Small-business group fears GSA regs changes

As the deadline approaches for industry and agencies to submit comments regarding possible changes to the General Services Acquisition Regulation (GSAR), at least one small-business advocacy group is trying to rally firms to speak up.

Lloyd Chapman, president of the American Small Business League, said he believes that the General Services Administration and the Small Business Administration are not doing enough to stop small-business contracts from going to large firms. The GSA's possible rule changes could exacerbate what he sees as a pervasive problem.

“I’m very concerned that the GSA is going to do what they’ve always done, which is to implement policies that will allow federal agencies and prime contractors to report contracts to large companies as small business awards,” Chapman said in a written statement. “I also foresee that the GSA will attempt to disallow any comments they receive that do not agree with their goal of diverting contracts to large businesses. My experience has been that the government manipulates this process in order to achieve its own ends.”

GSA published Feb. 15 an advance notice of proposed rulemaking, outlining its desire to streamline GSAR but not offering specific proposals. That lack of information creates uncertainty for Chapman's group. Several federal probes have found evidence that large companies do get funds earmarked for small firms, but Chapman said he believes regulators are essentially winking at fraud.

Early in 2005, SBA officials released a 2004 report showing that $2 billion of the $50.8 billion earmarked for small businesses in fiscal 2002 did not get to them. The top 1,000 small businesses turned out to include 39 large companies and five other entities that were not small businesses. However, SBA officials and Eagle Eye Publishers, the group hired to conduct the survey, insisted there was no evidence of fraud in the findings. Instead, they said, the funds were misdirected because of circumstances such as small companies growing or being acquired while holding a small-business contract.

Chapman's group forced SBA to release an earlier draft of the report, which he said he believed would contain evidence of fraud expunged from the final version. While the draft listed vendor fraud as a possible cause— a phrase that did not appear in the final version— it did not provide any evidence. A SBA spokesman at the time said the report was intended to explore the extent of the problem rather than determine its causes, and that the phrase was removed to prevent speculation in the absence of evidence.

Before the SBA report, the Center for Public Integrity found that about 30 percent of the contracting money that supposedly went to small firms through Defense Department contracts during a six-year period ended in large companies’ coffers.

None of the GSAR provisions GSA is considering address the systemic problems that allow the large companies to profit, Chapman said.

In its published notice, GSA asked for comments about which parts of GSAR:

• Should be clarified to be consistent with the Federal Acquisition Regulation.


• Should be eliminated because they either duplicate FAR or create inconsistencies.


• List inappropriate references.


• Have become irrelevant due to changes in technology or business processes.


• Create unnecessary administrative burdens for either contractors or agencies.


• Can be streamlined or simplified.


• Need to provide new or augmented coverage.


• Needlessly cost small entities money.