SAN FRANCISCO(CN) - A federal judge dismissed a lawsuit claiming the U.S. government falselyreported that billions of dollars in public contracts for large corporationswere going to small businesses.
     The American Small Business League sued the U.S.Small Business Administration (SBA) in May, alleging the federal agency fudgednumbers in its annual report to make it look like the government met its targetof awarding 23 percent of contracts to small businesses.
     According to the SBA's 2015 report,the U.S. government doled out $352.2 trillion in contracts last year with 25.75percent, or $90.7 billion, going to small businesses.
     However, the Small Business League says thosenumbers are false because the SBA improperly excluded "a significant numberof contracts" when calculating the total value of prime contracts. Theleague also claims the SBA wrongly counted huge corporations, includingVerizon, Lockheed Martin and Raytheon, as "small businesses" in itsreport.
     In an interview, the league's president andfounder, Lloyd Chapman, alleged that more than half of the $90.7 billion incontracts reportedly awarded to small businesses actually went to "Fortune500 companies."
     Chapman stressed how those government contractscan impact the American economy, pointing out that small businesses createdmore new jobs than large corporations in recent years.
     Small enterprises and entrepreneurs createdtwo-thirds of newjobs in 2014 and accounted for 7 million of the 11 million jobs addedduring the recovery period following the Great Recession of 2007 to 2009,according to the Small Business Administration.
     The Small Business Act requires the SBA to createa remediation plan detailing how it will work toward awarding more contracts tosmall businesses if it fails to meet the 23 percent goal.
     In a three-page ruling issued Tuesday night, U.S.District Judge Vince Chhabria found the federal court for the Northern Districtof California lacks jurisdiction to review the validity of the SBA's annualreport because it does not qualify as a "final agency action" underthe Administrative Procedure Act.
     "The report does not carry penalties for anagency's failure to meet the small business participation goal," Chhabriawrote. "It does not bind agencies to comply with any proposed remediationplan."
     Chapman said he was disappointed in the rulingand complained that his side was not given a chance to argue against thegovernment's motion to dismiss in open court.
     "We didn't have our day in court,"Chapman said. "If we could have gone in and had our oral arguments, thatwould have been different. The fact that they didn't let us do that istroubling."
     Earlier this month, the judge cancelled a hearingon the motion to dismiss scheduled for Oct. 6, stating that he would insteadissue a ruling based on written arguments.
     Chhabria did not immediately respond to a phonecall seeking clarification on why he vacated the hearing, but the judge'sbrief, three-page ruling indicates he may have viewed the motion to dismiss asa clear-cut matter of law.
     The judge cited a 1998 Ninth Circuit ruling, Guerrerov. Clinton, which held the court lacked jurisdiction to require theDirector of the Office of Insular Affairs to issue annual reports on the impactof a 1985 compact on Pacific islands, including Hawaii, Guam and the NorthernMariana Islands.
     Because Congress passed the law requiring thatreport be issued every year, the Ninth Circuit found that "Congress, notthe judiciary, is in the best position to decide whether it's gotten what itwants."
     Chhabria applied that same interpretation to theadequacy of the SBA's annual reports to Congress on government contractspending.
     "The upshot is that Congress enacted astatute requiring the Small Business Administration to provide informationabout the participation of small businesses in federal contracting,"Chhabria wrote. "If the Small Business Administration is giving Congressbad information, then Congress can do something about it, either in anoversight or legislative capacity."
     SBA spokeswomen Carol Wilkerson and HannahKelley-Bell did not immediately respond to phone calls seeking comment.
     Chapman said his organization plans to appeal theruling.

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