Petaluma, Calif. - A new Small Business Administration policy set to take effect on June 30th will allow NASA to continue to count contracts to Fortune 1000 firms towards their federally mandated 23 percent small business contracting goal.

In February of 2006, NASA lost a federal lawsuit to the American Small Business League, which was filed under the Freedom of Information Act. NASA was forced to disclose information that indicated that they had included billions of dollars in contracts to many of the nation’s largest defense and aerospace firms towards their small business contracting goal.

Under the new SBA policy, NASA can continue to include awards to firms such as Boeing and Lockheed Martin in their small business contracting statistics until the year 2012.

The SBA originally proposed a “grandfathering” policy in November of 2004, after a series of federal investigations found the SBA had included billons of dollars in contracts to Fortune 1000 firms and hundreds of other large businesses towards the federal government’s 23 percent small business procurement goal. It would have allowed the SBA to continue to claim that the government had met their small business-contracting goal by continuing to count contract awards to large businesses as small business contract awards. The SBA was forced to shelve the grandfathering policy after receiving more than 6000 objections to the proposed policy.

New SBA Administrator Steven Preston resurrected the unpopular grandfathering policy shortly after he was appointed to office, renaming it “five-year re-certification.” Like the grandfathering policy, the five-year re-certification policy will allow NASA and all other federal agencies to include existing small business contracts to Fortune 1000 firms and other large businesses towards their small business contracting goals for five more years.

The Senate is expected to propose legislation to remove Fortune 1000 firms and all large businesses from federal small business contracting programs before the end of 2007.

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