PETALUMA,Calif., Aug. 18, 2014 /PRNewswire-USNewswire/ -- The SmallBusiness Administration (SBA) is taking public comment on a new policy thatwould create a "safe harbor from fraud penalties" for largebusinesses that misrepresent themselves as small businesses to illegallyreceive federal small business contracts.

Undersection 16 (d) of the Small Business Act, the penalty forlarge businesses that misrepresent themselves to illegally land federal smallbusiness contracts is up to 10 years in prison. If the SBA "safeharbor" policy is adopted, large businesses that are caught committingfraud can simply claim they "acted in good faith" and avoid anypenalties.  Legitimate small businesses could lose billions of dollars ayear in federal contracts as the penalties for hijacking federal small businesscontracts are essentially removed.

Everyyear for a decade the SBA Office of Inspector General has named the diversionof federal small business contracts to large businesses as the numberone problem at the SBA. The SBA has consistently refused to adopt anypolicies to halt the rampant fraud.

TheSBA even denied the widely reported fraud calling it a "myth" in a 2006press release titled "Myth vs.Fact".

NBC, ABC, CBS, CNN, MSNBC, Fox and CNBC haveall reported on the fraud and abuse at the SBA.

Asearly as 1995 the SBA Inspector General uncovered that large businesses were misrepresentingthemselves as small businesses to illegally land federal small businesscontracts.

In2003 an investigation by the Government Accountability Office (GAO) found over5,000 large businesses were receiving federal small business contracts.

A2005 investigation by the SBA Inspector General found large businesses werecommitting contracting fraud by making "false certifications" and "impropercertifications".

Report 5-14 from the SBA Inspector General found the SBAwas reporting awards to large businesses as small business awards in it's ownprocurements. One of the firms the SBA reported as a small business wasBuhrmann NV, a firm located in Hollandwith over 26,000 employees around the world in 28 countries.

Aninvestigation by the General Accounting Office essentially accused the SBA ofencouraging fraud. GAO Report 10-108 stated, "By failing to hold firms accountable,  SBA andcontracting agencies have sent a message to the contracting community thatthere is no punishment or consequences for committing fraud…"

EvenPresident Obama recognized the fraud atthe SBA when he stated, "It is time to end the diversion of federal small businesscontracts to corporate giants."

Individualscan send comments to the SBA on the "safe harbor from fraudpenalties" policy by going the proposed rule on the Federal Registerwebsite and clicking on "Submit a formal comment" in the upper right handcorner. The comment period will end on Monday, August 25.

To view full press release, click here:http://www.prnewswire.com/news-releases/new-sba-safe-harbor-policy-could-cheat-small-businesses-out-of-billions-271655141.html