PETALUMA,Calif., Sept. 10, 2014 /PRNewswire-USNewswire/ -- The SmallBusiness Administration (SBA) has concluded taking public comment on acontroversial new policy that would create a "safe harbor from fraud penalties" for large businessesthat commit fraud to illegally land federal small business contracts.

Notsurprisingly over 90 percent of the public comments the SBA received on the"safe harbor fraud penalties" policy were strongly opposed to it. TheSBA only received two comments that favored the new policy and both of thosewere from law firms that represent large businesses.

Onecomment from Edward Kinberg describes, "This rule will open the door to governmentsanctioned fraud. Rather than take any action to ensure a business meets thesize standard for a procurement, they would be able to "guess" thatthey do, win the contract and IF their fraud is discovered claim it was aninnocent mistake."

TheAmerican Small Business League (ASBL)sent the SBA a comment that was stronglyopposed to the policy they believe will actually encourage fraud in federalsmall business contracting programs and protect fraudulent firms.

Undercurrent federal law, the penalty for any large businessthat misrepresents itself as a small business to illegally land federal smallbusiness contracts is up to ten years in prison, a $500,000fine per occurrence or both. Under the proposed "safe harbor from fraudpenalties" policy, a large business that commits felony federalcontracting fraud can avoid all penalties by simply claiming they "acted in good faith."

Asurvey of over 2000 Chambers of Commerce across the country by the American SmallBusiness League found the overwhelming majority of Chambers were stronglyopposed to the policy.

Everyyear since 2005 the SBA's own Office of Inspector General has named thediversion of federal small business contracts to large businesses as the numberone problem at the SBA. In Report 5-15 the SBA Inspector General described theproblem as, "One of the most important challenges facing the SmallBusiness Administration (SBA) and the entire Federal government today…"

Report5-16 from the SBA Inspector General found large businesses were committingfraud to hijack federal small business contracts by making "false certifications."

EvenPresident Obama recognized the magnitudeof fraud in federal small business contracting programs when he released thestatement, "Itis time to end the diversion of federal small business contracts to corporategiants."

Dozensof major newspapers along with ABC, CBS, NBC, CNN, MSNBC, RTTV, Fox Newsand CNBChave all reported on the issue.

TheSBA Office of Inspector General began finding widespread fraud in federal small business contractingprograms as early as 1995.

Itis unclear what the SBA's next step will be in attempting to adopt the"safe harbor from fraud penalties" policy considering the overwhelming public opposition to the policy.

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