Illinois Small Businesses Could Lose Millions With New SBA Policy, Says American Small Business League

PETALUMA, CA--(Marketwire - June 15, 2007) - The following is a statement by the American Small Business League:

A controversial new federal policy set to go into effect on June 30th could cost Illinois small business owners millions of dollars in federal small business contracts.

The policy was initiated by the Administrator of the Small Business Administration, Steven Preston and will allow hundreds of Fortune 1000 firms to receive billions of dollars a year in federal small business contracts. Under the new policy, small businesses in Illinois will be required to compete head-to-head with some of the largest firms in the United States and Europe for even the smallest orders of goods and services from federal agencies and prime contractors.

For example, under the new policy, any Illinois small business that sells office or computer products may find themselves directly competing for government small business contracts or subcontracts with Buhrmann NV, a Dutch firm headquartered in Amsterdam with over 17,000 employees in 26 different countries.

The new SBA policy was originally labeled as their "grandfathering plan" when it was first proposed in 2004. Small business owners across the country were outraged and the SBA received over 6000 comments from small business owners objecting to the plan. To avoid another embarrassing public opposition to the policy, the SBA has renamed it "five-year re-certification." Under this proposed five-year re-certification/grandfathering plan hundreds of large businesses will be allowed to continue to receive billions of dollars in government small business contracts through the year 2012.

Noted federal contracting expert, Professor Charles Tiefer, of the University of Baltimore School of Law, issued an opinion on the loophole in the SBA's five-year re-certification plan. Tiefer concluded that the "SBA's latest size standard regulations issued in mid-November will still result in the federal government reporting many of its prime contracts performed by large businesses as small business contract awards for at least five more years to come."

It has been estimated that if the five-year re-certification/grandfathering policy is allowed to stand, small businesses around the country could lose over $300 billion in federal small business contracts over the next five years.

During the last four years there have been over a dozen federal investigations that found billions of dollars in federal small business contracts that were reported as going to small businesses, had actually been awarded to a "Who's Who" of international corporate giants.

Investigations by the Office of Government Accountability, the Small Business Administration Office of Inspector General and the SBA Office of Advocacy found that in many cases outright fraud was responsible for the diversion of federal small business contracts to big businesses.

Under the new SBA policy, even firms that received small business contracts fraudulently will be permitted to keep them until 2012.

The new SBA five-year re-certification/grandfathering policy will allow firms like Boeing, Lockheed Martin, General Dynamics, Hewlett-Packard, Raytheon and L3 Communications to continue taking government small business contacts from legitimate Illinois small businesses for at least five more years.

Contact Information: Contact: Lloyd Chapman President American Small Business League (707) 789-9575