June 22, 2006 08:00 ET

Government Accused of Fabricating Latest Small Business Contracting Statistics by Advocacy Group

SBA Administrator Challenged to Provide Names of Small Business Contractors

PETALUMA, CA -- (MARKET WIRE) -- June 22, 2006 -- SBA Administrator Hector Barreto announced today that $79.6 billion in federal prime contracts was awarded to small businesses in fiscal year 2005. Although he claimed "another record year for small business," what Barreto failed to mention is that the government has included billions of dollars in awards to some of the nation's largest corporations in these small business numbers.

Lloyd Chapman, President of the American Small Business League, has challenged the statistics as significantly inflated and unsupportable. For three years, Chapman has filed a series of lawsuits against the SBA to force them to provide the names of firms that have been coded as small businesses for the purposes of federal contracting. Information that has been released during this time has shown that the government has reported billions of dollars in contracts to giant corporations such as Northrop Grumman, Raytheon, and Titan, as small business awards.

"Hector Barreto is a liar and this announcement is an insult to the American people and to the small business owners that Barreto purports to represent," stated Lloyd Chapman, President of the American Small Business League. "I think Congress, the media, and the public are tired of the government fabricating these numbers. I challenge Barreto publicly to disclose the names of the firms that were coded as small businesses that total $79.6 billion. He won't do it."

Paul Murphy, President of Eagle Eye Publishers, a Virginia-based research firm, has serious reservations about the way in which the SBA calculates the percentage of awards to small businesses. Mr. Murphy's concerns focus on the mechanism whereby the SBA excludes major government contracts in a manner that tends to inflate the small business contract percentage. Earlier this month, Eagle Eye stated that the federal government spent $377 billion on goods and services in fiscal year 2005. The SBA's statement claimed that the government purchased a total of only $314 billion.

Eagle Eye's latest procurement research shows that businesses coded as small in 2005 include mega-firms such as General Dynamics, Northrop Grumman, L-3 Communications, and Science Applications International. The ASBL believes that the majority of small business contract dollars are actually being awarded to large businesses. Many small business contractors blame the Department of Defense and the General Services Administration for diverting small business contracts to Fortune 1000 companies.

Chapman added, "I intend to request the names of these firms under the Freedom of Information Act, and if the SBA doesn't give them to me, I will file suit in Federal court to force them to release the documents. Any journalist who wants to get the real story should ask Mr. Barreto one question, 'Will you provide a complete and accurate list of all the firms coded as small businesses for 2005 that totals $79.6 billion?'"

About the ASBL

The American Small Business League was formed to promote and advocate policies that provide the greatest opportunity for small businesses -- the 98% of U.S. companies with less than 100 employees. The ASBL is founded on the principle that small businesses, the backbone of a vital American economy, should receive the fair treatment promised by the Small Business Act of 1953. Representing small businesses in all fields and industries throughout the United States, the ASBL monitors existing policies and proposed policy changes by the Small Business Administration and other federal agencies that affect its members.

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