Recommendations to End Fraud, Abuse and Loopholes in
Federal Small Business Contracting
1. Establish an annual recertification policy for all firms with existing Federal small business contracts, effective June 30, 2007. Current federal policy requires all government vendors to update their information annually on CCR, therefore annual recertification can be completed at that time simply by updating one box in the database. Annual recertification will be a simple, easy, quick and efficient way to stop the flow of billions of dollars in federal small business contracts to Fortune 1000 firms and other large businesses. In the past annual recertification has already been endorsed by the SBA (prior to the arrival of Steven Preston), the SBA Office of Inspector General, the Office of Federal Procurement Policy, the Senate Small Business Committee and the Office of Management and Budget.
2. Establish a federal policy that precludes any award made to a Fortune 1000 firm, its subsidiaries, or any of its divisions from being reported as a small business award. A company’s small business status should end the day that the firm is acquired by a large business.
3. Amend the Small Business Act to require annual re-certification. Require all government suppliers claiming status as a small business to recertify their size status on an annual basis. This can be done easily and efficiently online.
4. Ensure that all federal small business contracts that are only reported in the name of the parent company, removing any confusion about the actual recipients of the award.
5. Aggressively prosecute fraud and misrepresentation. Misrepresenting the size of a firm in order to illegally receive federal contracts and subcontracts is a felony with penalties of up to 10 years in prison, a fine up to $500,000, cancellation of all contracts and debarment from selling to the government. Policy should require the SBA to respond to any protest against any firm that misrepresents its size, regardless of whether or not the contract is a small business set-aside. Section 16(d) of federal code makes no differentiation as to the type of contract; therefore current SBA policy is illegal and clearly does not address the magnitude of the problem.
6. Abolish any federal policy giving special preference to Alaskan Native Corporations under the 8(a) program that is not given to other participants in the 8(a) program.
7. Publish a warning on all contractor databases. Any and all government databases for small business should clearly state the penalties for misrepresentation.
8. Enforce “Liquidated Damages” and all other existing federal laws for prime contractor non-compliance with small business goals. Because this law has never been enforced, most prime contractors never achieve the small business goals stated in their government prime contracts.
9. Remove any and all exemptions to the $100,000 small business set-aside. Congress passed legislation mandating all federal acquisitions between $2,500 and $100,000 to be automatically set-aside for small business. The SBA and the FAR Council essentially repealed this valuable piece of legislation by exempting all acquisitions on the GSA schedule from this policy.
10. Eliminate the “Comprehensive Test Program.” This program allows major prime contractors to avoid complying with their small business goals by eliminating specific small business reporting on individual contracts. It also eliminates “Liquidated Damages” for those companies under the program.
11. Force the SBA to publish a list of firms that have been removed from the small business contractor database for misrepresentation and add firms to the list monthly that lose their small business status through protests. Provide it to all federal agencies and prime contractors.
12. Establish federal policy that precludes the SBA from dismissing small business protests on non-small business set-aside contracts.
Thursday, May 10, 2007
Monday, March 19, 2007
WHITE HOUSE PR FIRMS SQUASH STORIES ON SMALL BUSINESS CONTRACTING SCANDAL
White House uses big PR firms to kill stories on small business
American Small Business League President Lloyd Chapman says he believes the Bush administration’s expenditure of over $50 million a month to some of the nation’s largest public relations firms is hampering his efforts to expose billions in fraud and abuse in federal small business contracting programs.
“White House PR firms have been working overtime to kill stories on Bush administration policies that have diverted over $300 billion in federal small business contracts to the top 2 percent of U.S. firms,” Chapman said.
A 2006 Office of Government Accountability report found the Bush administration had spent $1.6 billion over 30 months on public relations campaigns and advertising. In some cases, journalists like Armstrong Williams were paid as much as $240,000 to promote pro-Bush administration policy and pass it off as unbiased opinion.
Chapman points to a pattern over the last few years wherein newspapers, magazines and even some of the largest television networks drop his story once Bush administration officials were notified.
