Nation's Leading Federal Contracting Expert Opposes SBA Anti-Small Business Policies

ASBL's President Lloyd Chapman And Professor Charles Tiefer Oppose New SBA Size Standards

Nov 07, 2014, 11:56 ET from American Small Business League

PETALUMA, Calif., Nov. 7, 2014 /PRNewswire-USNewswire/ -- One of the nation's leading experts on federal contracting law, Professor Charles Tiefer, has joined with American Small Business League (ASBL) President, Lloyd Chapman, to oppose a new round of SBA polices they believe will be devastating to thousands of small businesses. Professor Tiefer served as Commissioner on the Commission on Wartime Contracting in Iraq and Afghanistan.

Professor Tiefer strongly opposed a new SBA proposed policy that will put thousands of Information Technology Value Added Resellers (ITVARs) out of business. In this new anti-small business policy, the SBA is proposing to eliminate the exception under NAICS code 541519 (Other Computer Related Services) and its 150-employee size standard.

The policy was derived from Congress's intent in the Small Business Jobs Act of 2010 to increase small business size standards. This proposed rule does exactly the opposite by "eliminating" the higher size standard of 150-employees and using the lower size standard of $27.5 million in receipts.

"If the SBA actually adopts a final rule eliminating IT-VAR, this will have precisely the effect Congress did not want. The final rule will decrease small business size standards in the 'solutions' sub-industry. Businesses that qualified, below the 150 employee standard, no longer will," Professor Tiefer stated in his comment.

In the Small Business Jobs Act of 2010, Congress's intent of increasing small business size standards was "to allow small businesses to compete in the current federal marketplace." According to Professor Tiefer, if the SBA adopts the final rule, "small businesses will be squeezed out of the federal marketplace."

The SBA doesn't provide any credible figures to back up their reasons for proposing to eliminate ITVARs from NAICS code 541519, but in their 2003 final rule when they established the 150 employee size standard the SBA stated, "An employee size standard is considered a better measure of the size of ITVARs operation than receipts since a substantial proportion of their receipts merely reflect the dollar value of equipment and software sold."

"Eliminating the 150 employee ceiling puts the 'high-employee-level' type of contractor out of business, because it cannot get down under $27.5 million without a kind of radical chopping it cannot handle – i.e., switching to a business model of fewer employees, and, laying off a third (50) or more employees," stated Professor Tiefer.

In the federal marketplace there are many other sub-industries that do not have NAICS census data. This looks like an intentional attack on ITVARs that make over $27.5 million in receipts with no market data to prove otherwise, only the SBA's statement that "it has created some inconsistencies, confusion, and misuse."

"Only IT-VAR is being eliminated. This unfairly and inconsistently punishes the 'IT Solutions' industry," Professor Tiefer states. "The patent unsoundness and unfairness of eliminating an entire sub-industry, not on the basis of the market, but just because the SBA has problems with data."

The last day to leave a public comment opposing this rule is Monday, Nov. 10.

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SOURCE American Small Business League