SBA Receives Crushing Opposition To New Anti-Small Business Policy

PETALUMA, Calif., Nov. 12, 2014 /PRNewswire-USNewswire/ -- The Small Business Administration's (SBA's) new proposed policy that could bankrupt thousands of small businesses that provide IT products to the federal government has received a resounding opposition from across America.

The American Small Business League (ASBL) mounted a national campaign to oppose the new SBA policy they described as "anti-small business". 

The SBA was proposing to remove the 150-employee small business size standard for Information Technology Value Added Resellers (ITVARs) that operate under North American Industry Classification System (NAICS) code 541519.

Several opposing comments pointed out the strongest piece of evidence that negates the rule, which came directly from the SBA in their 2004 Final Rule on 541519. In the SBA's Final Rule they 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."

Over 98% of the comments were vehemently opposed to the proposed change. One of the most noteworthy opposing comments came from Professor Charles Tiefer, one of the nation's leading experts on federal contracting law. Professor Tiefer had been retained by the ASBL to review the proposed SBA policy and determine if the SBA had the authority to adopt such a rule, and if the proposed rule was consistent with the Congressional intent of passing The Small Business Jobs Act of 2010 that authorized the SBA to change small business size standards.

"The SBA made a compelling case for the sub-industry of IT-VAR in 2002-2003.  As for the SBA's 2014 proposal to eliminate the sub-industry, the kind of administrative concerns and data questions that the SBA puts forth simply do not have any traction for questioning or changing the 2003 establishment of the category… It should continue, not eliminate, IT-VAR," Professor Tiefer stated in his opposition.

An opposing comment from Carly Goldstein pointed out that "The SBA notice also indicated that it was using 2007 Economic Census data… That 2007 Economic Census data has no relevance to the contractual landscape of 2014. It is apparent that the SBA has not attempted to obtain current data regarding the cost incurred by an ITVAR contractor with less than 150 employees to perform."

ASBL President Lloyd Chapman's refers to a hidden agenda the SBA may have in proposing this new rule when he stated in his comment, "I believe this latest round of changes in small business size standards is the latest attempt to prepare to close the SBA by combing it with the Department of Commerce in early 2015… I am strongly opposed to the removal of the 150-employee small business size standard for Information Technology Value Added Resellers."

It will now be several weeks before the SBA issues their final rule on the proposed policy.

"If the SBA tries to adopt this new policy that will unquestionably push thousands of legitimate small businesses out of the federal marketplace, I will work with our legal team to file and injunction to prevent them from making any change to NAICS code 541519," Chapman stated.

Logo - http://photos.prnewswire.com/prnh/20140811/135286

SOURCE American Small Business League