Contact Information: Contact: Lloyd Chapman President American Small Business League Email Contact (707) 789-9575
SBA Myth vs. Fact Press Release Debunked by American Small Business League
| Source: American Small Business League
PETALUMA, CA -- (MARKET WIRE) -- May 16, 2007 -- The following is a statement by the American
Small Business League:
The facts listed in the Small Business Administration's press release on
March 11, 2007 are blatantly false and deceptive and can easily be debunked
with reports from the SBA's Office of Inspector General and Office of
Advocacy.
Fact 1. Large companies, including large, multinational corporations are
taking away federal contracts specifically intended for small businesses.
Proof -- Report 5-15 (http://www.asbl.com/documents/05-15.pdf), released by
the SBA Inspector General in March of 2005 stated, "One of the biggest
challenges facing the Small Business Administration and the entire federal
government today is that large businesses are receiving small business
procurement awards and agencies are receiving credit for these awards."
In Report 5-14 (http://www.asbl.com/documents/05-14.pdf), the SBA Inspector
General investigated the SBA's own small business contracting statistics.
They reviewed the six largest contracts the SBA itself had reported as
going to small businesses. Report 5-14 states, "Of the six high dollar
contracts reported as going to small businesses, four were awarded to large
businesses at the time of the procurement." One of the four small business
contracts actually went to Buhrmann NV, a multinational, multi-billion
dollar corporation headquartered in Holland with 17,000 employees in 26
countries.
Fact 2. Large businesses and multinational corporations are listed in the
General Services Administration's database as holding small business
contracts.
Proof -- The Dutch firm Buhrmann NV is a good example. In the SBA response
to this point they admit that large corporations have been allowed to
acquire small businesses and keep those contracts for the life of the
contract, which can be up to 20 years. They refer to this practice as
"under federal rules." What the SBA has failed to mention is the SBA is the
agency that initiates federal policy on federal small business contracting
policy. They created the federal policy that allowed large businesses to
acquire a small business and keep that status for 20 years.
Fact 3. The SBA hasn't done anything to stop misrepresentation of these as
small business contracts and has made it easier for large businesses to
misrepresent themselves.
Proof -- As early as 1995 the SBA Office of Inspector General found fraud
in federal small business contracting. In their semi-annual report
to Congress, the SBA Inspector General reported officials at the SBA
declined to adopt their recommendation to stop the fraudulent activity. SBA
official Robert Neal wrote the response to the SBA Inspector General
declining to adopt the recommendation to stop fraud. Neal was later
convicted of soliciting bribes, extortion, money laundering and witness
tampering. He was sentenced to 25 years in prison.
The SBA has refused to place a warning on small business databases
informing vendors that misrepresentation of a firm as a small business to
illegally receive federal small business contracts is a felony under
section 16 (d) of the Small Business Act, with a penalty of up to ten years
in prison.
The SBA's currently proposed five-year re-certification rule will allow
large businesses, including large multinational firms, to continue to
receive federal small business contracts for five more years.
In December, the SBA
removed employee and revenue data from the government vendor database,
which the public uses to determine small business status of government
contractors. Legitimate small businesses used this information to file
protests against large businesses falsely claiming to be small businesses.
This will make it difficult, if not impossible, for legitimate small
businesses to file protests and make it easier for large firms to
misrepresent themselves as small businesses.
A prime example of
misrepresentation comes in the form of the GTSI corporation case in which
the SBA Inspector General recommended GTSI for debarment. To this date the
SBA has taken no action and GTSI continues to receive hundreds of millions
of dollars in federal contracts.
Fact 4. The new "five-year" re-certification policy allows federal agencies
to report billions of dollars earmarked for small businesses to large,
multinational corporations until 2012.
Proof -- Noted federal contracting expert Professor Charles Tiefer of the
University of Baltimore School Of Law, issued an opinion on the loophole in
the SBA's five-year re-certification plan. Tiefer concluded that the "SBA's latest size standard
regulations issued in mid-November will still result in the federal
government reporting many of it's prime contracts performed by large
businesses as small business contract awards for at least five more years
to come."
By the time the SBA's five-year re-certification policy goes into effect on
June 30th, federal agencies and prime contractors will have had several
months to enter into hundreds of long term contracts with hundreds of large
businesses that will avoid any of the "triggering events." Another loophole
for big business created by SBA Administrator, Steven Preston.
Fact 5. There have been no penalties or consequences for large businesses
getting small business contracts.
Proof -- The best information to prove this is in the SBA's own statements.
