By Rob Kuznia
July 17, 2009
An advocate for small businesses has launched a war of words with the U.S. Hispanic Chamber of Commerce, publicly assailing the organization for refusing to support a bill that aims to stop corporate giants from snatching up federal contracts meant for small businesses.
Lloyd Chapman, president of the California-based American Small Business League, insists that the bill, introduced in May by sophomore Congressman Hank Johnson (D-GA), champions a cause that is in the best interests of many Hispanic-owned businesses. Chapman says the bill thus far has about 45 organizational supporters, many of them regional minority chambers.
Over the past couple weeks, Chapman -- whose star as a shout-'em-down pundit on Fox News and CNBC is on the rise -- has sent out press releases to chambers across the country strongly criticizing the U.S. Hispanic Chamber and others for their lack of support. Late last week he used his regular column in the Huffington Post to challenge U.S. Hispanic Chamber leaders to "put up or shut up."
"The USHCC has never objected to the diversion of billions of dollars in federal small business contracts to Fortune 500 firms in any way, shape or form," he wrote on Friday. "If the U.S. Hispanic Chamber is such a big small business advocate, show me."
Specifically, the bill, called the Fairness and Transparency in Contracting Act (H.R. 2568), aims to ensure that no publicly traded company can vie for federal contracts meant for small businesses.
Few deny this phenomenon has been problematic. By law, the federal government has a legal obligation to try to set aside 23 percent of its contracts for small businesses. In 2002, the federal Small Business Administration released a report stating that about 4.4 percent of 1,000 contractors receiving federal small-business contracts should not have gotten them, citing Hewlett Packard as an example.
U.S. Hispanic Chamber officials say they are not opposed to the bill, they just aren't endorsing it.
"There is not a single small business organization that believes that large contractors should be getting small business awards," David Ferreira, Vice President of Government Relations for the Chamber, told HispanicBusiness.com. "Nevertheless, it is misleading to say that our organization is opposing legislation by virtue of not endorsing it."
Ferreira said the bill simply re-states current law that already prohibits publicly traded companies from landing federal small business contracts. What's more, he said the chamber is focusing its efforts on a more comprehensive piece of legislation that is developing in the Senate small business committee.
"We appreciate their enthusiasm for wanting to push the issue," Ferreira said. "We're working on the larger contracting reform bills from the Committees on Small Business - these are the bills that will very likely be approved by Congress, and these will deal with a larger set of substantive changes to the federal marketplace."
Ferreira is referring to a bill being drafted by Sen. Mary L. Landrieu (D-La), chair of the Senate small business committee, which is resurrecting a piece of legislation introduced in 2007 by Sen. John Kerry that never passed. Early this month, the U.S. Hispanic Chamber responded to Landrieu's request for feedback on Kerry's bill with a comprehensive critique.
In the critique, the chamber said it wants to see the bill address small-business busters such as contract bundling, in which the federal government puts together single monster contracts when they could issue many small ones, precluding small businesses from competing. It also mentions the importance of prohibiting large companies from landing small-business contracts.
Meanwhile, in a weird twist, Johnson -- the author of the bill exalted by the Chapman's ASBL -- is distancing himself from Chapman's feverish advocacy.
"It seems to me abrasive and grossly misleading," Johnson's communications director, Andy Phelan, told HispanicBusiness.com. "We want to make sure it's clear: We are separate from the ASBL. ... We do not want to get into any war of words between the ASBL and the U.S. Hispanic Chamber of Commerce."
For his part, Chapman insists that he wrote the bulk of the bill himself, shopped it around to different legislators and found a taker in Johnson, who was elected to Congress in November 2006.
In any case, for all the U.S. Hispanic Chamber's efforts to appear aloof to Chapman's tactics, the organization appears annoyed by the criticism.
Earlier this month, responding to a press release sent by Chapman to regional chambers across the country titled "U.S. Hispanic Chamber Opposes Bill to Help Small Businesses," the U.S. Hispanic Chamber fired off a press release of its own that took on a defensive tone, and added a not-so-subtle jab.
