Small firms rap SBA for thinking big
By Ambrose Clancy
Long Island Business News
April 25, 2008
This week, the U.S Small Business Administration celebrated “National Small Business Week 2008” amidst foul cries from some members of the small biz community.
According to a 2000 law, the SBA must try to give 5 percent of all federal contracts to small, women-owned businesses. But Margot Dorfman, chief executive of the U.S. Women’s’ Chamber of Commerce, said both the SBA and the chamber agree that goal has not been met.
And Dorfman thinks the SBA’s decision to throw up roadblocks against women-owned businesses, comes straight from the Bush administration.
“I believe this administration, for whatever reason, does not feel it’s necessary to comply with the law,” she said.
Mike Stamler, the SBA’s chief press officer, explained that the law dictates that his organization tries to hit 5 percent. It’s only a goal.
“We’re enacting the law as best we can as Congress asked us to do,” he said.
Sole proprietor Cris Young, owner of Oceanside’s Hudson Fasteners, said that logic is dismissive and wanted answers to why the goals are not being achieved.
She said the SBA has had eight years to reach that goal.
“This is 2008 and the goals are not met,” Young said. “Isn’t that enough time to get this right?”
Another charge leveled at the SBA is large corporations are scoring federal contracts at the expense of small businesses. By law, a goal of 23 percent of federal contracts should go to small businesses. However, the so called “bundling” of contracts, whereby several contracts on one project are included in only one bid, results in small businesses being shut out.
For example, if a small business is contracted to do cleaning for the Internal Revenue Service and windows also have to be cleaned, a large company will come in and bid for both jobs, resulting in two small businesses shut out, said Molly Brogan, spokeswoman for the National Business Association.
“We have concerns and we have raised the issue,” Brogan said, while adding that “the SBA has improved their transparency significantly since previous years.”
Ron Roybal, owner of PRMS Electronic Systems in Islandia, said bundling is done for speed and efficiency, forgetting the concept of a level playing field for small businesses.
“It’s easier for federal agencies to get these bundled contracts awarded,” Roybal said.
The SBA is not to blame, Roybal added. “They do the best they can with the resources they have.”
Stamler agreed, adding that the SBA is constantly trying to identify bundling and that it must depend on other agencies to identify bundling as well.
A more nefarious practice is corporations using small businesses as “pass-throughs.” Jordan Kudler, president of Krest Office Products in Long Island City, explained that a corporation approaches a small business and asks them to be a front, or pass-through for them. The corporation “tells the small business that on any government orders, ‘We’ll pick them, wrap them, pack them and ship them,’” said Kudler. The pass-through does absolutely nothing and receives a percentage of the over-all contract.
“This undermines the true essence of what the federal government is trying to-do which is set aside business for small businesses,” Kudler said. “This is a criminal act and there needs to be a law against it.”
Spokesman Stamler said “pass-throughs are hard to spot. Where we find them we act on them.”
New certification rules to judge what business is truly a small entity have been put in place since June, Stamler said “There never was a big problem with large companies swooping in and taking contracts specifically meant for small businesses,” he said. “That’s a repetitive, incorrect interpretation that one hears.”
Stamler himself is fending off accusations from SBA critics that claim small business are getting stiff-armed out of contracts.
Lloyd Chapman, president of the American Small Business League and a long-time opponent of the SBA, under the Freedom of Information Act has asked for all of Stamler’s e-mail correspondence for 2006-2007 to prove his point.
“Stamler threatens people and I want to expose what he does every day of the week,” Chapman said, adding that the spokesman has slandered him and his organization, which exists to fight the SBA’s giving contracts intended for small businesses to Fortune 500 companies, on numerous occasions.
The SBA is in the process of reviewing “all the correspondence and will hand over what is appropriate,” Stamler said. On the hostility and threatening charges, he added, “You’re asking the wrong guy. Those are not my words. Consider the source.”
Ambrose Clancy can be reached at email@example.com.