They do not provide any information on firms that have been penalized or
prosecuted for misrepresenting themselves as small businesses. They use
terms like "will be denied" and "subject to fines." Again the GTSI case is
a typical example, they were recommended for debarment by the SBA Inspector
General and the SBA did nothing.
A report released in 1995 by the SBA Inspector General is another great
example. They found fraud in federal small business contracting and the SBA
took no action against those firms. In another instance, the SBA Office of
Advocacy commissioned an investigation that found large businesses were
guilty of "vendor deception" a synonym for fraud to receive small business
contracts. The SBA took no action against those firms. Furthermore, On
February 24, 2005 in Report 5-16 the SBA Inspector General found "false
certifications" and "improper certifications," more synonyms for fraud
responsible for large businesses receiving federal small business
contracts. The SBA took no action against those firms.
Fact 6. Small businesses are forced to compete with large businesses under
the new re-certification rule.
Proof -- This was established in SBA Inspector General Reports 5-14, 5-15
and 5-16. The SBA uses the term "set aside for small business." This avoids
addressing the 90 percent of the contracts the government reports as going
to small businesses that were not "set aside" contacts. They do not address
the thousands of small business contracts that are already in place with
hundreds of Fortune 1000 firms and international firms. Once again they try
to divert attention from the billions of dollars in existing contracts with
large corporations by talking about firms that might be merged or acquired
in the future.
Fact 7. SBA refuses to release names of small businesses awarded federal
contracts.
Proof -- Try and find them. On numerous occasions the ASBL has asked the
SBA to release the names of firms reported as small businesses several
times. They have consistently refused. As far as the Federal Procurement
Data System-Next Generation, the ASBL challenges anyone to try and use it.
In 2006, ASBL President, Lloyd Chapman offered a $10,000 reward to anyone
that could provide him with an accurate list of the firms the federal
government reported as small businesses. No one was able to provide the
information. Even experts like Paul Murphy of Eagle Eye Publishers wasn't
exactly sure who got the contracts. Dozens of journalist have asked the SBA
for the information, but the SBA routinely declined the requests.
Fact 8. Since 2002, 14 federal investigations have found billions of
dollars have been diverted from legitimate small businesses to Fortune 1000
companies and subsidiaries across the country.
Proof -- The SBA's assertion that there have not been 14 federal
investigations is blatantly false. These reports and key statements are
readily available on the ASBL website (www.asbl.com). In this response the
SBA tries again to mislead by diverting attention from the fact that only a
very small percentage of the contracts that the federal government reports
as going to small businesses are actually formal set aside contracts.
Again, the SBA fails to mention, that the policy allowing Fortune 1000
firms to acquire a small business and keep the small business status for 20
years was originally drafted by the SBA.
Again, SBA Inspector General Reports 5-14, 5-15 and 5-16 all found large
businesses were receiving federal small business contracts. The Eagle Eye
report from the SBA Office of Advocacy found "vendor deception" --
more evidence of fraud. A report from the Center for Public Integrity found
the Pentagon alone had awarded over $47 billion in small business contracts
to some of the nations largest defense contractors. Investigative reports
by ABC, CBS and CNN all found Fortune 1000 firms were receiving billions of
dollars in federal small business contracts to Firms like Boeing, Lockheed
Martin, Raytheon, Titan Industries, L3 Communications, Rolls Royce and
AT&T, who did not recently out grow their small business status.
Fact 9. SBA's re-certification proposal is the same as the unpopular
"grandfathering" plan proposed by the SBA in 2004.
Proof -- In their response to the ASBL press release the SBA said, "No
proposal for a 'grandfathering' provision was ever made..." Yet, it was
published in the Federal Register in volume
69, 70200, No 232 on December 3, 2004. And, multiple publications prove
otherwise. Also, in a June 9, 2005 story in the Miami Herald titled "Small
Business Seek Fair Fight for Contracts," SBA spokesman Gary Jackson
admitted that the SBA would pursue a five-year grandfathering plan. Again,
in the Chicago Tribune on June 21, 2005 in a story titled "SBA Hearing
Fields Opinions on Small Business," an SBA spokesperson talked about a
five-year plan. Several other stories were written about the SBA
grandfathering proposal.
The SBA grandfathering plan would allow any firm with an existing federal
small business contract to keep it for five more years. The five-year
re-certification plan will allow any firm with an existing small business
contract to keep it for five more years.
As far as the federal small business contracts currently held by Fortune
1000 firms, grandfathering and 5-year recertification are virtually
identical.