in a writtenstatement. That would "greatly enhance the ability of both SBA and contractingofficers to perform their respective responsibilities," he said.

'DeceptivePractice.'

An ASBLinjunction request filed last year is the most direct ongoing attack on theSBA's goaling process. Although a judge with the U.S. District Court for theNorthern District of California dismissed the request in October onjurisdictional grounds, the ASBL has appealed the case to the U.S. Court ofAppeals for the Ninth Circuit.

TheASBL is asking the court to issue an injunction that bars the SBA fromexcluding any prime contract when calculating the value of contract awards. Theinjunction would also prevent the agency from including contracts that wereawarded to businesses that aren't "small" as defined by law and regulation,when calculating the value of prime contracts awarded to small businesses.

The SBAasserted in a press announcement last April that small-business contractsawarded in fiscal 2015 accounted for 25.75 percent of the total for all primecontract awards. However, in that fiscal year, SBA characterized 151 Fortune500 companies as "small businesses," according to the ASBLsuit.

Thesuit contends that the SBA excludes the small-business prime contracting awardnumbers from 27 agencies, including the CIA, the Federal AviationAdministration and the Supreme Court, as well as contracts that are performedoutside the U.S. These excluded contracts make up a significant portion offederal spending, the suit contends, meaning that the figures SBA releasesaren't accurate and reflect a form of "creative accounting."

"Usingthis deceptive practice, the SBA has, for years, been able to boast that the governmenthas attained or exceeded the 23 percent minimum goal," the suit says.

JudgeVince Chhabria didn't address the substance of ASBL's claims in his three-pageopinion Oct. 18. The judge found that Congress, but not the courts, couldmandate the types of changes the ASBL seeks.

"If theSmall Business Administration is giving Congress bad information, then Congresscan do something about it, either in an oversight or legislative capacity,"Chhabria wrote.

Thebaseline facts illustrate that their case has merit, Tiefer and ASBL PresidentLloyd Chapman told Bloomberg BNA.

Thereare gray areas of the law, Chapman said, "but my lawsuit is about policies thatare clearly illegal."

PriorityAttention

The SBAwas created to enforce the Small Business Act of 1953, which was designed inpart to ensure that a reasonable percentage of federal procurement contractswere awarded to small businesses, as well as small enterprises owned by women,minorities, veterans and others through set-aside programs.

TheGovernment Accountability Office (GAO) has urged the SBA for more than a decadeto address flaws it has recognized in the system.

The GAOin a May 2003 reportstudied five large companies that received $1.1 billion in federal contracts,including $460 million designated as "small business awards."

Asignificant cause for the misreporting is that federal regulations generallypermit companies to be considered small businesses over the life of the contract— even if they grow, merge with another company or are acquired by a largebusiness, the GAO found.

'ThereWas Confusion.'

Small-businessgovernment contracting is one of the most important functions of the SBA, theagency spokeswoman said.

Thereis "no evidence" that substantial intentional misrepresentation is occurring,she said. "Instead, the anomalies are more likely human error (thousands ofcontracting officers entering millions of actions each year) orrecertification, i.e., a small business may legitimately win the competition,but may subsequently be acquired during performance," she said in herstatement.

Theagency could not comment on the ASBL suit because it's ongoing, the spokeswomansaid.

Shedeclined to comment on whether SBA anticipates any changes in how it tabulatesits small-business goaling reports under McMahon — or whether the agency mayalter its mission as it pertains to federal contractors more generally.

"Inever thought during my time at SBA that there was any conspiracy," A. JohnShoraka, a former SBA associate administrator for government contracting andbusiness development, told Bloomberg BNA. "There was confusion."

Shoraka,who left the SBA in January after a five-year stint, said the rules aren't asclear as they could be on when companies need to recertify as largerbusinesses. Contractors don't follow them "100 percent of the time," he said.

But thegoaling reports are more reliable now than they've ever been, said Shoraka, nowmanaging director for PilieroMazza Advisory Services. Referring to the reportsissued during his tenure at the SBA, "I think these were the cleanest numbersin the history of these goaling reports," he said. "We worked very hard to getthese numbers clean."

