New Government Policies Could Wipe Out Small Business Programs

PETALUMA, Calif., Oct. 23, 2014 /PRNewswire-USNewswire/ -- The government has been adopting sweeping changes in federal small business programs that could be devastating for the millions of Americans that are employed by the nation's 28 million small businesses.

An article in the Washington Post titled, "How 8,500 large companies will become small businesses overnight," reported on the changes.

According to the latest data from the U.S. Census Bureau, 98 percent of all U.S. firms have less than 100 employees and 89 percent have less than 20. Those 28 million small businesses are responsible for over 50 percent of the GDP, over 50 percent of the private sector work force and over 90 percent of U.S. exporters.

The Small Business Administration has been adopting new small business size standards that have allowed many of the largest firms in a wide variety of industries to be redefined as small businesses. These new changes will make it much more difficult for legitimate small businesses to compete for over $100 billion a year in government small business contracts.

One of the SBA's proposed changes that is drawing the most criticism involves thousands of small businesses that provide information technology (IT) products to the federal government and government prime contractors. Over 95 percent of small businesses that provide IT products to the federal government fall under North American Industry Classification System (NAICS) code 541519, titled Information Technology Value Added Reseller. The current small business size standard for NAICS code is 150 employees or less.

If the new SBA size standard is adopted, any small business operating under NAICS code 541519 will lose their small business status and be reclassified as a large business if their annual sales exceed $27.5 million.

Federal investigators and investigative reports in the media have all found that the SBA awards billions of dollars in federal contracts to Fortune 500 firms and their subsidiaries as small business contracts. NBC, ABC, CBS, CNBC, MSNBC, Fox News, and RTTV have also reported on the fraud in SBA managed programs.

If the new SBA policy is adopted, federal contracts to a small IT business with annual sales in excess of $27.5 million would be reported as large business contracts, while some firms like Lockheed Martin, Boeing, General Dynamics, Northrop Grumman and Raytheon would be reported as small business contracts.

The American Small Business League (ASBL) has launched a national campaign to work with small businesses in the IT industry to oppose the SBA policies that will harm legitimate small businesses. ASBL attorneys are preparing to file an injunction to block the implementation of any changes to NAICS code 541519 after the SBA has adopted the final rule.

The SBA will be taking public comment on their proposed policy changes until November 10, 2014.

Take a look at ASBL's new documentary trailer.

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SOURCE American Small Business League