SBA Response Dodges Fraudulent Policies in Federal Injunction Case, ASBL Reports

The SBA's response dodged the two substantive issues of the case. The response did not include any specific justification to the SBA's long standing policy of diverting federal small business contracts to Fortune 500 firms.  The SBA's response contained no legal justification for falsifying the government's compliance with the 23% small business contracting requirement by excluding the majority of the federal acquisition budget.

ASBL attorney Robert Belshaw stated, "The SBA has obviously sidestepped the relevant issues of this case because their policies are undeniably in direct conflict with the Small Business Act."

The Small Business Act requires a minimum of 23% of the total value of all prime contracts to be awarded to small businesses and small businesses owned by women, minorities and service disabled veterans. The SBA's "exclusionary policy" excludes the majority of the federal acquisition budget from their calculations which dramatically reduces the volume of contracts awarded to all categories of small businesses.

SBA Administrator Maria Contreras-Sweet has admitted the SBA has a "grandfathering rule" they use to report federal contracts to Fortune 500 firms such as Chevron, Northrop Grumman and Raytheon as small business contracts. In fiscal year 2015, the SBA included contracts to over 151 Fortune 500 firms in the $90 billion they claim were awarded to small businesses. In recent years the SBA has diverted billions in federal small business contracts to hundreds of firms such as Verizon, IBM, Hewlett-Packard, Microsoft, Home Depot, Oracle, General Dynamics, Bechtel, Walmart, Citigroup, Johnson & Johnson, Honda, Finmeccanica in Italy, Thales in France, British Aerospace (BAE) and Rolls Royce.

The SBA's own Inspector General has described the diversion of federal small business contracts to large businesses as "One of the most important challenges facing the Small Business Administration (SBA) and the entire federal government today…."

President Obama released the statement, "It is time to end the diversion of federal small business contracts to corporate giants."

The General Accounting Office (GAO) found over 5,300 large businesses were the actual recipients of billions of dollars in federal small business contracts. GAO Report 10-108 uncovered similar fraud and abuse.

In 2015, Public Citizen released an investigative report titled, "Sleighted - Accounting Tricks Create False Impression That Small Businesses Are Getting Their Share of Federal Procurement Money." On July 25^th, Mother Jones released their investigative piece on the SBA titled, "Giant Corporations Are Reaping Billions From Federal "Small Business" Contracts."

ABC, NBC, CBS, CNN, Fox News, CNBC, MSNBC, RTTV, HuffPost Live, and the AP have reported on the abuses. ASBL President Lloyd Chapman is releasing a documentary on the history of fraud at the SBA.

California Northern District Court Judge Vince Chhabria will preside over the case (3:2016cv02410).

SBA Administrator Maria Contreras-Sweet - 202-205-6708
SBA Spokesman Terry Sutherland - 202-205-6919
SBA Inspector General Peg Gustafson - 202-205-6586

Contact: Jeanne Spatola
[email protected]
925-255-3658

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SOURCE American Small Business League

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