PETALUMA, CA--(Marketwired - Jul 10,2014) - According to the American Small Business League (ASBL),the Small Business Administration (SBA) has finally acknowledged the existenceof fraud in federal small business contractingprograms. Based on the SBA's new policy that wouldcreate a "safe harbor"from penalties for firms that have committed fraud, it would appear the levelof fraud is much more pervasive than the SBA has ever acknowledged.

For over 20 years a series of federal investigations have uncovered wide spread fraud in federal small businesscontracting programs. As early as 1995 the SBA Inspector General reported onwhat they called, "a particular fraudulentpractice."

In 2004 the SBA Office of Advocacyreleased the Eagle Eye report thatfound large businesses were guilty of "vendor deception" to illegallyreceive federal small business contracts.

In 2005 the SBA Inspector Generalreleased report 5-15 that referred to the diversion of federal small businesscontracts to big businesses as, "One of the most importantchallenges facing the Small Business Administration (SBA) and the entireFederal Government today..."

In Report 5-16 the SBA InspectorGeneral found large businesses had committed fraud by making "false certifications" and"improper certifications" to illegally land federal smallbusiness contracts.

SBA Inspector General Report 5-14 discoveredthe SBA was diverting small business contracts to large businesses includingsuch firms as Buhrmann NV in Holland with 28,000 employees worldwide in 26countries. 

Every year since 2005 the SBAInspector General has named the diversion of federal small business contracts to largebusinesses as the number one problem at the agency.

In 2009 after investigating the SBA,the Government Accountability Office released Report 10-108 that stated, "By failing to hold firmsaccountable, SBA and contracting agencies have sent a message to thecontracting community that there is no punishment or consequences forcommitting fraud."

In 2012 NBC found 24 large businessesin northern California that had received 299 small business contracts worthover $77 million. The SBA responded with the statement, "SBA has no tolerance for fraud, waste and abuse andtakes corrective steps when actionable information comes to light."

Section 16 (d) of theSmall Business Act mandates a penalty of up to10 years in prison, a $500,000fine, or both, for firms that misrepresent their status to illegally receivefederal small business contracts.

Under the new SBA "safeharbor" policy, firms that are found to be fraudulently misrepresentingtheir status as a small business can avoid all penalties by simply claimingthey "acted in good faith."

The SBA will be taking public comment on theproposed policy until August 15^th.

To view full press release, clickhere:  http://www.marketwired.com/press-release/SBA-Acknowledges-Fraud-in-Contracting-With-New-Safe-Harbor-Policy-1928476.htm