NBC spent a week in California filming a story on Chapman and his successful legal battle to stop the Bush administration from diverting billions in federal small business contracts to Fortune 500 firms, but the story never aired. CNN’s Lou Dobbs Tonight spent a month researching and filming a story on Chapman and his organization, but pulled the story just hours before it was supposed to air. When the story finally aired six months later, any mention of Chapman and the American Small Business League had been deleted. CBS spent weeks working with Chapman and his staff on what would have been CBS’s third installment in a series of investigative reports on the diversion of billions in federal small business contracts to firms like Rolls Royce, Wal-Mart, Boeing and Lockheed Martin. The story was suddenly halted after the SBA found out about the piece.
After spending months working with the New York Times on a story, any mention of Chapman and his group was removed from the story after it was written.
“After the New York Times story, I was contacted by the Los Angeles Times. They wanted to do a story on my campaign to stop fraud and abuse in federal small business contracting,” Chapman said. “I told the reporter if she mentioned me in the story, my name would be removed before the story ran, but she laughed. She called me the day the story ran, very upset, and told me her editor removed all references to me in the story.”
Chapman says he believes other publications have suddenly dropped their stories on this issue after being pressured by White House public relations firms, including the Associated Press, USA Today, Wall Street Journal, Dallas Morning News, BusinessWeek, Inc Magazine, Entrepreneur, Fortune, Fortune Small Business and dozens of other smaller newspapers and magazines around the country.
“We intend to use the Freedom of Information Act to uncover more information on exactly how PR firms working for the Bush administration are able to exert so much pressure on the media,” Chapman said. “I would like to see Rep. Henry Waxman hold hearings into why the Bush administration needs to spend $50 million a month on PR firms and exactly what those firms are involved in.”
American Small Business League President Lloyd Chapman says he believes the Bush administration’s expenditure of over $50 million a month to some of the nation’s largest public relations firms is hampering his efforts to expose billions in fraud and abuse in federal small business contracting programs.
“White House PR firms have been working overtime to kill stories on Bush administration policies that have diverted over $300 billion in federal small business contracts to the top 2 percent of U.S. firms,” Chapman said.
A 2006 Office of Government Accountability report found the Bush administration had spent $1.6 billion over 30 months on public relations campaigns and advertising. In some cases, journalists like Armstrong Williams were paid as much as $240,000 to promote pro-Bush administration policy and pass it off as unbiased opinion.
Chapman points to a pattern over the last few years wherein newspapers, magazines and even some of the largest television networks drop his story once Bush administration officials were notified.
NBC spent a week in California filming a story on Chapman and his successful legal battle to stop the Bush administration from diverting billions in federal small business contracts to Fortune 500 firms, but the story never aired. CNN’s Lou Dobbs Tonight spent a month researching and filming a story on Chapman and his organization, but pulled the story just hours before it was supposed to air. When the story finally aired six months later, any mention of Chapman and the American Small Business League had been deleted. CBS spent weeks working with Chapman and his staff on what would have been CBS’s third installment in a series of investigative reports on the diversion of billions in federal small business contracts to firms like Rolls Royce, Wal-Mart, Boeing and Lockheed Martin. The story was suddenly halted after the SBA found out about the piece.
After spending months working with the New York Times on a story, any mention of Chapman and his group was removed from the story after it was written.
“After the New York Times story, I was contacted by the Los Angeles Times. They wanted to do a story on my campaign to stop fraud and abuse in federal small business contracting,” Chapman said. “I told the reporter if she mentioned me in the story, my name would be removed before the story ran, but she laughed. She called me the day the story ran, very upset, and told me her editor removed all references to me in the story.”
Chapman says he believes other publications have suddenly dropped their stories on this issue after being pressured by White House public relations firms, including the Associated Press, USA Today, Wall Street Journal, Dallas Morning News, BusinessWeek, Inc Magazine, Entrepreneur, Fortune, Fortune Small Business and dozens of other smaller newspapers and magazines around the country.
“We intend to use the Freedom of Information Act to uncover more information on exactly how PR firms working for the Bush administration are able to exert so much pressure on the media,” Chapman said. “I would like to see Rep. Henry Waxman hold hearings into why the Bush administration needs to spend $50 million a month on PR firms and exactly what those firms are involved in.”
