PETALUMA, Calif., April 4, 2005 - The Small Business Administration has received over 5,000 comments from small businesses and small business groups across the country opposing an SBA proposal that would allow huge multinational corporations to continue receiving billions of dollars in federal government small business contracts.

The SBA "grandfathering" proposal would allow corporate giants in the U.S. and Europe to keep their small business contracts for up to five more years. As of March 31, with two business days remaining in the comment period, the SBA said it had received approximately 6,000 comments on the grandfathering proposal. Of that total, ASBL has received copies of more than 5,000 comments, or over 80 percent of the total, expressing opposition to the proposal.

Long-established Federal law mandates that 23 percent of government contracts go to small businesses, or a current annual total of about $87 billion. But several recent government and independent studies have shown that most of that money goes to big business, through a combination of fraud and misrepresentation, misguided SBA policies, and the SBA's unwillingness to carry out the law.

"This grandfathering proposal is the latest in a series of SBA maneuvers to serve big-business interests at the expense of small businesses," said Lloyd Chapman, President of the American Small Business League. "The SBA proposal would artificially inflate the government's small business contracting statistics and allow large businesses to continue to receive billions of dollars a year in contracts meant for small businesses."

In December, the SBA's Office of Advocacy released a report saying that small business contracts had gone to a Who's Who of giant businesses, including Raytheon Co., BAE Systems, Northrop Grumann Corp., Carlyle Group, Electronic Data Systems Corp., Booz Allen Hamilton Inc., Hewlett-Packard Co., Buhrmann NV, and many more. Early this year, a Center for Public Integrity study found that the Defense Department alone had awarded $47 billion in small business contracts to some of the nation's largest suppliers.

"Businesses like mine should be able to win federal government small business contracts, but instead they're being awarded to large multi-national corporations," said Craig Carnahan, vice president of Cybergear, Inc. in Gilbert, Arizona. "My wife and I employ seven hard-working people, and the federal government repeatedly looks the other way as businesses with thousands of employees illegally steal contracts away from us."

In the United States today, 98 percent of all firms have fewer than 100 employees. Until 1986 the SBA defined a small business as one with fewer than 100 employees. In 1986, the SBA changed the definition allowed up to 500 employees.

SBA Misrepresented Results of Previous Comment Period
Under strong public pressure from the ASBL and other voices in the small business community, the SBA in March 2004 proposed a series of rule changes, including one that would reduce the small business size standard back to 100 employees. Despite the overwhelming public support it received for this rule change, the SBA withdrew the proposal on July 1 and misrepresented the results.

Documents obtained through the Freedom of Information Act show that more than 2,500 comments received by the SBA were in favor of lowering the size standard for a small business to 100 employees, and fewer than 30 were opposed. Yet the SBA 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.

In December 2004, the SBA released a "grandfathering proposal" that would allow big corporations to keep their existing small business contracts even if size standards are reduced in the future. The comment period was scheduled to end on February 1, and was later extended through April 3. On Thursday, the SBA said it would accept comments through April 4.

In addition, the SBA has previously misrepresented comments from ASBL supporters as being unverifiable. In fact, each comment was written by a small business owner and submitted by them through ASBL's website, which saved one copy and sent another directly to the SBA. More than 95 percent of the comments on the grandfathering proposal contain the name, address and telephone number of the writer. The support ASBL received came from Chambers of Commerce, small business groups, and concerned small businesses across the country.

"Because the SBA misrepresented the previous comment period, ASBL is speaking out today to ensure that the public learns the truth," Chapman said. "The SBA should be carrying out its mission and working for the small businesses that are vital to America's economy. Instead, it caters to the interests of the Pentagon and large multinational corporations. The SBA is directly responsible for the staggering level of fraud and abuse that is being found at every level of small business contracting programs."