When Lloyd Chapman received a call from a Dallas newspaper reporter in 1991, warning him to be careful, he dismissed it as a crank call. When the reporter flew to California a few days later to warn him in person, he took it more seriously.

Chapman was engaged at the time in a lawsuit against the U.S. Department of Defense, and the stakes were high. He was pushing to have top-secret Pentagon information made public, based on his suspicion that billions of dollars in government contracts, earmarked for small business programs, were being awarded to large corporations.

"The reporter reminded me that I was interfering with an $80 billion military contract," he said. "He said he'd heard some things, and he brought up the movie 'Silkwood'."

A short time later, Chapman said, he got an ominous phone call from a stranger. "The guy was very calm and he spoke in measured tones. He told me I was going to get hurt if I didn't drop the suit."

Chapman hung up the phone, considered the situation, and ultimately changed only one thing: he began parking closer to his Novato office building.

Two years later, the 9th Circuit U.S. Court of Appeals ruled in his favor and the Pentagon was forced to make its military contract information public for the first time.

But according to Chapman, this landmark decision, which should have paved the way for small businesses to win substantial government contracts, was stifled by the efforts of the Small Business Administration (SBA).

"Congress specifically set this money aside for small business," he said, "but the SBA established loophole after loophole. You've had Fortune 500 companies getting contracts by disguising themselves as small businesses. Ninety-eight percent of the small businesses in America employ less than 100 people, yet the SBA's basic standard for many industries is 500 employees, and often more."

According to the SBA, a single-employee operation that manufactures pine benches is a small business, but so are a fiber optic company with 1,000 employees, a telecommunications company with 1,500 employees and an international trade finance company with $150 million in assets.

Chapman became increasingly frustrated by the SBA throughout the 1990s, often taking his concerns to Washington, and finally left his job in the microcomputer industry to establish the American Small Business League in 2002, right here in Petaluma.

He crusades tirelessly out of his Cypress Drive office, up to 14 hours a day, to ensure small businesses actually benefit from the government programs designed to help them.

So far, he has been successful in getting nearly 600 corporations removed from the government's database of small business contractors and is in the midst of a heated campaign, in which Sen. John Kerry has become involved, to re-define a small business as one with 100 employees or less.

"I testified before Congress," he said. "It was a five-hour hearing. I got to talk for seven minutes. The other five hours 23 minutes, they let the SBA lawyers talk. I got so angry, I held up a government document showing AT&T on their list of small business contractors. The chairman asked the SBA lawyer about this, and the lawyer said it was a computer glitch.

"I watched a federal employee lie to Congress," he said. "Get ready, because I'm gonna clean this stuff up."

The case of Stanley Pond, an engineer in Berthoud, Colo., is reflective of what Chapman sees as widespread abuse of the contract awards system. In 2001, Pond and his two employees developed a custom temperature calibration instrument for the Air Force, only to lose the bid to a large Ohio corporation.

"I was the only small business in the country that made this instrument," said Pond. "Their corporation used three layers to disguise itself. It was a joint venture, where this huge organization used a small local company as a rep. The SBA never even examined their facilities."

Pond, after being denied an appeal hearing, filed a complaint with the SBA Inspector General's office. Two years later, the office concluded the Ohio company should have been ineligible for the contract.

"That, and a buck and a quarter, will buy me a soda pop at a vending machine," said Pond, who estimates he sunk $100,000 into developing his product.

Chapman is sympathetic but not surprised. He recalls an incident years ago in Texas, where he got his first taste of common sense prevailing over government bureaucracy.

"I worked for the state controller," he said. "They were going to bring in a bunch of outside 'specialists' to figure out how to save money. I asked: why bring in strangers when you've got people who've been working here 20 years? The first idea came from a handyman who said all state employees should fill their rental cars before returning them. All told, we saved a million dollars that first year."

Chapman attributes his fighting spirit to his Texas upbringing in the 1950s.