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SBA goes to court

A motion was filed in the U.S. District Court, Northern District of California (Case No.C044250SI), against the U.S. Small Business Administration (SBA) by the American Small Business League (ASBL).

October 22, 2004

This motion seeks a court order compelling the SBA to provide a detailed description of the contents of a controversial report concerning fraud and abuse in government contracting. The ASBL also requests the SBA provide specific justification for previous claims that the report is exempt from the Freedom of Information Act (FOIA).

The SBA has referred to the widespread abuses as "miscoding," but the ASBL believes the report holds statistical data that will uncover blatant fraud and abuse in the SBA's mishandling of more than $67 billion annually in government small business contracts.

"I find it curious that the SBA has gone to court to avoid disclosing a document that they have consistently characterized as a routine report," said Robert Belshaw of Gutierrez-Ruiz, the firm who represents ASBL. "The justifications offered by the SBA for withholding this document are inapplicable and not supported by law."

"SBA's handling of this matter has been suspicious," said Lloyd Chapman, president and founder of the ASBL. "When I first requested this report, the SBA denied its existence. Once they admitted it existed, they claimed it was privileged communication between agency executives and was, therefore, exempt from the Freedom of Information Act. Next, they claimed it was a 'trade secret,' and now, they are telling the media it's just a routine report. If this is just a routine report, why has the SBA tried to keep it secret for nine months, and why are they willing to go to federal court during an election to withhold it?"

Case History

The motion follows a complaint filed October 6 (Case No.C044250SI) demanding the disclosure and release of the aforementioned documents. The original lawsuit was filed after the SBA twice refused requests made by ASBL for copies of "the original draft" of the report by Eagle Eye Publishing on abuses in small business contracting and submitted to the SBA in January 2004. The SBA is withholding the entire report based on specific exemptions in the FOIA; the ASBL's lawsuit counters that there is no legal basis for the denial of access to the original report.

The SBA's most recent refusal to release the report on small business contracting abuse comes just days after the Center for Public Integrity released its own report, which found the Defense Department had awarded more than $47 billion of small business contracts to some of the largest firms in the United States and Europe with the full knowledge and approval of the SBA.

Please see attached backgrounder for more information on the ASBL, its founder Lloyd Chapman, and the history of this case.

Contract Abuse Uncovered by Multiple Reports, Sources

"I believe the original report the SBA received back in January contains statistical and factual information that is in no way exempt from the Freedom of Information Act," said Lloyd Chapman, President and Founder of the ASBL. "The SBA is attempting to whitewash this report before it's released to the public because it will shed light on the SBA's role in allowing the staggering level of fraud and abuse in small business contracting uncovered by the Center for Public Integrity. This is in addition to the General Accounting Office (GAO) report published in 2003 that identified abuse within the SBA contracting program."

The SBA Had to Know

"$47 billion in small business contracts could not have gone to some of the nation's largest companies without the SBA's full cooperation and assistance," continued Chapman. "It's an insult to the 23 million small businesses in America for the SBA to try and convince us this is just 'miscoding.' $47 billion dollars is a lot of miscoding."



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