Petaluma, Calif.- The Small Business Administration has renamed and resurrected their very unpopular, “grandfathering” proposal from 2004 in the form of five-year recertification, which goes into effect June 30.

 

Like the SBA’s grandfathering plan, their five-year recertification plan will allow the SBA to count small business awards already awarded to hundreds of Fortune 500 firms and other large businesses towards the congressionally mandated 23 percent small business contracting goal for five more years. 

 

When the SBA originally announced their grandfathering plan in 2004 and began to take public comment on the proposal, they received the largest volume of comments from the public in SBA history. Over 95 percent of the responses received by the SBA were against grandfathering, many of which were directed to the SBA by thousands of small business owners, small business organizations and Chambers of Commerce across the nation.

 

Both the grandfathering plan and the SBA’s new five-year recertification plan do not take into consideration the diversion of small business contracts to large businesses. An oversight, which unchecked, could allow large businesses that received small business contracts through computer glitches, miscoding, vendor deception, false certifications and even blatant fraud to keep the contracts for five more years or through 2012.

 

The National Federation of Independent Businesses with over 600,000 members nationally was opposed to the SBA grandfathering plan.

 

 “Were the SBA to do this, it would undercut one of the primary reasons for engaging in a review of the existing size standards: access to government contracts for legitimate small businesses,” said Bruce Phillips, senior fellow at the NFIB Research Foundation, in a letter to the SBA. 

 

In the same letter Andrew Langer, NFIB’s manager of regulatory policy, expressed the NFIB viewpoint, “The NFIB does not support ‘grandfathering’.”

 

Under the SBA’s five-year recertification plan, Fortune 500 firms and other large businesses will not be required to recertify their small business status until 2012. A 2005 Congressional investigation found that Fortune 500 firms had received over $12 billion in federal small business contracts. Other investigations by small business advocacy groups such as the American Small Business League have found that the top two percent of US firms received over 50 percent of all federal small business contracts. The Center for Public Integrity found the Defense Department had awarded over 47 billion in small business contracts to some of the nation’s top Fortune 1000 defense contractors.

 

The American Small Business League projects that if the SBA passes its five-year recertification policy, American small businesses dealing in office products, computers, manufactured goods and hundreds of other industries could lose as much as $300 billion in federal small business contracts over the five-year timeframe.

 

 

 

###