Just a week after the Small Business
Administration celebrated record-breaking
contract awards to small business owners eligible for government set-asides,
a longtime critic filed
suit in federal court for an injunction to force SBA to halt some of the
practices used in measuring its success.
The Petaluma, Calif.-based American
Small Business League, in an injunction addressed
to Administrator Marie Contreras-Sweet filed in Federal District Court in San
Francisco, argued that the SBA’s “illegal policies” have “defrauded small businesses
and small businesses owned by women, minorities and disabled veterans out of
hundreds of billions of dollars in government contracts.”
It quotes the Small Business Act’s
language noting that “the governmentwide goal for participation by small
business concerns shall be established at not less than 23 percent of the total
value of all prime contract awards for each fiscal year." And within
that category, the goal states 5 percent for women-owned small businesses, 5
percent for minority-owned firms, and 3 percent for disabled veterans.
But the SBA, the group’s argument goes,
“has created a policy they call the ‘exclusionary rule’ and ‘small business eligible dollars’ that
uses a significantly lower federal acquisition budget number to calculate the
percentage of contracts awarded to all categories of small businesses.”
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Among the types of contracts defined as
"excluded," according to the brief, are those involving contracts
performed outside of the United States; acquisitions by agencies on behalf of
foreign governments, entities or international organizations; and all contracts
involving the following agencies: the Federal Deposit Insurance Corp., the U.S.
Postal Service, the Bureau of Engraving And Printing, the U.S. Mint, the Office
of the Comptroller Of The Currency, the Office Of Thrift Supervision, the
Transportation Security Administration, the Federal Aviation Administration,
the Tennessee Valley Authority, the Administrative Office of the U.S. Courts,
the Architect of the Capitol, Bankruptcy Courts, the Central Intelligence
Agency, the Congressional Budget Office, the Court Services and Offender
Supervision Agency, the Pretrial Services Agency, the Federal Judicial Center,
the Overseas Private Investment Corp., the Supreme Court, TRICARE, and the
Centers for Medicare & Medicaid Services.
“The SBA cannot claim it has met its
small business participation goals unless a significant portion of the total
contracts are ignored, some contracts are declared exempt, despite the act's
crystal clear use of the phrase all prime contracts,” the injunction concludes.
"I am confident,” said league
President Lloyd Chapman, “the court will find the
SBA's policies violate federal law and the SBA has blatantly falsified federal
small business contracting data and cheated small businesses out of billions of
An SBA spokesman told Government
Executive, “We don't have any comment and aren't aware of any
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