Agency critic not letting up

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Agency critic not letting up

By Thuy-Doan Le
Sacramento Bee
October 9, 4000

Lloyd Chapman doesn't mind being a thorn in the side of the U.S. Small Business Administration.

A longtime critic of the agency, Chapman, who is president and founder of the Petaluma-based American Small Business League, recently filed his second lawsuit against the SBA. He plans to file at least two more early next year.

One of Chapman's biggest beefs is that the agency's policies appear to favor big businesses over small ones when it comes to awarding federal contracts.

Chapman bases his conclusion, in part, on studies from the Government Accountability Office, the SBA Office of Advocacy and the SBA Office of the Inspector General, that he says have found some irregularities with the SBA's system. In Chapman's view, the SBA's policies allow large companies to get lucrative federal contracts by improperly calling themselves a small business.

"I think there's a cooperative effort ... to eliminate the federal small business program," he said. "All the reports indicate that."

But SBA officials say there's "no validity" to Chapman's accusation that there is "a conspiracy to favor large businesses." Calling Chapman a "very determined gentleman," Eric Benderson, the SBA's associate general counsel for litigation, said the agency is not trying to "undermine small businesses. ... We have nothing to gain by supporting big businesses, but he's certainly entitled to his view."

Size is a big deal. Last year, the federal government awarded about $65 billion in contracts to small businesses that meet the SBA's guidelines. That's about 23 percent of all goods and services purchased by federal agencies.

Currently, the agency is in the midst of refining its definition of a small business. It currently uses 37 different guidelines to define 1,151 industries and 13 subindustries across the country.

When a small business unsuccessfully bids on a federal contract and believes the winning bidder is not a qualified small business, it can lodge what's called a "size protest."

Chapman's most recent lawsuit, filed last month, said the SBA failed to give him all documents relating to its dismissal of size protests nationwide, under a Freedom of Information Act request he made in 2004.

SBA eventually sent him 118 documents about size protests filed with the San Francisco SBA office. Chapman contended that was incomplete; he wanted documents from SBA regional offices nationwide.

Benderson said Chapman's initial request was too vague, but the agency hopes to reach an agreement with Chapman's attorney before the case goes to court.

According to the SBA, among hundreds of thousands of contracts issued, a total of 1,572 size protests were lodged nationwide between 2002 and 2005.

Gary Jackson, SBA's assistant administrator for size standards, said when a protest is lodged, the agency reviews the questioned company's information, including tax returns and number of employees, to determine whether it truly qualifies as a small business.

Drue Brown, chairman of California Capital, a nonprofit corporation that supports small-business entrepreneurship, said he appreciates Chapman's cause.

"He's doing the right thing and pursuing it correctly," he said, owner of AgCEL, a Sacramento environmental firm. "However, I think it's a humongous task to tackle."

About the writer:
The Bee's Thuy-Doan Le can be reached at (916) 321-1040 or tdle@sacbee.com.





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