SOURCE: American Small Business League

American Small Business League

August 04, 2016 07:08 ET

Small Business Administration Policies Shortchange Middle Class Businesses

PETALUMA, CA--(Marketwired - August 04, 2016) - According to the American Small Business League, Illegal Small Business Administration (SBA) policies appear to be responsible for shortchanging middle class small businesses out of hundreds of billions of dollars in federal contracts. In a recent article in Mother Jones magazine, Professor Charles Tiefer has asserted the SBA has falsified the federal government's compliance with congressionally mandated small business goals.

Professor Tiefer, one of America's leading authorities on federal contracting law asserts the SBA has excluded hundreds of billions of dollars a year in federal contracts from their calculations that determine the percentage of federal contracts awarded to small businesses. According to Professor Tiefer's research, in 2011 the SBA excluded $677 billion in federal contracts when they claimed small businesses received 21.65% of all federal contracts that year. That accounts to over $155 billion in federal contracts that small businesses were shortchanged that year as a result of the SBA's creative accounting.

The SBA has admitted to using an "exclusionary rule" to inflate the percentage of awards to small businesses by excluding the majority of the true federal acquisition budget. The American Small Business League (ASBL) agrees with Professor Tiefer's research and points out the Small Business Act mandates that a minimum of 23% of the total value of all prime contracts shall be awarded to small business and no language in the act allows for any exclusions of any kind.

For over 15 years, federal investigators have exposed the fact the SBA includes billions of dollars a year in federal contracts to Fortune 500 firms, and their subsidiaries, in the volume of contracts they claim were awarded to small businesses. In 2003, the Government Accountability Office (GAO) exposed the fact over 5,300 large businesses were receiving federal small business contracts.

In 2005, the SBA's own Inspector General released Report 5-15 that stated, "One of the most important challenges facing the Small Business Administration (SBA) and the entire Federal Government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards."

According to a report from the ASBL, based on data from the Federal Procurement Data System (FPDS), in 2015 the SBA included federal contracts to over 151 Fortune 500 firms and their subsidiaries in the volume of contracts that the SBA reported were awarded to small businesses.

The House Small Business Committee unanimously adopted an amendment to request a new GAO investigation into fraud in small business programs based on the ASBL report.

The ASBL estimates that based on the SBA's two illegal policies and Pentagon programs such as the Comprehensive Subcontracting Plan Test Program that have obscured small business subcontracting compliance since 1989, legitimate small businesses have been defrauded out of over $200 billion a year in federal contracts and subcontracts every year for over a decade.

The ASBL has filed two cases in federal court to halt the SBA and Pentagon policies that have defrauded small businesses.

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