PETALUMA, Calif., Nov. 14, 2014 /PRNewswire-USNewswire/ -- House Small Business Committee Chairman Sam Graves has joined American Small Business League (ASBL) President Lloyd Chapman and Professor Charles Tiefer in opposing a new policy the SBA proposed on Sept. 10 that would have pushed thousands of small businesses in the Information Technology (IT) industry out of the federal marketplace.
The SBA had proposed to remove the 150-employee small business size standard for small businesses in the IT industry. If the policy was adopted, small IT firms with a few as 10 employees could be reclassified as large businesses. At the same time the SBA would continue to report billions in contracts to Fortune 500 firms as small business contracts.
The ASBL launched a national campaign to oppose the policy they described as "anti-small business" and retained Professor Charles Tiefer, one of the nation's leading experts on federal contracting law, to review the SBA's authority to propose such a damaging policy for small businesses.
"This proposed SBA change breaks the law by violating Congress's statutory intent in the Small Business Jobs Act of 2010," Professor Tiefer stated in his comment. "The SBA does not give any market data or other persuasive reason for the elimination," adding that this rule does exactly the opposite of what Congress intended and that if adopted into a final rule, "small businesses will be squeezed out of the federal marketplace."
In 2002, Lloyd Chapman launched a successful campaign to oppose the 500-employee small business size standard in favor of a more industry appropriate 150-employee size standard when the SBA originally created the category Other Computer Related Services under NAICS code 541519.
"I believe the most compelling argument against eliminating the 150-employee small business size standard for 541519 comes from the SBA itself. In 2003, after months of research and deliberation in their final rule on 541519 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,'" said Chapman in his comment. "That statement was true in 2003 and it is still true today."
On Nov. 10, Congressman Sam Graves submitted a 12 page letter to the SBA agreeing with Professor Tiefer and Lloyd Chapman that the SBA did not have the authorization or the justifications to remove the 150-employee small business size standard for Information Technology Value Added Resellers.
In a Gov. Exec. article by Charles Clark titled, "SBA Takes Flak Over Revising Company Size Standards," Charles recognizes Congressman Graves' letter and points out that Graves warned the SBA of "litigation and a legislative fix" if the SBA does not withdraw the proposed rule.
"The Proposed Rule violates the express statutory language added to the Small Business Act," said Graves. "The Committee urges the agency to withdraw the proposed rule… Should the SBA proceed with the rulemaking, the Committee will consider appropriate legislative action."
Almost a month prior to the Small Business Committee's letter, the ASBL had also proposed to consider legislative action, if necessary, by filing an injunction against the SBA to block implementation of the rule.
SOURCE American Small Business League