Novato resident Lloyd Chapman's ongoing battle with the U.S. Small Business Administration has taken another turn, with the small business advocate and former GC Micro executive filing a lawsuit against the federal agency and threatening to file another.

Chapman's American Small Business League, formerly the Microcomputer Industry Suppliers Organization, filed the lawsuit Wednesday in U.S. District Court in San Francisco in an attempt to force the agency to publicly release the results of a government study on small-business contract fraud. Chapman said he has exhausted other recourses under the Freedom of Information Act, and claims he knows the report shows rampant abuse of federal contracting regulations.

In a related and long-standing battle, Chapman said he will likely file another lawsuit against the agency to force it to release public comments about a proposal to change the size limits for companies classified as small businesses.

Chapman has been a staunch advocate of lowering the limit from 500 to 150 employees, saying small businesses shouldn't be forced to compete with big businesses in vying for government contracts. The agency has so far resisted lowering the limit, citing lack of public support for the change.

" The Small Business Administration is the worst enemy to small business this country has ever had," he said. "The SBA has essentially repealed the Small Business Act of 1951 for most people because they have enacted a series of policies that force small businesses to compete with some of the biggest companies in the world."

Eric Benderson, an associate general counsel for litigation for the agency, called Chapman's claims ridiculous.

" It would be totally contrary to the point of doing the report for us to not make it public - it is simply not finished and we will release it publicly when it is finished," Benderson said. "I can't be any more emphatic - it's going to be made public when it is finished.

" It is just going through a vetting process. The whole point of it is to make it public."

But Chapman says he spoke to the author of the report, Paul Murphy of Fairfax-based research firm Eagle Eye Publishers, which was hired by the SBA to conduct the report. Chapman said Murphy told him the report is indeed finished and does indicate fraud.

Murphy could not be reached for comment.

" All the research shows that this is rampant and widespread, and they're not prosecuting it," said Chapman, who also cited recent reports from the Government Accountability Office and the Center for Public Integrity that indicated fraud within the system.

" If it's true that the SBA is covering up fraud and is helping it to occur, that's a pretty serious federal crime," Chapman said.

Government officials have said the agency hasn't sought to punish big firms that are listed as small ones for the purpose of winning federal contracts, primarily because it hasn't had to. Companies found to be too large to qualify are simply taken off the list and are no longer in the running for small-business set-asides.

Chapman said the agency doesn't go far enough. He said fraud is a felony and should be prosecuted as such.

U.S. Rep. Lynn Woosley, D-Petaluma, is supporting Chapman in his fight on both fronts, according to her spokeswoman, Susannah Cernojevich. Woolsey could not be reached for comment.

Federal law requires the federal government to award 23 percent of the total value of its contracts to small businesses. The government issues several hundred billion dollars' worth of contracts each year.

Chapman said the government small business contract system is essentially riddled with three types of fraud: companies claiming to have fewer employees than they do to qualify; companies that lie about their specific line of business because of different small business size limits for different industries; and the federal government giving small business contracts to businesses it knows are larger than the size limits.

Benderson said Chapman's quest is misguided because the report would only focus on mistakes in the government's system to award contracts. "This study doesn't deal with fraud, it deals with how government agencies are counting their contracts," he said.

Big companies are able to qualify for small business contracts under the system. If a business is awarded a contract while it is classified as small, the business is considered small for the life of the contract.

The Center for Public Integrity found that the small business contracts won by the largest defense firms in the country from the U.S. Department of Defense amounted to $9.3 billion.

Chapman has spent the past 15 years in a fight with the government over what constitutes a small business, dating back to 30-employee GC Micro's struggles to win government contracts.