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Monday, November 29, 2010

SBA Loses Legal Battle Over Crisis Management PR Contract

November 29, 2010

Petaluma, Calif. – The Small Business Administration (SBA) has lost another Freedom of Information Act lawsuit filed by the American Small Business League (ASBL). The ASBL filed suit after the SBA refused to turn over information on potentially damaging public relations contracts awarded by the agency to APCO Worldwide Inc., an international public relations firm specializing in crisis management.

The ASBL suspects the SBA has spent American tax dollars to hire consultants to help obscure the SBA's role in diverting billions of dollars a month in federal small business contracts to Fortune 500 firms and other large businesses around the world. The ASBL believes the SBA may have launched a massive campaign to cover-up the diversion of federal small business contracts to large businesses, and to discourage the media from covering the issue.

In one case, the SBA paid $30,000 for a one-day meeting with APCO executives. In winning the lawsuit, the ASBL has now forced the SBA to turn over complete copies of those contracts.

Since 2003, more than a dozen federal investigations have uncovered billions of dollars a month in federal small business contracts are going to corporate giants. In Report 5-15, the SBA’s own Office of Inspector General (IG) referred to the issue as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today” (

In Report 5-16 from March of 2005, the SBA IG reported that large businesses had committed fraud by misrepresenting themselves as small businesses through “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.”

In recent years, the SBA has claimed the diversion of federal small business contracts to large corporations has been the result of harmless "miscoding." In May of 2007, the SBA even went as far as to claim that it was a "myth" that large corporations received federal small business contracts. (

“We are going to continue to sue the SBA to force the release of information that shows they have encouraged and protected firms that have committed felony contracting fraud,” ASBL President Lloyd Chapman said. “The proposal to combine the SBA with the Commerce Department is just the latest attempt by the government to cover up billions of dollars in abuse, while trying to further dismantle federal small business contracting programs.”


Christopher Gunn
Communications Director
American Small Business League
(707) 789-9575