'TheFundamental Question.'

The SBAhas no "sticks" at its disposal — no legal or regulatory remedies — whenagencies admit they've failed to meet their small-business contracting targets,Shoraka said — as happened in 2015, when the Department of Energy said thatjust 5.4 percent of its contracts were awarded to small businesses.

Instead,"when you get a bad report card, we're going to drag you before Congress andcall you out," Shoraka said.

Longtimegovernment contracting attorney Steve Koprince told Bloomberg BNA he isn'tconvinced that data reporting irregularities, even chronic problems, can beattributed to "book-cooking."

However,SBA needs to do a better job pressuring agencies to take their small-businesscontracting responsibilities more seriously, he said.

"It'sdefinitely a challenge for the SBA," Koprince said. "Are they holding agencies'feet to the fire when they report these numbers? That's the fundamentalquestion."

For thefull story, click here: https://www.bna.com/sba-draws-flak-n57982085975/

 

 

New

Small Business Administration (SBA) chief Linda McMahon soon will be facing a

question that goes to the heart of the agency's mission: Are smaller federal

contractors getting their fair share of contract awards?

The SBA

in recent years has touted the successes of its "goaling reports" and

"scorecards" — measures by which it monitors whether federal agencies have met

their obligations to dole out at least 23 percent of prime contract awards to

small businesses. The federal government in 2015 reached its small-business

contracting goals for the third consecutive year, according to a

2016 SBA report.

However,

the SBA faces a wide range of skeptics who claim that the methodologies the

agency uses allow it to fudge the percentage of contracts small businesses win

from the federal government.

McMahon,

the former CEO of World Wrestling Entertainment, will be addressing the issue

on a number of fronts over the next few months.

Congress

is set to hear from McMahon directly at an oversight hearing slated for next

week, and may raise the issue in new legislation.

The SBA

is preparing to release its next small-business goaling report so the public

can see whether government agencies are reporting that they're meeting their

small-business targets. At the same time, agency leaders will be working to

address the chronic concerns from the SBA Inspector General's office, which has

taken the agency to task on the topic in each of the past 10

years.

And

none of this is to mention the ongoing lawsuit filed by the American Small

Business League (ASBL), a persistent SBA critic, which is demanding that the

courts issue an injunction to revise how the agency counts which contracting

businesses are actually "small" and which aren't. The case was dismissed in

federal district court on jurisdiction grounds, but ASBL officials said they're

confident their appeal will succeed.

It's

unclear whether the change in presidential administrations will result in a

rethinking of small-business contracting policy, Charles Tiefer, a University

of Baltimore School of Law professor helping the ASBL with its case, told

Bloomberg BNA.

"Nobody

knows what the new head of the SBA is going to do," Tiefer said. "Maybe she'll

decide to wrestle with the Lockheed Martin types. We just don't know."

Defending

Small Contractors

An SBA

spokeswoman declined to shed light on McMahon's plans, including whether she

plans to tinker with the agency's goaling methodologies. SBA watchers likewise

said McMahon's contractor-related aims remain unclear.

During

her Jan. 24 Senate confirmation hearing, McMahon said she looked forward to

serving as an advocate for small contracting businesses, so that they "really

have that fair shot" at winning contracts over larger competitors. But she

provided few details as to how she might accomplish that goal.

That

may soon change. The House Small Business Committee will be holding its first

oversight hearing with McMahon on April 5, Kelley McNabb, the committee's

communications director, told Bloomberg BNA.

Small

contractor goaling has been a persistent issue in previous hearings and will

likely be raised again next week, a committee source said.

The

panel also is likely to pursue legislation to address the issue, at least

around the edges. A bill co-sponsored by Committee Chairman Rep. Steve Chabot

(R-Ohio) and the panel's ranking member, Nydia Velazquez (D-N.Y.), last session

would have revised the Small Business Act to increase prime federal contracting

opportunities for small-business concerns.

The

bill died in committee, but certain sections were rolled into the 2017 National

Defense Authorization Act. There's a strong chance that the parts of the

previous bill that didn't find another vehicle may again be put forth this

year, the committee source said.

