New Bill Reduces Small Business Contract Oversight

The House Committee on Small Business, chaired by New York Congresswoman Nydia Velazquez, has passed a bill that will allow large businesses that received federal small business contracts under questionable circumstances to keep them for at least five more years.

Congresswoman Velazquez recently appeared on an investigative report produced by CNN's Lou Dobbs Tonight, which also found fraud was one of the reasons why large businesses had received contracts Congress intended to go to small businesses.

Investigations by the Small Business Administration Office of Inspector General and the SBA Office of Advocacy found fraud was one of the reasons why large businesses received millions in federal small business contracts.

Under section 16D of the Small Business Act, firms that misrepresent themselves as small businesses to illegally receive government small business contracts can face up to ten years in prison, permanent debarment from doing business with the federal government and a $500,000 fine per occurrence.

The House Fairness in Contracting Act does not contain the "annual recertification" provision, which was endorsed by the SBA, the SBA Office of inspector general, the Office of Federal Procurement Policy, the Office of Management and Budget and the Senate Committee on Small Business and Entrepreneurship.

An annual re-certification provision would require all firms with existing federal small business contracts to recertify their status as legitimate small business each year and update their information in the Federal Central Contractor Registration database.

Congressman Henry Waxman of California, Chairman of the House Committee on Oversight and Government Reform, did not amend H.R. 1873 to include annual re-certification while it passed through committee. The bill, which passed out of the Committee on Oversight and Government Reform last week, could come before the house as early as this week. If the bill is passed in its current form it could divert as much as $300 billion to the top two percent of U.S. firms over the next five years.

Under H.R. 1873, the "Small Business Fairness In Contracting Act," fraudulent firms will be allowed to keep their illegally won small business contracts for at least five more years.

For more information on H.R. 1873, click here