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Wednesday, April 8, 2009

New SBA Administrator Should Remove Executives that Covered up Fraud and Abuse

April 8, 2009

Petaluma, Calif. – During the Bush Administration over 15 federal investigations and two private studies have found fraud, and widespread blatant abuses in a variety of programs administered by the U.S. Small Business Administration (SBA).

Several investigations such as Report 5-16 from the SBA Office of Inspector General (IG) found large businesses had received federal small business contracts illegally by making what the SBA IG referred to as "false certifications" and "improper certifications." (

Another investigation from the SBA Office of Advocacy found large businesses had received federal small business contracts fraudulently through what they referred to as "vendor deception." (

Under section 16(d) of the Small Business Act, misrepresenting a firm's status as a small business to illegally receive federal small business contracts is a felony, which carries a $500,000 fine per occurrence, up to ten years in prison and debarment from federal contracting programs. (

During the eight years of the Bush Administration, several SBA executives were clearly involved in an ongoing campaign to cover-up and minimize the fraud and abuses that were uncovered through the federal investigations, as well as in investigative stories in the media.

Several SBA executives conspired to deny the presence of any fraud and abuse in SBA programs for over seven years by describing even the most blatant cases of fraud and abuse as "miscoding." On several occasions they went so far as to launch a campaign to convince Congress, the public and the media that it was a "myth" that large businesses were receiving federal small business contracts. (

Other SBA executives launched campaigns to cover-up fraud and abuse by fraudulent contractors by fighting legal efforts to obtain data under the Freedom of Information Act (FOIA) that would uncover blatant abuses in programs administered by the SBA. (

Federal court rulings even opposed the SBA's executives campaign to withhold damaging information by ruling against the SBA in each and every FOIA case filed by advocacy groups like the American Small Business League (ASBL). (

In February of 2008, President Barack Obama stated, "It is time to end the diversion of federal small business contracts to corporate giants." ( If new SBA Administrator Karen Mills intends to end fraud and abuse at the SBA, she will make good on President Obama's campaign promise. The SBA executives responsible for allowing the abuses, and then attempting to cover them up must be removed as one of Mills' first actions at the SBA.


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