National Legal Scholar Slams SBA Anti-Small Business Policies

PETALUMA, Calif., Nov. 6, 2014 /PRNewswire-USNewswire/ -- Professor Charles Tiefer, one of America's leading experts on federal contracting law has weighed in against a new round of proposed policies by the Small Business Administration (SBA) many people are describing as anti-small business.

Professor Tiefer has joined forces with American Small Business League (ASBL) President, Lloyd Chapman, in an effort to defeat the new SBA policy that could be devastating to thousands of small businesses.

In one example, under the current policy any firm classified as an Information Technology Value Added Reseller (ITVAR) with less than 150 employees is considered a small business. If the SBA has their way, a small business with less than 10 employees could be reclassified as a large business if their annual sales exceeded $27.5 million. In the federal market, $27.5 million could be a single order placed by a federal agency.

At the same time, thousands of legitimate small businesses would be reclassified as large businesses over night. The SBA would continue to report billions of dollars in federal contracts to dozens of Fortune 500 firms and their subsidiaries as small business contracts as they have for the last 15 years.

"This proposed SBA change breaks the law by violating Congress's statutory intent in the Small Business Jobs Act of 2010; clashes with the SBA record of retaining all other SBA sub-industries; and, without justification, repeals the SBA's 2003 action recognizing this sub-industry," Professor Tiefer stated in his comment opposing the new SBA proposed policy. "Congress enacted the Small Business Jobs Act of 2010… Congress intended to increase SBA size standards, the opposite of what this rule does, which is to 'eliminate' the separate, higher ceiling of 150 employees and replace it with the lower, $27.5 million revenue ceiling."

"An employee size standard is considered a better measure of the size of ITVARs operation than receipts since a substantial proportion of their receipts merely reflect the dollar value of equipment and software sold," the SBA stated in a final rule in December 2003, when the SBA originally established the 150 employee ceiling.

Now in this new proposed policy, the SBA states that the reasons for removing ITVARs from NAICS code 541519 are because of "inconsistencies, confusion, and misuse." Professor Tiefer refers to this ruling and ends his comment with, "The arguments the SBA puts forth simply do not have any traction for questioning or changing the 2003 establishment of the category.  It should continue, not eliminate, IT-VAR."

The last day to submit public comments to this proposed rule is Monday Nov. 10.

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SOURCE American Small Business League

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