Lawsuit Alleges SBA Inflated SME Contract Stats

The Small Business Administration (SBA) may have been established to support the nation’s SMEs, but a lawsuit against the government group is accusing it of doing the opposite.

Reports from Federal News Radio on Thursday (May 5) said that the SBA was hit with a lawsuit earlier this week by the American Small Business League (ASBL). The ASBL is accusing the SBA of awarding small business contracts to Fortune 500 firms, yet still falsifying records to suggest that it is meeting government-mandated quotas for small business contracts.

“As has been the case in all previous years in which the SBA has released an annual goaling report, the SBA’s assertion that the percentage of the total value of all prime contract awards awarded to small businesses met or exceeded the congressional mandate of 23 percent is false,” court documents stated, according to reports.

The SBA is also accused of working to “fabricate the government’s compliance with the small business goals by using a much lower acquisition budget,” documents said.

“SBA can only make this statement by creating, through agency fiat, a class of government contracts which are, solely in the view of the SBA, subject to exclusion from being considered as part of ‘the total value of all prime contract awards’ as stated in the Small Business Act,” the documents continue. “Although the language of the statu[t]e is crystal clear, every year, the SBA redefines ‘total value’ as meaning total value minus the contracts SBA decides to exclude from the equation.”

The Small Business Administration released its annual SME federal contracting report card earlier this year, finding a record number of SME contracts. The administration said it surpassed its goal of allocating 23 percent of procurement spend to small business suppliers, instead allocating 25.75 percent — worth $90.7 billion.

In response, SBA Associate Administrator of Government Contracting and Business Development John Shoraka said the group’s exclusion rules are constantly being updated and are, in fact, being updated to be more inclusive for small businesses.