PETALUMA, Calif., Aug. 20, 2014 /PRNewswire-USNewswire/ -- A survey by the American Small Business League (ASBL) of over 2000 Chambers of Commerce across the country found overwhelming opposition to the Small Business Administration's (SBA's) proposed "safe harbor from fraud" policy.
Over the course of two months the ASBL contacted a sampling of Chambers of Commerce in all fifty states. Most of the chambers contacted were shocked that such a policy had even been proposed.
Under section 16 (d) of the Small Business Act, any firm that misrepresents itself as a small business to illegally receive federal small business contracts can be punished by up to ten years in prison, a fine of not more than $500,000 or both.
Under the proposed "safe harbor from fraud" policy, a large business that is caught misrepresenting itself as a small business to illegally land a federal small business contract can avoid any jail time or fines by simply claiming they "acted in good faith".
In 1995, the SBA Inspector General began sounding the alarm on large businesses fraudulently misrepresenting themselves to hijack federal small business contracts. In 2005, in Report 5-15, the SBA Office of Inspector General describes 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…"
Every SBA Inspector General since 2005 has continued to name the diversion of federal small business contracts to large businesses as the number one challenge at the SBA.
Report 5-16 from the SBA Inspector General found large businesses were fraudulently landing federal small business contracts by making "false certifications."
President Obama acknowledged the magnitude of fraud and abuse at the SBA when he released the statement, "It is time to end the diversion of federal small business contracts to corporate giants."
The SBA has refused to adopt any polices to halt the rampant fraud. Instead the SBA is taking public comment on the "safe harbor from fraud" policy that will likely encourage fraud in federal small business contracting programs.
Individuals that wish to send the SBA a comment on the "safe harbor from fraud" policy can do so going to the proposed rule's website. The comment period will end this upcoming Monday, August 25.
SOURCE American Small Business League