June 14, 2007
Petaluma, Calif.- On June 30th a new Small Business Administration policy is set to take effect that has outraged small business owners across the country. The new SBA five-year re-certification/grandfathering policy will allow the SBA to include billions of dollars in federal contracts to Fortune 1000 firms towards the federal government’s 23 percent small business contracting goal until the year 2012.
As early as 2002, federal investigations began to find that the SBA had reported contracts to hundreds of Fortune 1000 firms as small business awards. Two investigations by the SBA Office of Advocacy and the SBA Office of Inspector General found in many cases large businesses had received federal small business contracts fraudulently. (http://www.asbl.com/documents/05-16.pdf
The SBA responded to the charges by saying the contracts to the large businesses had been "miscoded" as small business contracts. (http://www.asbl.com/showmedia.php?id=393
) The new five-year re-certification/grandfathering policy will allow the SBA to continue to include the "miscoded" small business contracts to Fortune 1000 firms in their small business contracting statistics until the year 2012.
Beginning in 2003, the Office of Federal Procurement policy and the SBA Office of Inspector General called for a plan to remove Fortune 1000 firms and other large businesses from the government's small business contracting programs. (http://www.washingtontechnology.com/print/17_22/20148-1.html
) The SBA never implemented the policies, and they continued to include billions of dollars in contracts to Fortune 1000 firms and other large business in the United States and Europe towards the government's 23 percent small business goal.
SBA critics point out that if the new five-year re-certification/grandfathering policy is allowed to stand, legitimate small business could lose between $200 and $300 billion in federal small business contracts over the next five years.
Small business owners and advocates were hoping Congress would step in and pass legislation to stop the SBA policy from taking effect. To date, no legislation has been passed to stop the SBA policy or halt the flow of federal small business contracts to large businesses.