The Small Business Administration's decision in July to halt the reform of federal size standards that define which American businesses are "small", was 180 degrees wrong, documents show.

The result: Flawed rules that determine eligibility for $100 billion in government small business contracts remain in place, despite an outpouring of support for change.

Documents just obtained through the Freedom of Information Act show that more than 2,500 comments received by the SBA were in favor of lowering the basic size standard for a small business from 500 employees to 100 employees, and fewer than 30 were opposed. Yet the SBA had announced on July 1 that most responders were against changing the standards, and that therefore it was suspending the process. In fact, almost all of the negative comments received by the SBA were directed at other aspects of its 86-page proposal.

" This is an outrageous deception that cheats thousands of legitimate small businesses out of $50 billion a year in government contracts and thwarts the intent of Congress," said Lloyd Chapman, president of the American Small Business League (ASBL). "The SBA should be protecting small businesses, but instead its deceit is helping large corporations and hurting the small companies that are vital to America's economy."

Current rules generally allow companies with up to 500 employees to be classified as "small" and eligible for government contracts set aside for small businesses. The SBA sought comment on an array of changes it proposed in March 2004. The proposal to lower the small business size limit to 100 employees would increase opportunity for 24 million small businesses in the country to win government contracts. "Big corporations with 495 employees are not small businesses in anybody's eyes except the SBA's," Chapman said. "This needs to be fixed."

Comments in favor of reforming size standards came from small businesses across the country, according to the documents kept secret by the SBA but made public following ASBL's Freedom of Information Act filing.

• "I AGREE with the proposed changes! I am a VERY small business and I have found the existing standards to be a farce," wrote Melina Hansher, principal geologist of Value Environmental Services of Largo, Florida. "…I am tired of trying to compete with so-called 'small businesses' that have multiple offices and more employees than we have voters on Election Day."
• "As a small high-tech firm we noticed a recent influx of apparently large businesses participating in the small business innovative research (SBIR) program during the past 2 years … These companies are able to push smaller and often more innovative companies out of the competitive arena," wrote Scott Thompson, CEO of RealTronics Corp. of Rapid City, South Dakota. "It is my sincerest hope that you will adopt the proposed ruling to restructure the size standard for small businesses to a cap of 100 employees."
• "98% of firms in America employee 99 employees or less. These are the firms that Congress intended to receive federal contracts and sub-contracts," wrote Anthony Grimm, president of the Berks County Chamber of Commerce in Reading, Pennsylvania. "…We specifically support proposed changes that would revise the non-manufacturer size standard applicable to Federal procurements from 500 to 100 employees."
• "I am the owner of a small aerospace engineering and information technology company. I wholeheartedly agree with the proposal to revise the non-manufacturer size standard applicable to Federal procurements from 500 employees to 100 employees," wrote Dr. George W. Davis, president of Emergent Space Technologies, Inc., of Laurel, Maryland.