January 25, 2010
Petaluma, Calif. - The Obama Administration has removed a critical field from the Federal Procurement Data System - Next Generation (FPDS - NG) that has been used by federal contractors to indicate their status as a small or large business. Obama officials at the General Services Administration (GSA) removed the "small business flag" on all future and historical data.
Over a dozen federal investigations and numerous investigative stories by organizations such as ABC, CBS and CNN have used the small business flag to uncover billions of dollars in federal small business contracts that were fraudulently diverted to large businesses. (Report 5-15, http://www.asbl.com/documents/05-15.pdf; ABC, http://www.asbl.com/abc_evening_news.wmv; CBS, http://www.asbl.com/cbs.wmv; CNN, http://www.asbl.com/showmedia.php?id=1170)
The removal of the "small business flag" will make it difficult if not impossible for any future federal investigations to uncover large businesses that have fraudulently claimed to be small businesses prior to 2009.
In addition to removing the small business flag, the GSA has forced all firms that obtain federal contracting data from the GSA for dissemination to the public, to sign an agreement, which severely restricts their release of the data. The GSA's "GETLIST RULES OF BEHAVIOR" warns, "parties failing to sign the agreement and comply with the terms will be denied access to this service."(http://www.fpds-ng.com/downloads/FPDS-NG%20getList%20Rules%20of%20Behavior.pdf)
In one example, the agreement stipulates a firm would be in violation of the agreement if they create a report that "show[s] socio-economic information but which contains none of the requisite SBA rules of exclusion."
The American Small Business League (ASBL) has challenged the SBA's "rules of exclusion" since there is no basis in the law for the practice. The Small Business Act stipulates a minimum of 23 percent of the "total value of all prime contract awards for each fiscal year" shall be awarded to small businesses. (http://www.sba.gov/regulations/sbaact/sbaact.html) The ASBL believes the SBA has arbitrarily created the "rules of exclusion" to artificially inflate the percentage of federal contracts awarded to small businesses by removing billions of dollars in major prime contracts from their calculations.
The GSA's "GETLIST RULES OF BEHAVIOR" would prevent firms from releasing accurate data on the actual percentage of all federal contracts awarded to small businesses. In the past, information released by private firms on the percentage of all federal contracts awarded to legitimate small businesses has been significantly lower than the percentage claimed by the Small Business Administration.