SBA Attempts to Minimize Diversion of Billions in Small Business Contracts to Corporate...

SBA Attempts to Minimize Diversion of Billions in Small Business Contracts to
Corporate Giants

SBA Tries to Conceal Magnitude of Diversion of Billions in Small Business
Contracts to Fortune 500 Firms

PETALUMA, Calif., Oct. 23 /PRNewswire-USNewswire/ -- Yesterday, the Small
Business Administration (SBA) distributed a press release attempting to
characterize the recently presented findings of a Washington Post study as
proof that only a small portion of federal small business contracts are
diverted to large corporations. However, in its release the SBA failed to
recognize that the Post's study determined that the government had awarded
more than $5 billion in small business contracts to large corporations from a
sampling of only $13 billion in contracts. According to the Post's findings,
nearly 40 percent of the small business contracts they analyzed went to large
corporations.

In July of this year, the SBA used the same technique in an attempt to counter
an investigation by the Department of Interior Office of Inspector General
(DOI IG), which found that the DOI had misstated the achievement of its small
business goal by including Fortune 500 firms.
(http://www.doioig.gov/upload/2008-G-0024.pdf) In its investigation, the DOI
IG reviewed 0.3 percent of total contract actions during years 2006 and 2007
and found that over a dozen Fortune 500 firms were coded as receiving $5.7
million in small business contracts. In response to the DOI IG's findings the
SBA attempted to characterize the IG's findings as the total amount of small
business contracts awarded to large businesses.

The SBA has a long track record of attempting to misrepresent the magnitude of
the problem of large corporations receiving federal small business contracts.
The SBA has gone so far as to claim that it is a myth that large corporations
receive federal contracts intended for small businesses by issuing a press
release on the subject.
(http://www.sba.gov/idc/groups/public/documents/sba_homepage/news_07-30.pdf)

It is difficult to know exactly how severe the problem is, because the
government has extensively modified the data. For example, one study found
that 10,000 major contracts were removed from the government's contracting
database and contract numbers for 2003 had been concealed.
(http://www.asbl.com/documents/fpdsaccuracyletter10000.pdf)

The SBA has fought every effort by the American Small Business League (ASBL)
to expose the actual recipients of federal small business contracts. The SBA
has fought to the point that in August of this year, officials from the agency
attempted to convince a United States District Court judge that the SBA did
not have any information indicating the names of firms that had received
federal small business contracts for FY 2005 and 2006. After losing the case
the SBA has now appealed the District Court's decision to the Ninth Circuit
Court of Appeals. (http://www.asbl.com/showmedia.php?id=1150)

In Report 5-14, the SBA OIG found that the SBA itself was reporting awards to
large businesses as small business awards. In fact, the SBA was reporting
awards to multinational Dutch conglomerate Buhrmann NV.
(http://www.sba.gov/ig/8-14.pdf)

The pattern of what the SBA likes to call miscoding is anything but random.
One-hundred percent of the time, the miscoding results in contracts meant for
legitimate small businesses being diverted to Fortune 500 firms; it's just not
believable.

"There have now been 15 federal investigations and hundreds of stories in the
main stream media exposing the diversion of federal small business contracts
to large corporations. Despite all of this, officials at the SBA continue to
try to convince the American people that the diversion of federal small
business contracts to Fortune 500 corporations is a myth," ASBL President
Lloyd Chapman said.

SOURCE American Small Business League

Christopher Gunn, Communications Director of American Small Business League,
+1-707-789-9575, cgunn@asbl.com