Small Business Administration Refuses to Release Report Concerning Billions in Fraud and Abuse

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Advocacy group asks court to force SBA to explain contents of report on government contracts and reason Freedom of Information Act doesnÂ?t apply.

– A motion was filed today in the U.S. District Court, Northern District of California (Case No.C044250SI), against the U.S. Small Business Administration (SBA) by the American Small Business League (ASBL). This motion seeks a court order compelling the SBA to provide a detailed description of the contents of a controversial report concerning fraud and abuse in government contracting. The ASBL also requests the SBA provide specific justification for previous claims that the report is exempt from the Freedom of Information Act (FOIA).

The SBA has referred to the widespread abuses as “miscoding,” but the ASBL believes the report holds statistical data that will uncover blatant fraud and abuse in the SBA’s mishandling of more than $67 billion annually in government small business contracts.

“I find it curious that the SBA has gone to court to avoid disclosing a document that they have consistently characterized as a routine report,” said Robert Belshaw of Gutierrez-Ruiz, the firm who represents ASBL. “The justifications offered by the SBA for withholding this document are inapplicable and not supported by law.”

“SBA’s handling of this matter has been suspicious,” said Lloyd Chapman, president and founder of the ASBL. “When I first requested this report, the SBA denied its existence. Once they admitted it existed, they claimed it was privileged communication between agency executives and was, therefore, exempt from the Freedom of Information Act. Next, they claimed it was a ‘trade secret,’ and now, they are telling the media it’s just a routine report. If this is just a routine report, why has the SBA tried to keep it secret for nine months, and why are they willing to go to federal court during an election to withhold it?”

Case History

Today’s motion follows a complaint filed October 6 (Case No.C044250SI) demanding the disclosure and release of the aforementioned documents. The original lawsuit was filed after the SBA twice refused requests made by ASBL for copies of “the original draft” of the report by Eagle Eye Publishing on abuses in small business contracting and submitted to the SBA in January 2004. The SBA is withholding the entire report based on specific exemptions in the FOIA; the ASBL’s lawsuit counters that there is no legal basis for the denial of access to the original report.

The SBA’s most recent refusal to release the report on small business contracting abuse comes just days after the Center for Public Integrity released its own report, which found the Defense Department had awarded more than $47 billion of small business contracts to some of the largest firms in the United States and Europe with the full knowledge and approval of the SBA.

Please see attached backgrounder for more information on the ASBL, its founder Lloyd Chapman, and the history of this case.

Contract Abuse Uncovered by Multiple Reports, Sources

“I believe the original report the SBA received back in January contains statistical and factual information that is in no way exempt from the Freedom of Information Act,” said Lloyd Chapman, President and Founder of the ASBL. “The SBA is attempting to whitewash this report before it’s released to the public because it will shed light on the SBA’s role in allowing the staggering level of fraud and abuse in small business contracting uncovered by the Center for Public Integrity. This is in addition to the General Accounting Office (GAO) report published in 2003 that identified abuse within the SBA contracting program.”

The SBA Had to Know

“$47 billion in small business contracts could not have gone to some of the nation’s largest companies without the SBA’s full cooperation and assistance,” continued Chapman. “It’s an insult to the 23 million small businesses in America for the SBA to try and convince us this is just ‘miscoding.’ $47 billion dollars is a lot of miscoding.”

About Lloyd Chapman, President and Founder of ASBL

As a long-time advocate for small business, Lloyd Chapman has had 15-year running battle with the SBA to oppose policies and programs that have allowed larger and larger firms to receive U.S. government contracts meant for small business. In November 2002, Chapman uncovered information on fraud and abuse that prompted an investigation by the GAO. The resulting GAO report identified billions of dollars in small business contracts going to very large businesses, prompting the Committee on Small Business for the House of Representatives, Congress of the United States to call a hearing on the matter.

In May 2003, Chapman testified at the hearing and provided ASBL’s findings and data. Chapman also provided information to the SBA that forced the removal of more than 600 large businesses from the SBA’s database of small businesses. The GAO investigation and subsequent Congressional hearing prompted a host of changes in government small business policies, such as recertification for small businesses, changes in SBA protest procedures, reexamination of small business size standards and the GSA “Get It Right” program.

About the ASBL

The American Small Business League was formed to promote and advocate policies that provide the greatest opportunity for small businesses – the 98 percent of U.S. companies with less than 100 employees. ASBL monitors existing policies and proposed policy changes by the SBA; and other federal agencies that affect its members, and helps to coordinate any response required to safeguard the interests of small businesses. The organization achieves significant and measurable results for small businesses across America, seeking their congressionally mandated 23 percent share of federal contracts. Prior to Sept. 1, 2004, ASBL was known as the Microcomputer Industry Suppliers Association (MISA). On the net: http://www.asbl.com.

Contacts:

Lloyd Chapman, President

707-789-9575

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