Contact Information: Contact: Lloyd Chapman President American Small Business League (707) 789-9575
Top Defense Contractors Are Now Small Businesses Under New SBA Policy
| Source: American Small Business League
PETALUMA, CA--(Marketwire - July 9, 2007) - The following is a statement by the American
Small Business League:
On June 30th, a Small Business Administration policy went into effect that
will allow the federal government to count hundreds of contracts to many of
the nation's largest defense and aerospace contractors as federal small
business contracts through 2012.
The SBA's new five-year grandfathering/five-year re-certification policy
will allow the federal government to include billions of dollars in
contracts to firms like Boeing, Lockheed Martin, Northrop-Grumman,
Raytheon, SAIC, L3 Communications and General Dynamics towards the
government's 23 percent small business contracting goal.
In 2005, the SBA included over $650 million in government contracts to
defense giant L3 Communications towards the government's small business
contracting goal. For 2006, the SBA reported over $500 million to SAIC as
small business contracts.
Small business owners around the country are outraged at the new policy and
are pledging to take their complaints to Congress and federal court.
When the SBA originally proposed their grandfathering plan in 2005, it
would have allowed the SBA to continue to report awards to any firm that
had small business contracts towards the federal government's 23 percent
small business procurement goal for five more years. This would have
included: small business contracts found by the SBA Inspector General as
being fraudulently obtained, contracts to large businesses the SBA
acknowledged were miscoded as small business contracts, contracts to large
businesses that had accidentally claimed small business status, contracts
to firms that had outgrown their small business status and contracts to
firms that had been acquired by a large business.
When the SBA asked for public comment on the proposed policy in 2005, they
were bombarded with over 6000 angry comments opposing the grandfathering
policy. Small business owners and small business groups, including the NFIB
and Chambers of Commerce across the country, were strongly opposed to the
proposed plan.
Even after the SBA received an overwhelmingly negative response to the
proposed policy, SBA spokespersons told reporters for the Miami Herald and
the Chicago Tribune in June of 2005 that the SBA still intended to
implement the five-year grandfathering plan.
Shortly after new SBA Administrator Steven Preston was confirmed, he
directed that the unpopular five-year grandfathering policy be renamed
five-year re-certification and implemented. The net effect of the five-year
re-certification and the five-year grandfathering policy are identical.
Under the five-year re-certification policy, the same large businesses that
would have benefited from the five-year grandfathering policy will be
allowed to maintain their small business status until the year 2012. This
will allow the SBA to continue to report contracts to hundreds of Fortune
1000 firms and other large businesses as small business awards for at least
five more years.
SBA critics like the American Small Business League believe the real
purpose of the SBA's five-year grandfathering/five-year re-certification
policy is to artificially inflate the federal government's small business
contracting statistics to create the false impression that the government
has reached the Congressionally mandated 23 percent small business
contracting goal.
ASBL estimates if the policy is allowed to take full effect, legitimate
small businesses across America could lose over $300 billion in federal
small business contracts over the next five years.