New Controversial SBA Policies Favor Big Businesses Over Small Businesses

PETALUMA, Calif., Nov. 5, 2014 /PRNewswire-USNewswire/ -- Over the last few months the Small Business Administration (SBA) has proposed sweeping changes to the federal definition of a small business that has allowed thousands of large businesses to suddenly qualify as small businesses.

The Washington Post published a story of the new colossal small business definitions titled, "How 8,500 large companies will become small businesses overnight."

The new greatly elevated size standards will allow firms that are up to 150 times larger than the average American firm to be considered a small business for the purposes of federal contracting. The American Small Business League (ASBL) believes the new policies are part of a plan to quietly dismantle the SBA. Several journalists published articles that agreed. The ASBL believes by raising the small business size standards to such high levels, legitimate small businesses will be unable to compete with the newly large firms for federal contracts and will subsequently be forced out of the federal marketplace and out of business.

A new round of dramatically increased small business size standards was proposed on Sept. 10. Those size standards will allow firms that are up to three times larger than 98% of all U.S. firms to qualify as small businesses. One particular proposal that has drawn the most criticism could bankrupt over 12,000 small businesses in the Information Technology (IT) industry. Currently small businesses that provide IT products to the federal government are defined as Information Technology Value Added Resellers (ITVARs) and operate under North American Industry Classification System (NAICS) code 541519. The current small business size standard for NAICS code 541519 is 150 employees. If the new SBA policies take effect, any ITVAR operating under NAICS code 541519, with annual sales of over $27.5 million will be considered a large business and have to compete with firms with up to 500 employees.

At the same time the SBA will continue to report billions of dollars in awards to many Fortune 500 firms and their subsidiaries as small business awards.

The House Small Business Committee chastised the SBA for diverting billions of dollars in federal small business contracts to Fortune 500 firms like Lockheed Martin, Northrop Grumman, Raytheon and Chevron.

NBC, CBS, ABC, CNN, RTTV, Fox News, CNBC and MSNBC have all released investigative reports on the diversion of federal small business contracts to Fortune 500 firms.

The American Small Business League has launched a national campaign to oppose the new SBA policies they characterize as "anti-small business." In addition to their regular legal team the ASBL has retained nationally recognized expert on federal contracting law, Professor Charles Tiefer.

"This is obviously yet another attempt to dismantle federal small business programs. Think of the lunacy of continuing to report billions in federal contracts to Fortune 500 firms as small business contracts while small IT firms with as few as 10 employees will be redefined as large businesses," ASBL President Lloyd Chapman stated.

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SOURCE American Small Business League