PETALUMA, Calif., March 31, 2015/PRNewswire-USNewswire/ -- If a new SBA policy takes effect, thousands of small businessesin the IT industry will be reclassified as large businesses. At the same timeexisting SBA policies will continue to report billions of dollars in contractsto Fortune 500 firms as small business contracts.

The SBA reopened a policy for public comments that is attempting to makeamendments to small business government contracting and the National DefenseAuthorization Act of 2013 involving small business set aside contracts andsmall business subcontracting. The SBA proposed changes to the standard forsubcontracting by small business primes from no more than 50% of personnelcosts performing the set aside contract to no more than 50% of the award amountreceived by the prime contractor.

There is no logical justification for making this change inpolicy. It is inconsistent with the SBA's primary mission and seems outrageousin comparison to the current SBA policies that allow contracts to Fortune 500firms to be reported as small business contracts. This change will have adevastating impact on IT Value Added Resellers who currently provide services andsupplies to Federal agencies.

A number of investigative stories in the main stream media and a long seriesof federal investigations have found widespreadfraud and abuse in federal small business contracting programs. A number ofcongressionalhearings have found lack of oversight on the part of the SBA that has allowed widespreadfraud to permeate virtually every program managed by the SBA.

This policy comes on the heels of another anti-small businesspolicy, the "safe harbor from fraud penalties" policy that wouldallow firms to commit Federal contracting fraud. Large businesses thatmisrepresent themselves as small businesses and commit Federalcontracting fraud to illegally receive federal contracts to avoid allprosecution can simply claim they "acted in good faith." Opponents of the new policy areconcerned this is just another policy that appears to be designed to weaken anddismantle federal small business contracting programs and create moreloopholes and channels where federal small business dollars can be diverted tolarge businesses.

When the SBA tried a similar policy in October of 2014, Professor Charles Tiefer and the U.S. House Small Business Committee released legal opinionsthat found the SBA did not have the legal authority to make that change.

"Based off of Professor Tiefer's legal opinion fromNovember of 2014, I don't believe the SBA has the legal authority to make thischange. This is yet another anti-small business policy from the SBA. The agencythat continues to report billions a year in contracts to Fortune 500 firms assmall business contracts. And if this policy is passed it will reclassifythousands of legitimate small businesses in the IT industry as large businesseswhile the SBA continues to convert billions in small business contracts toFortune 500 firms," stated Lloyd Chapman,President of the American Small Business League.

The SBA is taking public comment until April 6,2015.

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