Attorneys for the Small BusinessAdministration are headed to court in October hoping to dismiss a suit brought by the Petaluma, Calif.,-based AmericanSmall Business League, which claims the agency's reports on achievement ofsmall-business contracting goals are legally suspect and harmful.

The league's complaint, filed in Mayagainst Administrator Maria Contreras-Sweet in federal District Courtin San Francisco, charges that the SBA's "illegal policies" have "defraudedsmall businesses and small businesses owned by women, minorities and disabledveterans out of hundreds of billions of dollars in government contracts,"the league said.

Specifically, it argues that the SBA shouldnot be able to exclude certain contracts when calculating whether agencies meetthe 23 percent goal in small business contracting. Thoseexclusions include contracts performed outside of the United States,acquisitions by agencies on behalf of foreign governments, or all contractsinvolving more than two dozen agencies on a list that ranges from the FederalDeposit Insurance Corp. to the Transportation Security Administration.

Such exclusions in measuring the percentageof prime contracts awarded to small businesses is "arbitrary, contrary to theclear directive of the Small Business Act, and thus exceeds the SBA'sauthority," the league's attorney argued. He noted the statute's requirementthat the SBA monitor agencies that fail to meet small business contractinggoals so they execute a remediation plan. Yet "through creative accounting . .. failed goals are not reported, no analysis is done, no remediation plans arecreated, and Congress' clear directive that the SBA continue to monitor andimprove its small business participation programs is left unheeded," the briefsaid.

Late last month, just before the filingdeadline, the SBA responded with a motion to dismiss. "SBA's requirement topublish agency remediation plans stems directly from the Small Business Act.Though the implementation of this requirement is tied to the outcomes publishedin the goaling reports, it is the statute—not thereports—which binds SBA to act," the agency argued. "Moreover, the allegedlegal consequences for plaintiff are speculative and result not from SBA'sactions but from individual contracting decisions across multiple federalagencies."

SBA added that the court lacks the federalsubject-matter jurisdiction, and said the plaintiff alleges no "final agencyaction" that would invoke a waiver of sovereign immunity under the AdministrativeProcedure Act. "The goaling report does not amount toagency action, which must be analogous to 'rule, order, license, sanction,relief, or the equivalent or denial thereof, or failure to act' as defined bythe APA," SBA said. "Even if the goaling reportconstitutes agency action, it is not final agency action because the reportdoes not consummate any SBA decision making process, and because it does notdirectly result in legal consequences for either party."

League president Lloyd Chapman told GovernmentExecutive the SBA's brief "completely side-stepped the two main issuesof the case—their grandfathering rule and their exclusionary rule," to "try andhave the case thrown out on a technicality. Based on their weak response, wefeel we have an excellent chance of prevailing." 

He is seeking an injunction against excludingcertain contractors from the calculation, an amended goalingreport and attorneys' fees.

Separately on Tuesday, the SBA unveileda new website called certify.sba.gov tohelp women-owned and economically disadvantaged contractors navigate theapplication and certification process. It includes a tool that poses 15questions to help firm owners determine their status in qualifying for governmentset-asides.

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