Facing Campaign Financing Fraud Charges, Sen. Norm Coleman Tries to Smear Minnesota DFL Challenger Al Franken

This week, a Republican businessman in Texas by the name of Paul McKim filed a lawsuit this week against Nasser Kazeminy. Kazeminy is one of Sen. Norm Coleman's biggest donors and closest friends. In fact, he's the same man who flew Coleman on his private jet to vacations in the Bahamas and Paris.

Only a small portion of the lawsuit has anything to do with Norm Coleman -- but the part that does is incredibly serious. McKim's sworn affidavit, since corroborated by a second lawsuit, describes an effort to funnel $75,000 to Sen. Coleman's wife.

So, are the allegations true? That's yet to be determined. Still, no one at the Al Franken for U.S. Senate campaign reportedly knew a thing about this lawsuit, and had never even heard of this company or Paul McKim, until they read about it in the newspaper.

Then came yesterday. Instead of answering these very serious allegations, Norm Coleman released a TV ad, blaming DFL challenger Al Franken for the lawsuit. It shows Coleman, seated on a couch next to his wife, Laurie, as he looks directly into the camera and says, "This time, Al Franken's crossed the line... I'm fair game for his ugly smears. My wife and family are not."

"It's his most dishonest ad of the year," wrote Andy Barr, Al Franken for U.S. Senate's communications director, to campaign supporters today. "That ad is up on TV right now. And it's a despicable lie. Franken had nothing to do with this lawsuit. Norm Coleman, faced with sworn allegations of a conspiracy to funnel him improper payments, is trying to deflect blame by lying about Al Franken in a TV ad."

According to the Star Tribune, Coleman called this an "11th-hour attack" on his re-election campaign. The Star Tribune also reported that, "within an hour [of the ad's airing], Franken abruptly canceled an appearance at a campaign rally in Minneapolis to hustle over to a DFL Party news conference, where he denied the accusations and called Coleman's remarks 'insulting to voters.'"

There, Franken looked directly into the camera and flat-out discredited the notion of any wrongdoing. "Senator Coleman looks the people of Minnesota in the eye and lies," he said. "I'm being blamed for crossing a line and I didn't do a thing. And our campaign didn't do a thing."

"It has been a long campaign, and a tough one," noted Barr. "Norm Coleman has sunk to historic depths to smear Al Franken and make this election about something -- anything other than his own record and the issues that affect the people of Minnesota."

DSCC Issues Memo: "It's Time for Norm to Go"
These lawsuits come within days of a Democratic Senatorial Campaign Committee memo, rhetorically asking, "Does Norm Coleman deserve to be re-elected?"

It goes on to highlight a handful of compelling numbers reflecting Coleman's service as Minnesota's senior U.S. Senator in the seat once held by the late Paul Wellstone:
* 52 free trips paid for by special interests
* Over $600,000 from big oil and drug companies
* Living almost rent-free in the $1,000,000 home of a Washington insider
* Ranked the 4th most corrupt senator in Washington
* Coleman voted nearly 90% of the time with George Bush -- together, running up a $10 trillion national debt

The DSCC memo cites dozens of credible sources -- including specific votes that Coleman has cast -- and then concludes, "It’s time for Norm to go."

GoodBiz113's take: We agree: It is time for Norm Coleman to go. After all he's done for George W. Bush, big corporations and myriad special interests, he should be able to land at least one or two consulting and/or lobbying gigs. Now, it's time for small businesses, entrepreneurs, farmers, etc., in Minnesota and across the nation to have real champions in the U.S. Senate. Al Franken will aptly fill Paul Wellstone's seat with integrity, vision, ingenuity, compassion and, very likely, some terrific post-Bush era humor, too.

SOURCES: Al Franken for U.S. Senate, Democratic Senatorial Campaign Committee, Star Tribune
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Franken Demands Immediate Congressional Hearings re Banks' Abuse of $700 Billion Bailout

Minnesota DFL candidate Al Franken -- the only U.S. Senate candidate who opposed the $700 billion Wall Street bailout -- today called for immediate hearings in light of reports indicating that banks may not be using those funds to unfreeze credit markets but, rather, for other purposes -- with the encouragement of the Treasury Department.

"Washington sprung into immediate action when Wall Street was in trouble, but there's been no help for struggling homeowners on Main Street and no solutions for middle-class families and small businesses hurt by the failed economic policies of the last eight years," said Franken. "And now we find that the $700 billion bailout is being used not to solve the problem, but to handpick winners and losers on Wall Street. That's an outrage.

"Taxpayer dollars should be helping taxpayers, not going to pad the bottom lines of the Wall Street bankers whose bad bets got us into this mess. This is exactly why we should never have passed this bill without proper accountability. And it's time for Congress to take action."