DEMOCRATS IGNORE SMALL BUSINESS CONTRACTING SCANDAL
No Plans From New Congress to Stop Fraud and Abuse
Petaluma, Calif.- Since the Democrats took control of Congress in January, more than $10 billion in small business set-aside contracts have been diverted to some of the largest firms in the U.S. and not one piece of legislation has been passed to stop it.
There have been over 400 stories in the media and 14 federal investigations over the last four years on large businesses receiving small business procurement awards. The Small Business Administration Inspector General called this situation “one of the most important challenges facing the Small Business Administration and the entire Federal government today.”
Lloyd Chapman, president of the American Small Business League, said that although the Democrats pledged to clean up fraud, corruption and abuses in government while campaigning for Congress, they have given nothing but lip service to this issue.
“The Democrats have blamed the Republicans for years for the loopholes and abuse in federal small business contracting and yet, now that they are in power, they have done nothing to change it,” Chapman said. “If you look at the House and Senate Small Business Committee Web sites, you will notice that any mention of small business contracting abuse is conspicuously absent.”
Sen. John Kerry, current head of the Senate Small Business and Entrepreneurship Committee, who has been a proclaimed advocate for small businesses for nearly two decades, has publicly stated that the current policies are inefficient.
“Politicians love to say they want to help small businesses,” Kerry said in the Marin Independent Journal. “But how can any politician make that claim with a straight face when contracts that should be going to these hard-working small businesses are being turned into giveaways to large multinational companies?"
Rep. Nydia Velázquez, the head of the House Small Business Committee, has also challenged current SBA policies in investigative reports on CBS, ABC, and CNN and in the New York Times.
“The fact that large businesses are being awarded with small-business contracts, and that there is no system in place with penalties or consequences for this, is extremely concerning,” Velázquez said in a New York Times article in December 2006.
Chapman said that despite all the statements Velázquez and Kerry have given regarding the magnitude of this problem, they continue to be “all show and no go.”
“I hope we get more than just talk from the Democrats like we got from the Republicans,” Chapman said.
ASBL research concluded that approximately half of all funds reported as going to small businesses actually went to some of the largest firms in the U.S., totaling nearly $65 billion a year. Chapman said this problem could be easily resolved with passing an annual recertification policy, but instead, the SBA passed a five-year plan that will allow large businesses to continue collecting small business awards until 2012.
“Five-year recertification is just like repealing the Small Business Act for the next five years,” Chapman said. “I can’t believe we’re even talking about how many more years Fortune 1000 firms will get small business contracts.”
Petaluma, Calif.- Since the Democrats took control of Congress in January, more than $10 billion in small business set-aside contracts have been diverted to some of the largest firms in the U.S. and not one piece of legislation has been passed to stop it.
There have been over 400 stories in the media and 14 federal investigations over the last four years on large businesses receiving small business procurement awards. The Small Business Administration Inspector General called this situation “one of the most important challenges facing the Small Business Administration and the entire Federal government today.”
Lloyd Chapman, president of the American Small Business League, said that although the Democrats pledged to clean up fraud, corruption and abuses in government while campaigning for Congress, they have given nothing but lip service to this issue.
“The Democrats have blamed the Republicans for years for the loopholes and abuse in federal small business contracting and yet, now that they are in power, they have done nothing to change it,” Chapman said. “If you look at the House and Senate Small Business Committee Web sites, you will notice that any mention of small business contracting abuse is conspicuously absent.”
Sen. John Kerry, current head of the Senate Small Business and Entrepreneurship Committee, who has been a proclaimed advocate for small businesses for nearly two decades, has publicly stated that the current policies are inefficient.
“Politicians love to say they want to help small businesses,” Kerry said in the Marin Independent Journal. “But how can any politician make that claim with a straight face when contracts that should be going to these hard-working small businesses are being turned into giveaways to large multinational companies?"
Rep. Nydia Velázquez, the head of the House Small Business Committee, has also challenged current SBA policies in investigative reports on CBS, ABC, and CNN and in the New York Times.
