Petaluma, Calif. –  In response to testimony by American Small Business League (ASBL) Communications Director Chris Gunn during a February 5, 2008 hearing on regulatory fairness, Small Business Administration (SBA) National Ombudsman Nicholas Owens has referred the ASBL’s concerns to the SBA Office of Government Contracting and Business Development for a high level review and response.

 

The ASBL’s testimony highlighted a need for more enforcement of regulations currently on the books. These regulations, which were designed to prevent the diversion of federal small business contracts to large corporations and their subsidiaries are not being enforced, according to Gunn.

 

Specifically, during his testimony Gunn referred to Section 5 of the Small Business Act of 1953 (15 U.S.C. 637 (d)(3)(C)), which states, “Misrepresentation of any concern or person as a small business concern is punishable by a fine of not more than $500,000 or by imprisonment for not more than 10 years, or both.” Every year, billions of dollars in federal small business contracts are unlawfully diverted from legitimate small businesses to large corporations. Yet, to date, no fines or punishments have been levied against offending parties.

 

The ASBL estimates that every year more than $100 billion in federal small business contracts are diverted from legitimate small businesses to some of the largest corporations in the United States and Europe.

 

“Despite the regulations set in place in the Small Business Act, which were designed for the purposes of preventing the diversion of federal small business contracts to large corporations, misrepresentation in federal small business contracting is still taking place,” Gunn stated during his testimony.

 

In Report 5-15, the SBA Office of the Inspector General stated, “One of the most important challenges facing the Small Business Administration (SBA) and the entire Federal Government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards.”

 

“The bottom line is that the SBA is not enforcing current regulations and then fabricates the small business goaling report to give the outward impression that the federal government is nearly hitting its 23 percent goal,” President and Founder of the ASBL, Lloyd Chapman said. “We believe that with effective solutions like annual re-certification, the Fairness and Transparency in Contacting Act of 2008, and the enforcement of current regulations, we can make huge strides towards the removal of large firms from the small business contracting.”

 

The ASBL expects the Fairness and Transparency in Contracting Act of 2008 to be introduced shortly.

 

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