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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.


Monday, April 6, 2009

New SBA Head Will Ignore Agency’s Biggest Problem

April 6, 2009

Petaluma, Calif. – Since 2003, over a dozen federal investigations have found billions of dollars in federal contracts earmarked for small businesses have been diverted to Fortune 500 corporations and some of the largest companies around the world.

In her confirmation hearing, Administrator of the U.S. Small Business Administration (SBA) Karen Gordon Mills sidestepped a question from Senator Jeanne Shaheen (D - NH) regarding her plan to address the diversion of federal small business contracts to Fortune 500 corporations and other clearly large firms.

The American Small Business League (ASBL) is predicting that new SBA Administrator Mills will completely ignore the issue. Additionally, the ASBL believes Mills will continue Bush Administration policies of covering up and withholding information that would prove the SBA has dramatically inflated the government's small business contracting statistics by including up to $100 billion a year in contracts to large businesses.

During the Bush Administration, the SBA lost a series of lawsuits against the ASBL. The lawsuits resulted in the release of thousands of pages of data proving that every year billions of dollars in government small business contracts have wound up in the hands of companies like: Lockheed Martin, Boeing, Rolls-Royce, Microsoft, Wall-Mart, L-3 Communications, British Aerospace Engineering (BAE), Home Depot, Xerox, Starwood Hotels, Dell and Buhrmann NV, a Dutch firm with 17,000 employees in 26 countries.

All of the SBA executives that were involved in the Bush Administration's policies to divert federal small business contracts to corporate giants and then cover-up any information that would prove it, remain active employees at the agency.

Report 5-15 from the SBA's own Office of Inspector General referred to the diversion of federal small business contracts to large corporations as, "One of the most important challenges facing the Small Business Administration and the entire Federal government today." Despite Report 5-15, and more than a dozen other federal investigations, SBA Press Office Director Mike Stamler continues to try to convince the media that these abuses in small business programs are a “myth.”

"I predict Mills is not going to do anything to stop the diversion of federal small business contracts to large businesses and in fact, you can bet that Mills is going to support policies to divert even more federal small business contracts to some of President Obama's wealthiest contributors in the venture capital industry," ASBL President Lloyd Chapman said.