“The fact that large businesses are being awarded with small-business contracts, and that there is no system in place with penalties or consequences for this, is extremely concerning,” Velázquez said in a New York Times article in December 2006.
Chapman said that despite all the statements Velázquez and Kerry have given regarding the magnitude of this problem, they continue to be “all show and no go.”
“I hope we get more than just talk from the Democrats like we got from the Republicans,” Chapman said.
ASBL research concluded that approximately half of all funds reported as going to small businesses actually went to some of the largest firms in the U.S., totaling nearly $65 billion a year. Chapman said this problem could be easily resolved with passing an annual recertification policy, but instead, the SBA passed a five-year plan that will allow large businesses to continue collecting small business awards until 2012.
“Five-year recertification is just like repealing the Small Business Act for the next five years,” Chapman said. “I can’t believe we’re even talking about how many more years Fortune 1000 firms will get small business contracts.”
BUSH ADMINISTRATION FAILS SMALL BUSINESSES ONCE AGAIN
Latest statistics show government fails to meet small business goals for seventh year
According to a recent report by Eagle Eye Publishing, a commercial provider of federal procurement information, the federal government has failed to achieve the federally mandated 23 percent small business contracting goal for the seventh consecutive year.
Eagle eye statistics found that the government reached a mere 19 percent once again in 2006. However, Lloyd Chapman, small business advocate and president of the American Small Business League, estimates that the actual number is significantly lower considering many of the top recipients were Fortune 1000 companies or subsidiaries. Last year’s report cited L-3 at $650 million in small business contracts.
“The numbers that Eagle Eye Publishers reported includes contracts awarded to major corporations like Boeing, Lockheed, Microsoft and Bechtel—some of the largest firms in the US and dozens in Europe,” Chapman said. “If you exclude the Fortune 1000 firms on the list, the government is probably only reaching 5 percent of small businesses.”
Since 2002, 14 federal investigations have found billions of dollars have been diverted from legitimate small businesses to Fortune 1000 companies and subsidiaries across the country. Even though this issue was first exposed in 2002, Congress has passed no legislation to stop it. In November 2006, Steven Preston, head of the Small Business Administration, proposed a policy that will actually allow the government to continue to count awards to large companies toward its small business goals until 2012.
On Dec. 16, 2006, the government abruptly pulled employee and revenue statistics off of the government’s Central Contracting Registry, information that allows the public to determine a company’s small business size status. Chapman says he believes this is another government attempt to keep Congress, the public, and the media from being able to prove that federal agencies have completely falsified their small business numbers for several years.
According to a recent report by Eagle Eye Publishing, a commercial provider of federal procurement information, the federal government has failed to achieve the federally mandated 23 percent small business contracting goal for the seventh consecutive year.
Eagle eye statistics found that the government reached a mere 19 percent once again in 2006. However, Lloyd Chapman, small business advocate and president of the American Small Business League, estimates that the actual number is significantly lower considering many of the top recipients were Fortune 1000 companies or subsidiaries. Last year’s report cited L-3 at $650 million in small business contracts.
“The numbers that Eagle Eye Publishers reported includes contracts awarded to major corporations like Boeing, Lockheed, Microsoft and Bechtel—some of the largest firms in the US and dozens in Europe,” Chapman said. “If you exclude the Fortune 1000 firms on the list, the government is probably only reaching 5 percent of small businesses.”
Since 2002, 14 federal investigations have found billions of dollars have been diverted from legitimate small businesses to Fortune 1000 companies and subsidiaries across the country. Even though this issue was first exposed in 2002, Congress has passed no legislation to stop it. In November 2006, Steven Preston, head of the Small Business Administration, proposed a policy that will actually allow the government to continue to count awards to large companies toward its small business goals until 2012.
On Dec. 16, 2006, the government abruptly pulled employee and revenue statistics off of the government’s Central Contracting Registry, information that allows the public to determine a company’s small business size status. Chapman says he believes this is another government attempt to keep Congress, the public, and the media from being able to prove that federal agencies have completely falsified their small business numbers for several years.
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