Petaluma, Calif. – The Senate Committee on Banking, Housing and Urban Affairs is scheduled to hold hearings Tuesday, May 20th on the pending nomination of current Administrator of the Small Business Administration (SBA), Steven Preston as Secretary of Housing and Urban Development. Small business advocates expect the committee, which is chaired by Christopher J. Dodd (D – CT), to challenge Administrator Preston on his poor track record on small business.

 

On July 10, 2006, Mr. Preston was sworn in as Administrator of the SBA, assuming the position after the resignation of former SBA Administrator Hector Baretto. Baretto’s tenure has been severely criticized by small business groups, the press and Congress for allowing billions of dollars in federal small business contracts to be diverted to large corporations. Prior to Preston’s confirmation, a series of federal investigations and private studies found that many of the actual recipients of federal small business contracts were Fortune 500 corporations and their subsidiaries.

 

Despite a mountain of evidence pointing to the diversion of federal small business contracts to large corporations produced prior to his confirmation, Mr. Preston has failed to recognize or implement policies to stop such abuses.

 

The first congressional investigation into the diversion of federal small business contracts to large corporations was held on May 7, 2003. Since then there have been more than 400 stories in nearly every major newspaper and mainstream media outlet across the United States. Investigative reports by ABC, CBS and CNN have all found that billions of dollars in federal contracts intended for small businesses have actually gone to firms like: Lockheed Martin, Boeing, Rolls Royce, L3 Communications, British Aerospace Engineering (BAE) and Raytheon. (www.asbl.com)

 

Specifically, the American Small Business League and its members expect that Mr. Preston be held accountable for the continued diversion of federal small business contracts to large corporations during his tenure at the SBA.

 

On May 11, 2007, the SBA distributed a press release titled "Myth vs. Fact: SBA and Government Contracting," which stated that it is a myth that, "Large companies, including large, multinational corporations are taking away federal contracts specifically intended for small businesses." Additionally, the press release stated that it was a myth that the SBA had proposed a grandfathering plan that would have allowed large firms receiving federal small business contracts to keep those contacts. (http://www.sba.gov/idc/groups/public/documents/sba_homepage/news_07-30.pdf)    

 

The SBA’s Myth v. Fact press release flies in the face of Report 5-15 from the SBA Office of Inspector general which stated, “One of the most important challenges facing the Small Business Administration (SBA) and the entire federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards." Additionally, information on the SBA’s proposed grandfathering plan can be found in the Federal Register dated December 3, 2004. (Federal Register, volume 69, 70200, No 232) (http://edocket.access.gpo.gov/2004/pdf/04-26609.pdf)

 

During the last two years, Mr. Preston has fostered the continued diversion of federal small business contracts to large corporations. In June of 2007, Preston instituted a policy to allow Fortune 500 firms to keep their small business contracts for 5 more years. The policy was instituted despite recommendations for a policy that would have stopped the abuse in 2008 by: the SBA Office of Inspector General, the Office of Federal Procurement Policy, the Office of Management and Budget and the Senate Committee on Small Business and Entrepreneurship.

 

In addition to these offenses, Mr. Preston has diminished transparency in the reporting of federal contracting numbers by removing the information the general public can use to determine whether a business is small or large in the Central Contractor Registration database, and by consistently refusing to release the names of the actual recipients of federal small business contracts.

 

   

###