American Small Business League

June 14, 2011

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American Small Business LeagueÂ’s Advocacy Leads to Changes in Federal Small Business Contracting Procedures

PETALUMA, CA (PRWEB) May 2, 2005

The American Small Business League welcomed a recent set of changes in Federal small business contracting procedures as long overdue, but warned that significant problems remain.

The ASBL – the only national organization defending the interests of small businesses in the Federal government’s $ 60-plus billion small business contracting program – has advocated for these and other changes since 2002. The Small Business Act of 1953 directs that at least 23 percent of federal government prime contracts go to small business. But a host of abuses and loopholes allow large companies to get many of these contracts. The Defense Department alone awarded more than $ 47 billion in “small business” contracts to huge corporations between 1998 and 2003, according to a 2004 report by the Center for Public Integrity.

The new changes attempt to close one of the many loopholes that allow this to happen. On April 22, the Small Business Administration and several Federal agencies announced they have revamped the small business designation process in the Central Contractor Registration (CCR) database. Federal agencies rely on the CCR database to determine whether a contractor qualifies as a small business. The SBA itself will now mark a companyÂ’s record in CCR to indicate whether a business is SBA-certified small disadvantaged, 8(a)-certified or HUBZone-certified. Previously, businesses could self-certify. ASBL has found hundreds of large companies listed in the small business database, and has forced the SBA to remove nearly 600 of them.

“We welcome these changes as a step in the right direction,” said Lloyd Chapman, president of the ASBL. “We are gratified that our efforts on behalf of American small business continue to produce results. However, these programs will remain rife with abuse unless Congress and the SBA do far more to clean them up.”

In May 2003, Congressional hearings and a GAO report both highlighted problems with the SBA’s database. “Why has it taken the SBA two years to even begin to address this problem?” Mr. Chapman asked.

While the SBA changes, if properly implemented, could help reduce one source of small business contracting abuses – false self-certification – many other problems remain, including:

·    The SBAÂ’s size standards are misguided. In the United States today, 98 percent of all firms have fewer than 100 employees. Until 1986 the SBA defined a “non-manufacturer” (reseller) small business as one with fewer than 100 employees. In 1986, the SBA changed the definition to allow up to 500 employees.

·    The SBA and Justice Department have failed to prosecute fraud and misrepresentation. Misrepresenting a firm as a small business to illegally received federal contracts is a felony with penalties of up to ten years in prison. Despite widespread documentation of abuses, no companies have been prosecuted under this law. [DO WE KNOW THAT AS A FACT?]

·    The SBA has flouted the will of Congress. Congress passed legislation mandating all federal acquisitions between $ 2,500 and $ 100,000 to be automatically set-aside for small business. The SBA and the FAR Council essentially repealed this valuable piece of legislation by exempting all federal acquisitions on GSA schedule.

About the American Small Business League

The ASBL is a non-profit national organization focused on promoting the interests of the 23 million American companies with fewer than 100 employees. Among our successes, we provoked a GAO investigation confirming that a majority of small business contracts are going to large companies; we prompted a congressional hearing into abuse in small business contracting; we pushed the government to begin requiring annual recertification for suppliers; we helped eliminate a federal policy that allowed large businesses to buy small businesses and keep that small business status for up to 20 years; we forced the SBA to remove 600 large corporations from the SBAÂ’s database of small businesses; we succeeded in reducing the SBAÂ’s Information Technology Value-Added Reseller size standard from 500 to 150 employees; we prompted the SBA to propose redefining a small business as one with 100 employees or fewer; and we drove the SBA to change procedures allowing businesses to file protests against large companies falsely claiming to be small businesses.


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