October 3, 2007
Petaluma, Calif. – The Bush Administration has announced its opposition to new House bill, H.R. 3567, the Small Business Investment Expansion Act of 2007. The bill contains provisions that will serve as a partial repeal of the Small Business Act.
In a written statement dated September 26, 2007, the Executive Office of the President stated:
“The Administration also strongly opposes the proposed change to the definition of a small business for the purposes of venture capital investment. This definition strips the elements of independent ownership and control that identify small business ownership under current law. Not only would this change be inequitable for actual small businesses, but it would be a step backward from our recent progress in addressing the misidentification of large firms as small businesses for Federal procurement purposes.”
The section of H.R. 3567 that has drawn the most fire from small business groups, chambers of commerce across the country and the White House is “Title V.” The provision amends the Small Business Act’s definition of a small business as “independently owned and operated” to include firms that are up to 49.9 percent owned by venture capital firms.
H.R. 3567’s definition of a venture capital firm is broad enough that Fortune 500 firms would be able to use the new definition as a loophole to acquire up to 49.9 percent of a small business and maintain that firms federal small business status for an indefinite period of time.
One of H.R. 3567’s chief supporters is House Small Business Committee Chair, Representative Nydia Velázquez (D – NY). In the last year, Velázquez has appeared on ABC, CBS and CNN complaining about the federal policies that have allowed Fortune 500 corporations and international firms to receive billions of dollars in federal small business contracts. To date, Velázquez has declined to offer any legislation that will help to remove large firms from federal small business contracting and increase access to federal small business contracts for legitimate small businesses.
Small business advocates like the American Small Business League (ASBL) are angered that Representative Velázquez would co-sponsor legislation that is clearly designed to give venture capital firms and other large businesses access to federal small business contracting programs.
In response to the passage of H.R. 3567, chambers of commerce from across the country have joined the ASBL’s campaign to stop H.R. 3567 and started notifying their Senators of their opposition to H.R. 3567.
“I am very disappointed in Nydia Velázquez for proposing this legislation, clearly this H.R. 3567 is going to be devastating to small businesses in America,” President of the American Small Business League, Lloyd Chapman said. “I am happy to see President Bush joining the American Small Business League in opposition to this legislation.”