NOVATO, Calif., Dec. 16 /PRNewswire/ -- Effective Tuesday, December 21, a long overdue rule by the Small Business Administration (SBA) goes into effect, ensuring a small business purchased or acquired by a large business is no longer eligible for small business contracts. Sounds like a "no-brainer," but this distinction is made only after years of protest and countless demands for reform -- most of which came from the American Small Business League (ASBL). ASBL estimates implementation of this rule will shift $20 billion a year in federal contracts to small businesses.

"This rule is a step in the right direction -- in effect reversing egregious government polices that have allowed federal contracts meant for small businesses to go to large, often multinational, companies," said Lloyd Chapman, president and founder of the ASBL. "This is a fight we've been waging for more than 15 years, and no other organization has done as much as the ASBL to drive the reform necessary within the SBA."

"Earlier this year, the SBA requested public comment on reducing the size standard of a small business from 500 to 100 employees, and 98 percent of the responses they received were in support of the change," added Chapman. "More than 90 percent of those were a direct result of a national campaign by the ASBL to let people know that many of the SBA's current rules and regulations hurt, rather than help, small business owners."

The final rule (RIN: 3245-AE92, "Small Business Size Regulations; Rules of Procedure Governing Cases Before the Office of Hearings and Appeals") amends the SBA's small business size regulations, which are used to determine eligibility for all SBA and Federal programs that require a business be officially defined or designated as "small." With numerous sections and at a length of 38 pages, most of the rule went into effect June 21, 2004. A delay of six months was allowed regarding this aspect of the rule, which provided time to notify novating companies, or companies in the midst of acquiring small businesses, that they will no longer be eligible for small business contracts.

SITUATION HISTORY

In October 2004, the ASBL filed a complaint against the SBA demanding the disclosure and release of a report on small business contracting abuse, citing the Freedom of Information Act. The SBA's refusal to release the report came just days after the Center for Public Integrity released its own report, which found the Defense Department had awarded more than $47 billion in small business contracts to some of the largest firms in the United States and Europe with the full knowledge and approval of the SBA.

ABOUT LLOYD CHAPMAN, PRESIDENT AND FOUNDER OF ASBL

As a long-time advocate for small business, Lloyd Chapman has had a 15- year running battle with the SBA to oppose policies and programs that have allowed larger and larger firms to receive U.S. government contracts meant for small business. In November 2002, Chapman uncovered information on fraud and abuse that prompted an investigation by the GAO. The resulting GAO report identified billions in small business contracts going to very large businesses, prompting the Committee on Small Business for the House of Representatives, Congress of the United States to call a hearing on the matter. In May 2003, Chapman testified at the hearing and provided ASBL's findings and data. Chapman also provided information to the SBA that forced the removal of more than 600 large businesses from the SBA's database of small businesses. The GAO investigation and subsequent Congressional hearing prompted a host of changes in government small business policies, such as recertification for small businesses, changes in SBA protest procedures, reexamination of small business size standards and the GSA "Get It Right"program.

ABOUT THE AMERICAN SMALL BUSINESS LEAGUE (ASBL)

The American Small Business League was formed to promote and advocate policies that provide the greatest opportunity for small businesses -- the 98 percent of U.S. companies with less than 100 employees. The ASBL monitors existing policies and proposed policy changes by the SBA, and other federal agencies that affect its members, and helps to coordinate any response required to safeguard the interests of small businesses. The organization achieves significant and measurable results for small businesses across America, seeking their congressionally mandated 23 percent share of federal contracts. Prior to Sept. 1, 2004, ASBL was known as the Microcomputer Industry Suppliers Association (MISA). On the net: https://www.asbl.com.