The proposed administrator of the U.S. Small Business Administration is running into criticism from one of the SBA’s most persistent critics.

Santanu “Sandy” Baruah, head of the Commerce Department’s Economic Development Administration, and a longtime servant in the Bush Administration, was nominated this week by President George W. Bush to run the agency charged with aiding the nation’s small businesses.

But to Lloyd Chapman, president of the American Small Business League, it’s just more of the same.

"Just like his predecessor, Sandy Baruah has no background experience or interest in small business issues. I am concerned the Bush Administration will continue to dismantle programs for small businesses in middle class America by dramatically increasing the federal definition of a small business to allow large businesses to take contracts away from small firms. I am also concerned the Bush Administration will try to close the Small Business Administration altogether by combining it with the Commerce Department," says Mr. Chapman.

It’s expected to be several months at the earliest before the Senate holds confirmation hearings. If confirmed on such a timetable, it would leave Mr. Baruah barely enough time to warm his chair before the Bush Administration leaves office.

But another group representing small businesses has an opinion opposite that of Mr. Chapman.

“Baruah is a very qualified candidate, and we look forward to working with him as we continue to help amplify the voice of small business. The President’s quick appointment to this post reinforces how important our country’s hard-working small business owners are, especially in tough economic times,” says Dan Danner, executive vice president of the National Federation of Independent Business, in a written statement.

Before joining the Bush Administration in 2001, Mr. Baruah was a consultant with Performance Consulting Group Inc. of Portland, Ore., for six years.

The chairman of the Senate Small Business and Entrepreneurship Committee, John Kerry, indicates confirmation hearings may be intense.

“We’ll review Sandy Baruah’s record carefully to make sure that he is the right person for the job,” says Mr. Kerry. “For seven years the Bush Administration has put Wall Street ahead of Main Street, and denied the SBA the funding and staff needed to serve our small businesses. The next administrator at the SBA must be ready to offer creative solutions for the current credit crunch, implement programs that will actually help women and minorities gain access to federal contracts and loans, and make sure that small firms have access to counseling and training to grow their businesses in this tough economic climate.”

Source:  http://www.centralvalleybusinesstimes.com/stories/001/?ID=9149

The U.S. Small Business Administration has been sued in an effort to get it to release the name of a company that the SBA inspector general said should be banned from getting government contracts.

The U.S. District Court Freedom of Information lawsuit was brought by Lloyd Chapman, president of the American Small Business League of Petaluma.

He says the SBA has refused to release the name of a government contractor which the SBA's inspector general had recommended be debarred for intentionally misrepresenting its size as a small business in order to illegally obtain Federal contracts set aside for small firms.

The lawsuit says the recommendation was made to SBA Administrator Hector Barreto in June 2005 and was subsequently reported in the Inspector General's semiannual report to Congress.

But Mr. Barreto has failed to take action to debar any firm for contracting fraud and only one firm has been fined, the ASBL says.

"I am sick and tired of the Federal government turning a blind eye to blatant felony contracting fraud," Mr. Chapman says. "The SBA Office of Inspector General would not have recommended that this firm be debarred unless they had conducted an exhaustive investigation and were absolutely sure the firm is guilty. I intend to take every legal option available to expose this firm and see that it is prosecuted to the fullest extent of Federal and civil law."

Small business advocate Lloyd Chapman is determined to find out more about an alleged federal small business contract fraud, and he's filed suit in federal court to pry the information out of the government.

Chapman, who heads the American Small Business League, says the federal Small Business Administration has refused to release the name of a company that was cited in a 2005 SBA inspector general's report for violating SBA contracting guidelines.

The inspector general recommended barring the company from competing for future small business contracts, but to date, SBA director Hector V. Barreto has taken no action, Chapman said.

"I am sick and tired of the federal government turning a blind eye to blatant felony contracting fraud," said Chapman in a statement. "The SBA Office of Inspector General would not have recommended that this firm be debarred unless they had conducted an exhaustive investigation and were absolutely sure the firm is guilty."

The Interior Department took credit during the past two years for more than $5.7 million in small-business contracts that it actually awarded to large corporations, some of which are Fortune 500 companies, auditors have found.

In fiscal 2006 and 2007, the department counted contracts it awarded to major companies, such as Home Depot, Dell, John Deere and others, toward its small-business contracting goals, wrote Earl Devaney, inspector general at the department, in a report issued July 1.

