SBA Refuses to Release Name of Fraudulent Contractor

Press Release

SBA Refuses to Release Name of Fraudulent Contractor

SBA Accused of Covering Up Fraud in Federal Small Business Contracting

February 16, 2006

PETALUMA, Calif., February 16, 2006 /PRNewswire/ -- In its semiannual report to Congress, the SBA's Office of Inspector General reported that in June 2005 it had recommended debarment of a major government contractor. The Inspector General found that the firm had misrepresented its status as small in order to illegally receive small business contract awards.
A Freedom of Information Act request from the American Small Business League to obtain the name of the firm was denied on February 10th. To date, the Small Business Administration has taken no action against the fraudulent contractor.

In a recent interview with the Dallas Morning News, SBA Administrator Hector V. Barreto rejected the existence of small business contracting fraud and claimed that there would be "serious repercussions" for any large business that was guilty of misrepresenting its size.

During Barreto's tenure, the SBA Inspector General, the General Accounting Office, and the SBA Office of Advocacy have reported numerous instances of fraud and abuse in small business contracting, however, no firms have been penalized in any way.

Lloyd Chapman, President of the American Small Business League had this to say, "Hector Barreto has a track record of protecting large corporations that are guilty of felony contracting fraud. His own Inspector General has uncovered numerous cases of fraud and abuse, but Barreto has refused to do anything to stop it. Instead, he has tried to convince Congress, the media, and the general public that these crimes are merely a matter of "miscoding."

"If the ASBL has to take the SBA to court again, we will in order to force them to disclose the name of the fraudulent contractor and ensure they are debarred and prosecuted to the fullest extent of the law," Chapman added.

Section 16(d) of the Small Business Act makes it a criminal offense to misrepresent in writing the status of any concern as a "small business concern" in order to obtain for oneself or another any prime contract. Violations of 16(d) are punishable by a fine of not more than $500,000 or by imprisonment for not more than ten years or both, and can result in certain administrative remedies, including suspension and debarment.

About the ASBL
The American Small Business League was formed to promote and advocate policies that provide the greatest opportunity for small businesses - the 98% of U.S. companies with less than 100 employees. The ASBL is founded on the principle that small businesses, the backbone of a vital American economy, should receive the fair treatment promised by the Small Business Act of 1953. Representing small businesses in all fields and industries throughout the United States, the ASBL monitors existing policies and proposed policy changes by the Small Business Administration and other federal agencies that affect its members.


Lloyd Chapman



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