Earlier this month, the Bush administration announced that it would use bailout funds to inject capital directly into banks. They claimed that this would allow credit to start flowing again as banks lent that money to other entities. But recent reports indicate that, instead, the banks receiving these funds are using them to buy up other, smaller banks. And the Treasury Department, according to a column by New York Times financial columnist Joe Nocera, is encouraging the practice.

Meanwhile, Wall Street financial institutions like Morgan Stanley and Merrill Lynch continue to pay out billions in bonuses, despite receiving bailout funds.

This morning, during his statewide "For The Middle Class, For A Change" bus tour, Franken stopped at Bouquets by Carolyn, a small business located in St. Paul, Minn. There, he called for:
* Immediate hearings into potential abuses of the $700 billion bailout by Wall Street banks
* Straight answers from the Bush administration on its real plans for these taxpayer dollars
* An administration guarantee that banks receiving bailout funds will use them to lend
* A revocation of U.S. Treasury Department Secretary Henry Paulson's authority to implement the bailout if he cannot explain how his plan is serving taxpayers

In an editorial today, the New York Times wrote, "Shortly after the bailout was enacted, The Times's Mark Landler reported that Treasury officials also wanted to steer the bailout billions to banks that would use the money to buy up other banks. Now, lo and behold, with $250 billion in bailout funds committed to dozens of large and regional banks, it turns out that many of the recipients of this investment from taxpayers are not all that interested in making loans. And it appears that Mr. Paulson is not so bothered by their reluctance."

Case in point: Merrill Lynch. Two days ago, Bloomberg reported that, while Merrill Lynch is laying off employees, the financial institution is paying out billions in bonuses. According to Bloomberg, "Five straight quarters of losses and a 70 percent slide in its stock this year haven't stopped Merrill Lynch & Co. from allocating about $6.7 billion to pay bonuses ... The money Merrill has set aside for bonuses equates to an average $110,000 for each of its 60,900 people, up from $108,000 a year ago because more than 3,000 jobs have been cut."

Apparently, Merrill Lynch isn't the only bailout recipient that's utilizing taxpayer funds to reward its employees. Bloomberg also reported that Morgan Stanley and Lehman are both setting aside billions for bonus payments. According to Bloomberg, "Even some employees at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, will get the same bonus they received a year ago ... Morgan Stanley, the second-biggest securities firm until it also converted to a bank, has $6.44 billion for bonuses, or $138,700 per person, down 20 percent from last year."

GoodBiz113's take: Al Franken is right: Congressional oversight is needed, post-haste, to hold the Wall Street bailout recipients accountable for seeing that taxpayer funds are used to help fuel America's economy [e.g., small businesses, homeowners, working families], as intended -- not to lavishly reward their own fat-cat executives and employees.

SOURCES: Al Franken for U.S. Senate, Bloomberg, New York Times
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Kerry Responds to Bush Administration's Failure to Meet Its Small-Business Contracting Goals

Sen. John Kerry [D-Mass.], chairman of the U.S. Senate Committee on Small Business and Entrepreneurship, released the following statement regarding the Bush Administration’s failure to meet its small-business contracting goal. This comes after yesterday's release of the Small Business Administration’s [SBA] annual contracting Scorecard, which shows that just 17 of 24 federal agencies met their 2007 small-business contracting goal:

"For the second year in a row, the Bush Administration has short-changed America's small businesses. But the fact that the government missed its contracting goal isn't even the worst of it. Like the administration itself, the numbers just can't be trusted. They don't count the millions of small-business contracts that have slipped through the cracks and gone to corporate giants.

"Eight years of budget cuts and lax oversight show that the Bush Administration thinks small equals less important. Given the impact entrepreneurs have on our economy, we need leadership that is more aggressive in giving small businesses the chance to succeed in the federal contracting arena."

SBA’s Scorecard builds on a series of significant initiatives the agency began two years ago to improve small-business access to federal contracts. SBA, along with the Office of Federal Procurement Policy, ordered the federal contracting database to be scrubbed, removing many cases of non-profits, state or local governments, and large companies that were recorded erroneously as small businesses.

The annual Scorecard rated federal agency performance in meeting the overall small-business goal and the component contracting goals for small disadvantaged businesses, small businesses in HUBZones, and small businesses owned by women, and service-disabled veterans.

The following 17 agencies met their small-business contracting goals: the departments of Veterans Affairs, Agriculture, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, Labor, State, Transportation, Treasury, and the Environmental Protection Agency, General Services Administration, National Aeronautics and Space Administration, Nuclear Regulatory Commission, Office of Personnel Management, and SBA.

