Congress to Vote on New Loophole for Venture Capital Companies; H.R. 3567

PETALUMA, CA--(Marketwire - September 26, 2007) - The following is a statement by the American Small Business League:

Tomorrow the United States House of Representatives will vote on H.R. 3567, the Small Business Investment Expansion Act of 2007, which will give some of the largest financial institutions in the world the ability to receive federal small business contracts for an indefinite time period.

The bill was introduced on Tuesday, September 18th by Representative Jason Altmire (D - PA) and is cosponsored by Representative Nydia Velázquez (D - NY) and Representative Sam Graves (R - MO).

Small business advocates around the country are disappointed with Congresswoman Velázquez for supporting a piece of legislation that they see as another loophole that will divert even more federal small business contracts to large corporations.

In the last four years, more than 12 federal investigations have found that billions of dollars in federal contracts reported as going to small businesses actually went to some of the largest companies in the world. Additionally, several of the investigations yielded reports that found firms like Lockheed Martin, Boeing, Raytheon, Halliburton, General Dynamics and even foreign-owned firms like BAE have all received hundreds of millions of dollars in federal small business contracts.

Opponents of the bill see it as another loophole that will allow large businesses to acquire controlling interest in a small business and keep that small business status indefinitely.

The legislation comes less than 90 days after the Small Business Administration moved to close a similar loophole on June 30th by requiring firms receiving federal small business contracts to recertify their small business status every five years.

A similar exemption for venture capital companies was proposed and put out for comment in 2005. During the comment period the SBA received the largest response in the history of the agency with more than 6000 responses, of which 95 percent were opposed to the policy.

The American Small Business League projects that if this legislation is passed it will divert as much as 20 billion dollars a year in federal small business contracts to firms that are owned by some of the largest financial institutions in the country.

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