Pennsylvania Small Businesses to Lose Out to Billionaires With New House of Representatives Bill, Says American Small Business League

PETALUMA, CA--(Marketwire - April 21, 2008) - The following is a statement by the American Small Business League:

Pennsylvania small businesses could lose more than a billion dollars a year in federal small business contracts and subcontracts if the House Committee on Small Business has its way.

Last week, Nydia M. Velázquez (D - NY), the Chair of the House Committee on Small Business, introduced H.R. 5819, the "SBIR/STTR Reauthorization Act." This bill marks the second time in less than a year that House democrats have introduced legislation that will amend the 55-year-old federal Small Business Act to allow firms controlled by some of the nation's wealthiest venture capital firms to receive government small business contracts. Although the bill currently applies only to the SBIR program, it creates a dangerous precedent for venture capital participation in other small business programs.

In 2007, the House Committee on Small Business passed H.R. 3567, the "Small Business Investment Expansion Act of 2007." Title V of H.R. 3567 also included a provision that would have allowed businesses with up to 49.9 percent ownership by some of the nation's wealthiest venture capital firms to receive government small business contracts. H.R. 3567 fizzled in the Senate after receiving opposition from the American Small Business League (ASBL), the Small Business Administration, the White House, the National Small Business Association and the U.S. Chamber of Commerce.

If H.R. 5819 passes, a venture capital firm with billions of dollars in managed assets would be allowed to own up to 49.9 percent of a business and still qualify for government programs designed to assist small businesses. The current definition of "independently owned" was designed to protect small businesses. It prevents large businesses from using divisions or subsidiaries to masquerade as small businesses in order to receive federal small business contracts. H.R. 5819 removes that protection.

If the SBIR/STTR Reauthorization Act becomes law, Pennsylvania's more than 1 million small businesses (http://www.sba.gov/advo/research/profiles/07pa.pdf) could find themselves competing head-to-head with firms controlled by billionaire venture capitalists for even the smallest government orders for goods and services.

The ASBL estimates that if H.R. 5819 passes, small businesses around the country could lose as much as $50 to $100 billion a year in government contracts.

During 2008, members of the House Committee on Small Business have been targeted with a slew of campaign contributions from the National Venture Capital Association (NVCA). According to Opensecrets.org, 13 members of the committee have received contributions from NVCA this year alone. Additionally, Rep. Velázquez has been the top committee recipient of funds from NVCA during 2008.

Small business advocates expect legislators to vote on H.R. 5819 this month. The ASBL (www.asbl.com) encourages concerned citizens and small business owners to contact their congressional representatives and ask them to oppose changing the definition of a small business in the Small Business Act. Small businesses should remain "independently owned" and operated.

Contact Information: Contact: Christopher Gunn Communications Director American Small Business League (707) 789-9575