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Out of Reach

Some say that the SBA is withholding contracts--and important information.

Small-business groups are taking aim at the SBA for failing to ensure procurement opportunities. Two lawsuits were filed late last year arguing that the SBA has refused to implement a congressionally dictated women's procurement set-aside program and to release an internal study showing widespread fraud in procurement programs.

The U.S. Women's Chamber of Commerce filed a complaint in the U.S. District Court to force the SBA to implement the Women's Procurement Program. It was included in the SBA's 2000 reauthorization passed by Congress and told the SBA to set aside contracts for businesses in industries underrepresented by women-owned businesses. "We have heard from thousands of members that their ability to gain access to contracts has been harmed by the delay in implementing this mandate," says Margot Dorfman, CEO for the Women's Chamber.

The SBA's Raul Cisneros points to an agency press release stating that women-owned businesses received $1.5 billion more in federal prime contracts in fiscal 2003 than in 2002. That came to 2.98 percent of all federal contract dollars. But Dorfman says that Congress set a goal 10 years ago of 5 percent, which has never been reached. That failure prompted Congress to pass the 2000 amendment.

It's not just women who are complaining, though. The American Small Business League (ASBL) says the SBA is illegally withholding an internal report that shows the set-aside program is rife with fraud. "We believe that the SBA is covering up the problem by keeping the report under wraps," says ASBL president Lloyd Chapman. The ASBL lawsuit attempts to overturn the SBA's rejection of a Freedom of Information Act request on details of the study.

Cisneros argues the report sought by ASBL is only a draft. It has not been finalized, he says, so it can't be released.


Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.

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This article was originally published in the February 2005 print edition of Entrepreneur with the headline: Out of Reach.

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