The primary reasons for the problems are mistakes contracting officers make when entering company data into their records, their reliance on incorrect information in federal registries, and their failure to verify business sizes in the Central Contractor Registration (CCR), Devaney wrote.

As a result, on certain contracts, officers coded John Deere, which is No. 98 on Forbes Fortune 500 list, and Waste Management, which is No. 181 on the list, as small businesses. Then, the department’s Office of Small and Disadvantaged Business Utilization included the contracts in the Small Business Goaling Reports for 2006 and 2007, the report states.

“Contracting officers often click through mindlessly when entering contracts” in the government’s data system, called the Federal Procurement Data System-Next Generation (FPDS-NG), Devaney wrote in quoting an Interior contracting officer.

The auditors found outdated and erroneous information in several governmentwide data systems. Businesses are required to update their profiles in the CCR annually, but some profiles are obsolete or simply wrong, Devaney wrote. For example, three divisions of Xerox Corp., which is No. 145 on Forbes’ list, were coded as small businesses in the CCR. Similarly, John Deere Construction & Forestry was listed as a small business in the CCR and other federal registries, according to the report.

Dell Federal Systems, a subsidiary of Dell Inc., which is No. 34 on Forbes’ list, is also marked as a small business in the CCR, the report states.

“Conversations with contracting personnel highlighted the need for increased attention to small-business procurements, including the importance of accurate FPDS-NG data entry,” according to the report.

Problems also are created when contracting officers use interagency contracts, such as multiagency contracts or governmentwide acquisition contracts. The contracting officers must rely on a company’s size determinations made by contracting officers from other agencies. However, only the agency that made the original contract award can correct the code, Devaney wrote.

He added that the contracting officers said the General Services Administration, the government’s premier procurement agency, is slow to respond to requests to correct size determinations.

Acquisition officials, especially in the Office of Federal Procurement Policy (OFPP) at the Office of Management and Budget, have pushed to make reliable data a top priority for agencies. In May, OFPP told agencies they will need to verify their fiscal 2008 information in FPDS-NG and create plans to assure that it’s correct.

Devaney recommended that contracting officers at the Interior Department report incorrect information in the CCR to the Small Business Administration and they should pay special attention to businesses’ sizes in all federal registries. He suggested reviews of FPDS-NG data during regular internal control reviews.

He also recommended that training emphasize the importance of accurate information to make sure the department’s small-business goals are correct.

Source:  http://www.fcw.com/online/news/153085-1.html

Democrats on the House Small Business Committee today said Congress has failed in its efforts to help small businesses, specifically sighting its lack of action over the last two years.

The committee today released an assessment of the 109th Congress, detailing how not updating the tax code and failing to reform labor laws and procurement policies have contributed to what the report called "an environment where small firms often lack the tools to compete effectively."

During the two-year reign of the 109th Congress, 280 bills became public laws, yet only 8 percent of those dealt with small business, the report stated.

"We talk about leaving no child behind, but we have left thousands of small businesses behind," said Rep. Nydia M. Velazquez (D-N.Y.).

With interest rates rising and credit conditions tightening, small businesses are struggling to gain access to capital.

One key legislative change will affect small IT companies looking to acquire funding to develop new products. The change stems from a regulatory decision by the Small Business Administration that prevents venture capital-backed companies from using the Small Business Innovation Research program. SBIR offers funding to help small firms research and develop new products and technologies.

Legislation was introduced to allow companies to access both funding sources, but the bill has not been passed, the report states.

A key issue affecting small IT companies is the inaccurate representation and reporting of federal contracting data. A report released by the Democrats on the House Small Business Committee in July found almost $12 billion in miscoded federal contracts in fiscal 2005.

As a result, SBA's claim that the federal government awarded 25.4 percent of all federal contracts to small companies is flawed, the report stated. When contracts awarded to large companies and other ineligible organizations, such as non-profits and state and local governments, were counted as going to small businesses are removed from the equation, the percentage of contracts given to small companies drops to 21.4 percent.

The federal government's mandated goal is to award small businesses 23 percent of all contracts.

The report also noted the rise in contracts going to Alaska Native Corporations, and how that is leading to more contract bundling and hurting other minority business owners under SBA's 8(a) Business Development program.

Because ANC's can grow large and maintain their small disadvantaged business status, federal agencies "are increasingly likely to consolidate contracts and award these giant packages to ANC's than to resolve the root problem of contract bundling," the report stated.