The

reason for the renewed effort is clear, Chabot told Bloomberg BNA in a written

statement. "Federal dollars are a limited resource," he said. "Awarding

ineligible firms federal contract awards means eligible small businesses do not

get those contracts."

'Widespread

Misreporting.'

There

is no evidence of "substantial intentional misrepresentation" among federal

agencies, an SBA spokeswoman told Bloomberg BNA in a written statement.

Anomalies are more likely caused by human error, she said — an understandable

occurrence, given that thousands of contracting officers enter data about

contracts, including contractor size, millions of times per year.

Yet,

reports from various agencies "have shown widespread misreporting by procuring

agencies, since many contract awards that were reported as having gone to small

firms have actually been substantially performed by larger companies," said the

SBA IG's annual report, issued

last October, on the most serious "SBA management challenges."

The IG

has used similar language in management challenges reports since at least 2007.

The watchdog, over the past decade, requested that SBA make several changes to

improve the accuracy of its goaling and scorecard reports, many of which the

agency has made.

The SBA

should focus on modernizing its information systems and improving data

integrity, acting SBA IG Hannibal "Mike" Ware told Bloomberg BNA in a written

statement. That would "greatly enhance the ability of both SBA and contracting

officers to perform their respective responsibilities," he said.

'Deceptive

Practice.'

An ASBL

injunction request filed last year is the most direct ongoing attack on the

SBA's goaling process. Although a judge with the U.S. District Court for the

Northern District of California dismissed the request in October on

jurisdictional grounds, the ASBL has appealed the case to the U.S. Court of

Appeals for the Ninth Circuit.

The

ASBL is asking the court to issue an injunction that bars the SBA from

excluding any prime contract when calculating the value of contract awards. The

injunction would also prevent the agency from including contracts that were

awarded to businesses that aren't "small" as defined by law and regulation,

when calculating the value of prime contracts awarded to small businesses.

The SBA

asserted in a press announcement last April that small-business contracts

awarded in fiscal 2015 accounted for 25.75 percent of the total for all prime

contract awards. However, in that fiscal year, SBA characterized 151 Fortune

500 companies as "small businesses," according to the ASBL

suit.

The

suit contends that the SBA excludes the small-business prime contracting award

numbers from 27 agencies, including the CIA, the Federal Aviation

Administration and the Supreme Court, as well as contracts that are performed

outside the U.S. These excluded contracts make up a significant portion of

federal spending, the suit contends, meaning that the figures SBA releases

aren't accurate and reflect a form of "creative accounting."

"Using

this deceptive practice, the SBA has, for years, been able to boast that the government

has attained or exceeded the 23 percent minimum goal," the suit says.

Judge

Vince Chhabria didn't address the substance of ASBL's claims in his three-page

opinion Oct. 18. The judge found that Congress, but not the courts, could

mandate the types of changes the ASBL seeks.

"If the

Small Business Administration is giving Congress bad information, then Congress

can do something about it, either in an oversight or legislative capacity,"

Chhabria wrote.

The

baseline facts illustrate that their case has merit, Tiefer and ASBL President

Lloyd Chapman told Bloomberg BNA.

There

are gray areas of the law, Chapman said, "but my lawsuit is about policies that

are clearly illegal."

Priority

Attention

The SBA

was created to enforce the Small Business Act of 1953, which was designed in

part to ensure that a reasonable percentage of federal procurement contracts

were awarded to small businesses, as well as small enterprises owned by women,

minorities, veterans and others through set-aside programs.

The

Government Accountability Office (GAO) has urged the SBA for more than a decade

to address flaws it has recognized in the system.

The GAO

in a May 2003 report

studied five large companies that received $1.1 billion in federal contracts,

including $460 million designated as "small business awards."

A

significant cause for the misreporting is that federal regulations generally

permit companies to be considered small businesses over the life of the contract

— even if they grow, merge with another company or are acquired by a large

business, the GAO found.

'There

Was Confusion.'

Small-business

government contracting is one of the most important functions of the SBA, the

agency spokeswoman said.

