PETALUMA, Calif., April 29, 2016 /PRNewswire-USNewswire/ -- On Thursday April 28, the Small Business Administration (SBA) released their Fiscal Year 2015 Small Business Procurement Scorecard on the volume and percentage of federal contracts awarded to small businesses.
The SBA claims that during 2015, small businesses received $90.7 billion in federal contracts, which according to their statistics, would be 24.9% of all federal contracts.
The American Small Business League (ASBL) is challenging the accuracy of the SBA data on two grounds. The Small Business Act stipulates that small businesses shall receive a "minimum of 23% of the total value of all federal prime contracts." The Congressional Budget Office indicates the federal acquisition budget for fiscal year 2015 was $1.2 trillion. The SBA has admitted they used a significantly reduced federal acquisition budget number of just $352 billion to calculate their 24.9%. The SBA has referred to this number as their "exclusionary rule" or "small business eligible dollars."
The ASBL points out the Small Business Act make no mention of "small business eligible dollars" or an "exclusionary rule."
The ASBL is also challenging the legality of another policy the SBA created called the "grandfathering rule" or the "five-year rule," which allows large businesses that were once small to maintain small business status for the length of the contract. The Federal Procurement Data System indicates the SBA included contracts to 151 Fortune 500 firms in the $90.7 billion they claim was awarded to small businesses. The ASBL points out the Small Business Act lacks any provision that would allow Fortune 500 firms or their subsidiaries to be considered small businesses.
Every year since 2005 the SBA Office of Inspector General has named the diversion of federal small business contracts to large businesses as the number one problem with SBA management.
In Report 5-16 the SBA Inspector General found the SBA was including large businesses in their data that had made "false certifications "and "improper certifications."
As early as 2004 the SBA Office of Advocacy found large businesses were illegally receiving federal small business contracts as a result of "vendor deception."
In Report 5-14 the SBA Inspector General found 66% of the high dollar contracts the SBA reported had been awarded to small businesses had actually gone to large businesses.
In 2014, Public Citizen's investigative report, "Sleighted", accused the SBA of using "accounting tricks [to] create [a] false impression that small businesses are getting their share of procurement money…" and to fabricate and falsify federal small business contracting data.
Research by the ASBL estimates in 2015 legitimate small businesses received no more than 5% of the $1.2 trillion federal acquisition budget for 2015.
President Obama released the statement, "It is time to end the diversion of federal small business contracts to corporate giants."
ASBL President Lloyd Chapman was recognized by American Express as one of the four strongest voices for small business. Chapman plans to release a documentary on the SBA's history of corruption and fraud this summer.
SOURCE American Small Business League