Harnett: Has fraud finally caught up to SBA?


Harnett: Has fraud finally caught up to SBA?

By Dwayne Hartnett
Amarillo Globe News
October 9, 9600

The headline on the news release was what caught my attention.

It read:

"Buried report proves SBA knew about fraud.''

Some history.

It seems the Small Business Administration Inspector General's office conducts internal investigations regularly.

And, to make a long story short, a 1995 probe entitled "Government Contracting Programs: Activities to Enhance Fraud Detection and Deterrence'' proved that executives at the SBA have known for almost 10 years that intentional fraud existed in federal small business contracting programs.

The assertion is admittedly a bit on the wordy side, but the information is telling.

Let's jump ahead of all the findings with this tidbit of data: The Center for Public Integrity found the Pentagon alone had awarded $47 billion in federal small business contracts to some of the nation's largest defense contractors.

Mind you, that's with a B.

SBA Administrator Hector Baretto told the House Committee on Small Business in February the billions in abuses were the result of "data entry errors.''

His explanation didn't fly.

It didn't even reach taxying status.

Rep. Nydia Velasquez, D-New York, accused Baretto of being "dishonest.''

Harsh words?


Too harsh?


Maybe not.

The SBA's own Inspector General, according to a report out of American Small Business League's office in Petaluma, Calif., released three separate damaging reports in February and March on the subject. The reports found large firms were still intentionally misrepresenting themselves as small businesses to illegally receive federal small business contracts.

Many of the documents were uncovered by the ASBL, which has launched a national campaign to end fraud and other abuses in federal small business contracting programs.

The results speak for themselves, according to ASBL President Lloyd Chapman.

"This report and the most recent investigations by the SBA's own Inspector General clearly show the SBA has known about this rampant fraud for 10 years,'' he said.

"And, they have lied to Congress, the media and the public,''

The ASBL's Web site said that seven separate government and private studies have found billions in U.S. government small business contracts have been awarded to some of the largest firms in the world.

One of the probes conducted by the SBA Inspector General was sought at the request of Sen. John Kerry, D-Mass., who lost the 2004 presidential election to George W. Bush. That might explain Kerry accusing the Bush Administration of "fostering an atmosphere of fraud and abuse in federal small business contracting programs.''

If true, that would account for five of the 10 years.

So that would place the rest of the blame squarely on the Clinton Administration for the previous five years.

Fraud is an equal opportunity participant.

Not only has the SBA angered members of Congress and the small business community nationwide by offering lame excuses, it hasn't been very original in its defense.

Words like "computer glitches and miscoding'' stand out.

For the record, misrepresenting a firm as a small business is a felony under federal law with a 10-year prison term and a $500,000 fine.

That sounds tough enough.

Except, there is one small factor worth mentioning. The SBA has never taken any action against any firm for fraudulently claiming to be a small business.

Who said thinking small doesn't pay off?



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