There

is "no evidence" that substantial intentional misrepresentation is occurring,

she said. "Instead, the anomalies are more likely human error (thousands of

contracting officers entering millions of actions each year) or

recertification, i.e., a small business may legitimately win the competition,

but may subsequently be acquired during performance," she said in her

statement.

The

agency could not comment on the ASBL suit because it's ongoing, the spokeswoman

said.

She

declined to comment on whether SBA anticipates any changes in how it tabulates

its small-business goaling reports under McMahon — or whether the agency may

alter its mission as it pertains to federal contractors more generally.

"I

never thought during my time at SBA that there was any conspiracy," A. John

Shoraka, a former SBA associate administrator for government contracting and

business development, told Bloomberg BNA. "There was confusion."

Shoraka,

who left the SBA in January after a five-year stint, said the rules aren't as

clear as they could be on when companies need to recertify as larger

businesses. Contractors don't follow them "100 percent of the time," he said.

But the

goaling reports are more reliable now than they've ever been, said Shoraka, now

managing director for PilieroMazza Advisory Services. Referring to the reports

issued during his tenure at the SBA, "I think these were the cleanest numbers

in the history of these goaling reports," he said. "We worked very hard to get

these numbers clean."

'The

Fundamental Question.'

The SBA

has no "sticks" at its disposal — no legal or regulatory remedies — when

agencies admit they've failed to meet their small-business contracting targets,

Shoraka said — as happened in 2015, when the Department of Energy said that

just 5.4 percent of its contracts were awarded to small businesses.

Instead,

"when you get a bad report card, we're going to drag you before Congress and

call you out," Shoraka said.

Longtime

government contracting attorney Steve Koprince told Bloomberg BNA he isn't

convinced that data reporting irregularities, even chronic problems, can be

attributed to "book-cooking."

However,

SBA needs to do a better job pressuring agencies to take their small-business

contracting responsibilities more seriously, he said.

"It's

definitely a challenge for the SBA," Koprince said. "Are they holding agencies'

feet to the fire when they report these numbers? That's the fundamental

question."

For the

full story, click here: https://www.bna.com/sba-draws-flak-n57982085975/

 

 

LAKEWOOD, Ohio - The Trump administration is looking to cut more than $43million in funding to the Small Business Administration.

Among the programs being eliminated include grants for entrepreneurs,resources to help startup companies and the entire Minority BusinessDevelopment Agency; all are resources that helped spots like The Root Café andTease Hair parlor in Lakewood succeed.

"It's very challenging to do that if you don't have the support of someonebigger," said Emily Bobbitt, an employee at Tease Hair and BodyParlor.

"There should be support from the federal government for organizations likethe SBA because they need to be there in order to provide resources for smallbusinesses and if anything we should be strengthening them and not taking moneyaway," said Julie Hutchison, Owner of The Root Café.

"If you want to create jobs you got to do it with small businesses," saidLloyd Chapman, President of the American Small Business League.

Chapman's concerned that the President, who ran on the promise of creatingjobs, will inadvertently stunt job growth with budget cuts to the SBA.

"The number one issue to voters is jobs and the economy and the US CensusBureau data shows that small businesses create over 98 percent of all net new jobs.The Small Business Administration is the only agency in government to helpthose small businesses," he said.

Lakewood has a high concentration of small businesses. In reaction to thecuts, Ian Andrews, Executive Director of Lakewood Alive provided thisstatement:

"Lakewood is a community of entrepreneurs and small businesses. These folkshave put everything on the line to open the restaurant or store or firm oftheir dreams and the support of the Small Business Administration has helpedmany of them to make their dream a reality. We urge our elected officials tosupport the work of the Small Business Administration and safeguard theprograms that have supported businesses like Melt Bar & Grilled to bring anincredible business idea to fruition in Lakewood in 2006, now with multiplelocations across the state."

"Small businesses, not only are they giving service to the entire city, butthey're employing and giving a life to the people that are working for them,"said Hutchinson.

The Trump administration says they're making cuts to programs they considerredundant, or would be better provided by the private sector.

Congress will vote on the budget proposal likely sometime next month.

For the full story, click here: http://www.newsnet5.com/news/e-team/trump-looks-to-cut-funding-to-small-business-administration