Small Business Administration (SBA) Goes to Federal Court For Withholding Falsified Contracting Data

Small Business Administration (SBA) Administrator Stephen Preston has decided his agency will go to federal court in San Francisco over his agency’s refusal to release the names of Fortune 500 firms that received a major portion of more than $270 billion in federal small business contracts during 2005 and 2006.

Administrator Preston has consistently refused to release the specific names of firms that received federal small business contracts. Under Preston’s direction, the SBA has even refused requests from members of Congress for a complete list of all firms the SBA reported as receiving federal small business contracts.

During late 2007, Northern California Congresswoman Lynn Woolsey was just one of the many members of Congress whose request for the information was refused by Mr. Preston.

On February 6th, 2008, the American Small Business League filed its fourth lawsuit against the SBA in the U.S. District Court, Northern District of California. The ASBL has won a series of legal battles against the SBA and NASA under the Freedom of Information Act. Documents obtained by ASBL litigation have been instrumental in proving that the SBA had intentionally inflated the Bush Administration’s small business contracting statistics by including billions of dollars in awards to Fortune 500 firms in its annual small business contracting data.

The ASBL contends that the inflated numbers were used to misrepresent the Bush Administration’s compliance with the congressionally mandated small business contracting goal. According to the Small Business Reauthorization Act of 1997, the federal government has a goal of awarding 23 percent of the total value of all prime and sub contracts to small businesses.

Since 2003, investigative reports by ABC, CBS and CNN found the SBA had attempted to inflate Bush Administration small business contracting statistics by including billions of dollars in federal contracts to hundreds of large firms like: Lockheed Martin, Boeing, Rolls Royce, Microsoft, Wall-Mart, L3 Communications, British Aerospace Engineering (BAE) and Buhrmann NV, a Dutch firm with 17,000 employees in 26 countries.

The SBA has until mid-March to respond to the ASBL lawsuit and present its case for withholding the data. Historically, the SBA has been guilty of dragging out cases filed under FOIA for as long as possible and then capitulating just prior to going to trial. The ASBL believes that the SBA uses this tactic as a means of avoiding responsibility for ASBL’s legal fees. By law, a federal judge must issue a ruling in the favor of the plaintiff in order for the plaintiff to be eligible for reimbursement of their legal fees.

“I’m sure SBA Administrator Preston just wants to stall the release of this damaging information until he and Bush are out of office,” ASBLPresident Lloyd Chapman said. “This close to the elections, the Bush Administration obviously does not want information released to the public that will prove they have diverted hundreds of billions of dollars in federal small business contracts away from the small businesses where most American's work and into the hands of the Fortune 500 firms that are the largest contributors to the Republican party."

The ASBL plans to file similar lawsuits under FOIA against the Department of Defense and the General Services Administration within the next sixty days. To date, the ASBL has won every lawsuit it has filed against the Bush Administration.