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New SBA Head Could Spell More Trouble for Middle-Class Firms

June 30, 2008

Petaluma, Calif. – Last week, President Bush announced that Santanu "Sandy" Baruah, head of the Commerce Department's Economic Development Administration, would be the third Bush appointee to head the U.S. Small Business Administration (SBA). Like his successor Steven Preston, Baruah has no experience or background working with small businesses and hails from a corporate background. Small business advocates are concerned that Baruah will continue the Bush anti-small business policies that have been the status quo with the Bush Administration's previously appointed administrators.

In 2001, Hector Barretto was President Bush's first appointee to the position. During his tenure, a series of federal investigations (http://www.asbl.com/documents/keystatements.html) uncovered the Bush administration had reported billions in awards to Fortune 1000 corporations as small business awards. In 2005 the SBA's own Inspector General issued three reports, 5-14, 5-15, 5-16, (www.sba.gov/ig/05-15.pdf) that confirmed that corporate giants were in fact, getting federal small business contracts. Barretto responded to the diversion of federal small business contracts to large corporations by attempting to explain it as miscoding and harmless computer errors.

Administrator Steven Preston's time at the SBA was marked by his refusal to release the names of actual recipients of federal small business contracts. He attempted to describe the diversion of federal small business contracts to large corporations as a "myth." Like Barretto, Preston also refused to implement the 5 percent women owned set-aside goal, which was passed by Congress in 2000. During his tenure at the SBA, Preston removed the annual revenue and total employee fields from the government's database of federal contractors, effectively preventing the public from determining whether a federal contractor is small or large.

On June 30, 2007, Preston adopted an unpopular SBA policy originally proposed as a grandfathering policy that will allow Fortune 500 firms to keep their federal small business contracts through 2012. Critics of the Bush Administration are concerned that Baruah will try to further dismantle programs for middle class firms by increasing the federal definition of a small business to allow large businesses to take contracts meant for legitimate small businesses.

During his administration, President Bush has cut the SBA's budget and staffing in half. Each successive administrator has adopted policies that have continued to dismantle programs that were designed to help American small businesses.

The American Small Business League (ASBL) thinks that this third administrator will continue the practices and policies of Barretto and Preston in undermining federal small business programs. ASBL is concerned that before leaving office, President Bush will make one last attempt at closing the SBA and ending federal programs that assist small business owners by combining the SBA with the United States Department of Commerce.

"Small businesses need to stand together and make sure that the Bush Administration does not continue to erode programs designed to help America's 27 million small businesses," President of the ASBL, Lloyd Chapman said. "I am confident that if Senator Obama becomes president he will restore the SBA's budget and staffing, and undo virtually everything the Bush Administration has done to dismantle programs designed to help veteran, women, and minority owned firms and the small businesses where most Americans work. I cannot imagine an Obama Administration allowing Fortune 500 firms to continue to receive federal small business contracts."


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Petaluma, CA 94954

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