SBA Continues To Fail Small Businesses


SBA Continues To Fail Small Businesses

By Lloyd Chapman - Special to the Worcester Business Journal
Worchester Business Journal
September 29, 2008

Most Americans think of the Small Business Administration (SBA) as the agency that is supposed to help small businesses get started, secure loans, grow and maybe land some federal contracts.

The truth about the SBA can be uncovered in reports from their own Office of Inspector General (OIG), the United States Government Accountability Office (GAO) and in court documents from the many Freedom of Information Act (FOIA) lawsuits the SBA has lost.


Paper Chase

These documents paint the picture of a federal agency that, along with the Office of Management and Budget (OMB), has done everything possible to dismantle every federal program to designed assist small businesses.

In 2007, the ASBL filed a FOIA request for the specific names of the firms that received federal small business contracts for fiscal years 2005 and 2006.

The SBA once again refused to provide the data. As a result, the ASBL filed suit against the SBA in Federal District Court in San Francisco on February 6, 2008.

The SBA was so determined to withhold the damaging information that its attorneys told the court that the agency did not have any information on the actual recipients of government small business contracts.

United States District Court Judge Marilyn H. Patel didn’t buy it. She directed the SBA to release the information. Recently the SBA moved to dismiss the case and avoid paying the ASBL’s legal fees. Patel again ruled against the SBA and denied their motion. In court documents Patel stated, “The court finds curious the SBA’s argument that it does not ‘control’ the very information it needs to carry out its duties and functions.”

Since May of 2003, there have been 15 federal investigations regarding federal small business programs. They all found fraud, abuse, loopholes, a blatant lack of proper oversight and the intentional diversion of billions of dollars in federal small business contracts to hundreds of the largest firms in the world.

Additionally, the investigations found hundreds of large firms that had received federal small business contracts, including: Lockheed Martin, Boeing, Raytheon, Hewlett-Packard, Northrop Grumman, John Deere, Dell, Xerox, General Dynamics, and British Aerospace and Engineering (BAE).

Surprisingly, no one in Congress has even proposed legislation to stem the flow of federal small business contracts to corporate giants around the world.

The ASBL projects that the SBA and the OMB are allowing large businesses to take up to $100 billion a year in federal small business contracts from middle-class America.

Bush officials that call the shots at the SBA may have painted themselves into a corner. For the first time in the SBA’s 55-year history, the agency is refusing to release the government’s small business contracting statistics.

How can they? They told a federal judge they didn’t have any such data.

The Bush Administration is apparently extremely concerned about the negative impact the release of this information could have on the upcoming elections. SBA attorneys notified the Federal District Court in San Francisco that the agency would appeal the District Court’s decision to deny its motion to the 9th Circuit Court of Federal Appeals.

The SBA’s arguments before the 9th Circuit Court will no doubt be, shall we say, creative. It’s not likely they will have any luck in trying to convince the 9th Circuit Court of Federal Appeals that the SBA has no information whatsoever on the actual recipients of more than $140 billion a year in federal small business contracts.

In 1992, I won my first FOIA case against the federal government in the 9th Circuit Court. During the hearing, the panel of federal judges lambasted the federal government’s attorney so severely that she left the courtroom in tears. My advice to the unfortunate soul that will be charged with representing the SBA during this case, “bring a hanky.” 

Lloyd Chapman is the president of the California-based American Small Business League.




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