National Small Business Advocates Join Forces To Protect Small Business Programs

ASBL's President Lloyd Chapman And Professor Charles Tiefer Oppose New SBA Policy

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Nov 10, 2014, 12:39 ET

PETALUMA, Calif., Nov. 10, 2014 /PRNewswire-USNewswire/ -- Today is the last day to leave a public comment opposing the SBA's plan to eliminate the 150 employee based size standard under NAICS code 541519 for Information Technology Value Added Resellers (ITVARs).

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The nation's leading expert on federal contracting law, Professor Charles Tiefer, has teamed up with American Small Business League (ASBL) President and founder, Lloyd Chapman, to oppose a new SBA policy they believe will be devastating to thousands of small businesses. Professor Tiefer has left an extremely powerful comment that refutes every argument the SBA has for removing ITVARs from NAICS code 541519.

The policy was derived from Congress's intent in the Small Business Jobs Act of 2010 to increase small business size standards "to allow small businesses to compete in the current federal marketplace." This proposed rule does exactly the opposite by "eliminating" the higher size standard of 150 employees and using the lower size standard of $27.5 million in receipts. In fact, Professor Tiefer mentioned that if the SBA adopts the final rule, "small businesses will be squeezed out of the federal marketplace."

One of the SBA's justifications for implementing this new change is, "Over the years, SBA has received comments that its size standards have not kept up with changes in the economy, in particular the changes in the Federal contracting marketplace and industry structure."

"It's curious the SBA would propose to change the size standard for 541519 based on an undisclosed number of anonymous comments and yet ignore a decade of reports from the SBA's own Office of Inspector General and the General Accounting Office on the rampant diversion of federal small business contracts to corporate giants," Lloyd Chapman stated in his comment.

"I believe the most compelling argument against eliminating the 150 employee small business size standard for 541519 comes from the SBA itself," said Chapman referring to the SBA's 2003 final rule when they established the 150 employee size standard and stated, "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."

Many concerned ITVARs that believe this policy will hurt their company have already left compelling arguments as to why this rule should be rejected. "Eliminating the 150 employee ceiling puts the 'high-employee-level' type of contractor out of business, because it cannot get down under $27.5 million without a kind of radical chopping it cannot handle – i.e., switching to a business model of fewer employees, and, laying off a third (50) or more employees," stated Professor Tiefer.

The SBA's only argument to support their proposal of removing the exception from NAICS code 541519 is that, "it has created some inconsistencies, confusion, and misuse."

"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," states Professor Tiefer in his final remarks.

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SOURCE American Small Business League