New Government Policies Could Wipe Out Small Business Programs
ASBL Prepares To File Injunction To Stop Anti-Small Business Policies
By Lloyd Chapman
American Small Business League
October 23, 2014
PETALUMA, Calif., Oct. 23, 2014/PRNewswire-USNewswire/ -- The government has been adopting sweeping changes infederal small business programs that could be devastating for the millions ofAmericans that are employed by the nation's 28 million small businesses.
An article in the Washington Post titled, "How 8,500 large companies will become small businessesovernight," reported on the changes.
According to the latest data from the U.S. Census Bureau, 98percent of all U.S. firms have less than 100 employees and 89 percent have lessthan 20. Those 28 million small businesses are responsible for over 50 percentof the GDP, over 50 percent of the private sector work force and over 90percent of U.S. exporters.
The Small Business Administration has been adopting new smallbusiness size standards that have allowed many of the largest firms in a widevariety of industries to be redefined as small businesses. These new changeswill make it much more difficult for legitimate small businesses to compete forover $100 billion a year in government smallbusiness contracts.
One of the SBA's proposed changes that is drawing the most criticisminvolves thousands of small businesses that provide information technology (IT)products to the federal government and government prime contractors. Over 95percent of small businesses that provide IT products to the federal governmentfall under North American Industry Classification System (NAICS) code 541519,titled Information Technology Value Added Reseller. The current small businesssize standard for NAICS code is 150 employees or less.
If the new SBA size standard is adopted, any small businessoperating under NAICS code 541519 will lose their small business status and be reclassified as a large business if their annual salesexceed $27.5 million.
Federal investigators and investigative reports in the mediahave all found that the SBA awards billions of dollars in federal contracts toFortune 500 firms and their subsidiaries as small business contracts. NBC, ABC, CBS, CNBC, MSNBC, Fox News,and RTTVhave also reported on the fraud in SBA managed programs.
If the new SBA policy is adopted, federal contracts to a small IT business with annual sales in excess of $27.5 million would be reported as large businesscontracts, while some firms like Lockheed Martin, Boeing, General Dynamics,Northrop Grumman and Raytheon would be reported as small business contracts.
The American Small Business League (ASBL) has launched a nationalcampaign to work with small businesses in the IT industry to oppose the SBA policiesthat will harm legitimate small businesses. ASBL attorneys are preparing tofile an injunction to block the implementation of any changes to NAICS code541519 after the SBA has adopted the final rule.
The SBA will be taking public comment on their proposed policy changes until November10, 2014.
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