An interim rule from the Obama administration grants federal agencies the power to decide whether or not to set aside GSA Schedule contracts worth between $3,000 and $150,000 for small businesses. This proposed regulation is in obvious violation of existing federal law, and is the latest development in a 10-year-long battle between federal regulators and small businesses, during which upwards of $400 billion in small business set-asides have been diverted to large companies.

According to the Small Business Act, any federal acquisition within the simplified acquisition threshold ($3,000-$150,000) shall be set aside for small businesses. In clear violation of the Small Business Act, federal regulators have already exempted GSA Schedule contracts, which represent about $40 billion annually, from that requirement. Now, the Obama administration’s interim rule would allow small business set-asides on GSA Schedule contracts but only at the discretion of federal agencies, which would also violate the Small Business Act. The Small Business Administration (SBA), which will eventually write the final ruling, has supported the exclusivity of the simplified acquisition threshold for small businesses.

“The interim rule is the equivalent of telling small businesses that their rights to ‘justice,’ an inalienable right, would now be offered, butat the discretion of the government. How dare they!” said Raul Espinosa, a small business contractor and founder of the Fairness in Procurement Alliance (FPA). Espinosa has been fighting the exemptions since 2007, and was recently informed that the Government Accountability Office (GAO) dismissed his latest protest, refusing to address the issue.

Although the Small Business Administration has affirmed that the intent of Congress in the Small Business Act was unambiguous and that simplified acquisitions take priority over GSA Schedule contracts, the federal government’s most recent contracting data indicates that 3 out of 5 simplified acquisitions have been diverted away from small businesses.

“The small business community is not fooled by this latest anti-small business policy from the Obama administration,” said ASBL President Lloyd Chapman. “We will fight this policy and we won’t stop until every single contract worth less than $150,000 is awarded to a legitimate small business.”

Small business owners have until February 13, 2012 to oppose the interim rule. The American Small Business League (ASBL) strongly urges small business owners to tell federal regulators that simplified acquisitions, including those on the GSA Schedules, are exclusive for small businesses.

Visit the government regulations website: http://1.usa.gov/zMeTfn, click on the “Submit a Comment” link, and post a message to the regulators.