The Small Business Administration is cracking down on the not-so-small.
Starting this summer, small businesses with federal contracts will -- for the first time -- have to alert the government whenever they are acquired, merged or buy a company if they want a share of the $80 billion in annual federal procurement money awarded to small firms.
It's a big issue across the nation including Southern California, where local small-business executives sometimes find themselves seething when they learn that small-business-oriented contracts are going to large companies.
The SBA came under attack last summer in a report by Democrats on the House Small Business Committee. It showed that hundreds of 2005 contracts tagged as being held by small companies were actually in the hands of some of the country's biggest corporations, including AT&T Inc., Home Depot Inc. and Northrop Grumman Corp.
The report partially blamed laws that allowed big companies to qualify if they had acquired small government contractors. It also cited contract coding errors that gave false impressions of a company's size.
Said SBA critic Lloyd Chapman: "How many more years do Fortune 100 companies get to be considered small businesses?" Chapman is founder and president of the Petaluma, Calif.-based American Small Business League, which aims to expose and end fraud and abuse in the federal small-business procurement system.
Joan Smay, owner of WEP Construction Inc. in Bell Gardens, knows the problem well. Her construction security firm has done work for the Federal Aviation Administration, among other government agencies.
When major Southland engineering and contraction firms team with small businesses, she said, "they can seriously keep me out of bidding."
Smay salutes the new SBA rule, but is skeptical about whether there will be any real enforcement efforts. The SBA, she said, is "taking small steps against great odds."
Ted Davis, president of IsComp Systems Inc. in Los Angeles, is just as dubious about the rules. "None of those rules have any teeth in them unless you have an [SBA] administrator who is willing to push to make sure the intent is there to do what the rule is put in place to do," the small-business executive said. "Very seldom is that what happens."
The local SBA chief is sympathetic to such concerns. "We know that there is some concern out there and we believe this is a way of addressing that issue," said Alberto G. Alvarado, district director of the SBA's Los Angeles District Office, which oversees Los Angeles, Ventura and Santa Barbara counties.
