GC Micro Corp. makes dramatic progress in its 10-year battle to get meaningful oversight of companies claims they are small businesses and eligible for special treatment in federal procurement.

Led by Lloyd Chapman, general manager of the Novato, CA, information-technology company, the effort has led to:

• An investigation by the U.S. Attorneys Office in Washington.
• An investigation by the Special Investigations Division of the General Accounting Office.
• A reexamination of the Small Business Admin. regulation that permits companies to retain federal contracts they won when they were small even though they grow to exceed small-business size standards.

Chapman has already attracted about 1,000 members to the newly formed Microcomputer Industry Supplier Assn. and it is in his role as president he recently completed a whirlwind campaign among federal agencies, elected officials and congressional staff to present his thesis.

Im concerned that individuals at the Small Business Admin, the Defense Dept., the General Services Admin. are colluding with large businesses to allow them to receive contracts intended for small businesses, he tells MBI.
The companies and agencies have more benign explanations of why large companies have contracts intended for small businesses.

Nonetheless, his efforts produce a letter from Sen. Barbara Boxer (D-CA) to the U.S. Attorneys Office in Washington asking for a review of the situation.

A spokesman for that office confirms the case has been assigned to investigators, which should suggest that its more than just a cursory review.
In his trek through official Washington, Chapman visited the GAO, the SBA Office of Inspector General, the U.S. Attorneys Office and staff members of the congressional Small Business Committees. He talked, too, with Senate Small Business Chairman John Kerry (D-MA) when Kerry was visiting California.

Chapman says GAO called him to say the agency has begun an investigation. GAO does not respond to a query by MBI.

Under federal law, a company falsely claiming to be small faces fines and criminal penalties.

In the myriad letters to government officials, Chapman names three firms he says are large but still are listed on SBAs PRO-Net as small businesses. One firm has since taken its name off PRO-Net. Another tells MBI it no longer has any small business contracts and the third says Chapmans facts are incorrect but declines to explain.

Darryl Hairston, deputy to the SBA associate deputy administrator for government contracting and business development, says listing on PRO-Net is not proof a company is holding itself out as a small business and SBA does not accept responsibility for making sure only small businesses are listed.

Indeed, the Website contains a disclaimer asserting the information is the responsibility of the listing company and users of the site should communicate directly with the listed companies.

Hairston says the legal assertion a company is a small business is made on the bid form.

One explanation for large firms or their affiliates retaining contracts intended for small businesses after they become large firms is an SBA regulation requiring it. The rationale is that the company should be permitted to complete work on a contract even though it has become a large company ineligible for future small-business preferences.

That rule works with discrete contracts issued by agencies, but under GSA schedules contracts can go on for many years.

Boyd Rutherford, associate GSA administrator of the Office of Enterprise Development, tells the Los Angeles Times the agency is considering requiring companies to recertify as small businesses when the contracts come up for renewal, which at the most is every five years.