Judge orders SBA info released

Small Business Administration officials are under a court order to release early drafts of a report that shows some small-business contracting money going to other types of businesses.

Officials could appeal the ruling, which was issued April 29.

The study showed that 44 of the top 1,000 small businesses were incorrectly classified. Of those 44, 39 were large businesses and five were nonprofit organizations or government entities. SBA officials released a version of the report in December 2004. They attributed the problem, which routed $2 billion of the $50.8 billion earmarked for small businesses in fiscal 2002 to other organizations, to mostly honest mistakes.

That explanation doesn't sit well with Lloyd Chapman, president of the American Small Business League. Long convinced that some large companies deliberately misrepresent themselves with a wink from SBA officials, he filed a Freedom of Information Act (FOIA) request July 6, 2004, asking for a copy of the then-unreleased report. SBA officials refused, according to court documents.

Chapman filed suit in the U.S. District Court in the Northern District of California Oct. 6, 2004, seeking to force SBA officials to release any and all draft reports related to the study. Eagle Eye Publishers conducted the study under contract to SBA, and first filed their report with the agency in late 2003.

Legal maneuvering continued through the second half of 2004, and SBA officials argued that the original Eagle Eye report was "predecisional," and therefore exempt from FOIA disclosure, according to the court decision. Chapman said he believes that earlier versions might show evidence of fraud that SBA officials scrubbed from the final version.

The judge disagreed with SBA's position and ordered agency officials to produce the report by May 20, according to the court document.

Chapman said SBA officials have reason to classify more businesses as small because they can more easily meet the Bush administration's small-business contracting goals that way.

Paul Murphy, president of Eagle Eye, said SBA should not have to release more documentation.

"I don't think agencies should be forced to release drafts of internal or contracted research," he said. "A published government study should be able to stand on its own merits."

He took issue with Chapman's characterization of the SBA going easy on fraud, and said that his study was intended to show how information about small-business status is handled, not to identify the reasons that companies are incorrectly coded.

"Determining fraud was well outside the scope of the analysis," he said.

SBA officials could not be reached for comment.