"The United States Hispanic Chamber of Commerce (USHCC), the national advocate for nearly 3 million Hispanic-owned businesses, reaffirms its longstanding commitment to comprehensive and substantive federal contracting reform," it said. "Today, an obscure organization criticized the USHCC ... on the commitment to such reform."
Johnson's bill, despite not being as comprehensive or wide-ranging as Landrieu's, does boast some supporters, most of them regional minority chambers, such as the California Hispanic Chamber of Commerce, the Hispanic Chamber of Commerce of Minnesota, the Greater Kansas City Hispanic Chamber of Commerce, the California Black Chamber of Commerce and the Georgia Black Chamber of Commerce, according to Johnson.
Val Vargas, founder and board member of the Hispanic Chamber of Commerce of Minnesota, said she doesn't know the details of the bill, but appreciates how it strives to stop a practice that shouldn't be happening.
"I'm not an attorney and I'm not a politician," she told HispanicBusiness.com, but "increased opportunity is a wonderful thing for small business."
Steve Gandola, President and CEO of the Sacramento Hispanic Chamber of Commerce, told HispanicBusiness.com that the bill sounds like something he would support, though as of this week he had not done so officially.
"We certainly support the intent of it, but given that the U.S. Hispanic Chamber has opposed it, we want to do due diligence" in researching it, he said.
(In contradiction to this, the ASBL provided HispanicBusiness.com a copy of a January letter from the interim executive director of the Sacramento Hispanic Chamber formally endorsing the bill.)
Gandola added that he appreciates how the bill seeks to ensure that the law is upheld.
Even under the law as written, he said, "the majority of contracts still go to large businesses. To take that small portion and redirect it to large businesses already getting the lion's share of contracts goes against the intent of the measures put in place."
As for Chapman, he insists that the Fairness and Transparency in Contracting Act would inject more money back into the middle-class economy than President Obama's $787 billion stimulus package.
"Here's the Lloyd Chapman plan: the bill could be passed and signed into law by Friday, and take effect Monday morning" he told HispanicBusiness.com. "That would start putting $40 million a day back into the middle-class economy."
Chapman said his bill would prohibit companies from self-certifying themselves as small businesses, thereby putting the onus of approval on the federal government. It also would require the federal Small Business Association to make public which companies are receiving small business contracts.
"The Hispanic chamber is saying my bill is weak, it's just the opposite: my bill is bulletproof," he said. "If the chamber's got something better, show it to me."
Chapman spent a majority of his career in sales, most recently as a sales manager for a small IT company in Navato, California, which he left in 2003. While a salesman, he also took an interest in federal contracting disputes.
Chapman later founded a niche advocacy organization called the Micro Computer Industry Suppliers Association. After broadening its scope, he would eventually rename it the American Small Business League.
Chapman does say that although he initially wanted to create the league as a non-profit organization, he changed his mind when he learned that such companies cannot lobby lawmakers.
Over the years Chapman has donated tens-of-thousands of dollars to elected officials. He gave Obama $2,300 in the last election, and in 2007 contributed $10,000 to U.S. Senator Barbara Boxer, D-California.
And although Chapman does say the ASBL gets money from its member businesses, he declines to reveal the names of any members, or even how many paying members there are.
Chapman's criticisms are not confined to the U.S. Hispanic Chamber. On a recent CNBC appearance, he sparred with Giovanni Coratolo, vice president of small business policy at the U.S. Chamber of Commerce, whom Chapman blasted for refusing to support his bill.
"Giovanni doesn't represent small business any more than McDonald's represents cows," chided Chapman, who claims that the U.S. Chamber's board of directors includes 15 members representing Fortune 500 companies.
Coratolo shot back: "You use the cloak of small business to make people think you have this great organization. It's a sham! Let's face it Lloyd, it's a sham."
In response to this, Chapman's ASBL sent HispanicBusiness.com a list of its accomplishments, which, according to the organization, includes forcing the federal Small Business Administration to remove 600 "of the largest companies in the world" from the federal government's database of small businesses.