GoodBiz113's take: America's small-business owners, entrepreneurs and self-employed folks are fortunate to have Sen. Kerry advocating on our behalf, to see that we're awarded the contracts that have been set aside for us -- at least 23 percent of all federal contracts, according to Federal Acquisition Regulation [FAR] -- Part 19 standards. Hopefully, the next Administration will be much fairer in spreading the wealth of federal contracting dollars, and all 24 agencies will meet their small-business contracting goals across all components.

SOURCES: U.S. Senate Committee on Small Business and Entrepreneurship, U.S. Small Business Administration
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Kerry Urges President Bush to Help America’s Small Businesses

In a letter to President Bush yesterday, Sen. John Kerry [D-Mass.], chairman of the U.S. Senate Committee on Small Business and Entrepreneurship, pleaded for action to help save America’s entrepreneurs. With private banks shutting their doors to struggling business owners, many are turning to the Small Business Administration [SBA] for help, but they’re finding little assistance.

“Since last November, I’ve urged this Administration to prepare for the looming credit crunch,” said Kerry. “In letters and hearings, members of the Committee asked the SBA to step up to help small businesses. Despite the extraordinary financial crisis, the agency has been of little help to the very people they’re meant to serve.”

In September, Kerry introduced the Small Business Lending Market Stabilization Act of 2008 [S. 3596], which temporarily suspends fees for government loans, and Sen. Barack Obama [D-Ill.] has proposed a similar measure. Kerry has also held two hearings on the credit crisis and sent a previous letter to the SBA, urging them to work in a bipartisan manner to help solve the crisis. The SBA has ignored Kerry’s repeated warnings and calls for action.

Kerry’s letter comes as new data shows that lending for the SBA’s largest loan program – the 7[a] lending program, which is the nation’s largest source of long-term small business capital – has fallen by nearly 50 percent, compared with the same period last year. The SBA’s fees for these loan programs, along with banks' rising cost of funds, have made SBA loans out of reach for many entrepreneurs. Small-business owners are having an increasingly difficult time maintaining their businesses, as other sources of credit -- such as credit cards and home equity loans -- are drying up as well.

In addition to temporarily reducing fees, Kerry noted that the Administration could make disaster loans available nationwide, to serve as bridge loans until the rescue package takes effect. A similar approach was used after 9/11 and proved to be helpful.

Among further changes to help stabilize lending in the 7[a] program: allowing weighted average coupons to sell SBA loans on the secondary market; adopting a different rate index, to get the best rate for borrowers and to make the program compatible with other rate standards; and temporarily adjusting the rate cap for the loans, which will make the 7[a] program more efficient and cost-effective and restart the flow of capital to small businesses. Congress is pushing for such changes, but the SBA has the immediate authority to revise the program.

“The Administration should take immediate action to jump-start small-business lending,” said Kerry. “Waiting for a larger bailout of banks isn’t an option for many firms in desperate need of capital. My hope is that the President will see the urgency of this matter, to push the SBA to work with us to save hundreds of businesses and thousands of jobs.”

GoodBiz113's take: Last April, when President Bush helped kick off National Small Business Week, he told the audience of small-business owners and stakeholders, "The truth of the matter is, every day ought to be Small Business Day in America... Small businesses create over two-thirds of all new jobs in America. And if you want your economy to grow, and if you want the country to be hopeful, it seems like you ought to be celebrating the talent and the energy of our small business owners -- daily." Indeed, Mr. President. Now, how about heeding Sen. Kerry's call for bipartisan action to bolster our entrepreneurial endeavors with the financial resources needed today, so that we can continue to fuel America's economy for all -- Democrats, Republicans and Independents alike?

To read the letter that Sen. Kerry sent to President Bush, please click here.

SOURCES: GovTrack.us, Obama for America, Peace Corps Online [photo], U.S. Senate Committee on Small Business and Entrepreneurship, WashingtonWatch.com, WhiteHouse.gov
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Franken Campaign Releases Two New Ads Focusing on the Economy, Middle-Class Families and Small Businesses

Just one day after Minnesota's U.S. Senate candidate Al Franken unveiled his proposal to unfreeze credit and help small businesses create jobs, his campaign released two new television spots highlighting Franken's strong message on middle-class economic issues and supporting small businesses. The ads -- "Get to Work" and "Honest Differences" -- began airing this morning and will run statewide.

"The election comes down to a simple choice," said Andy Barr, communications director of the Al Franken for Senate campaign. "Norm Coleman chose Bush economics over Minnesota's middle class. And, now, Minnesotans have a chance to choose a new direction. In these ads, Al Franken lays out his plans to help the middle class: Cut taxes for middle-class families, create jobs, bring real oversight to Wall Street, and work to put our economy back on track."


SCRIPT: "Get To Work"
Al Franken: It's such a tough time. People's life savings are literally slipping away. We have got to change the disastrous policies of the Bush administration. I don't have all the answers – but here's where we start. Let's stop the billions of dollars in giveaways to big oil and drug companies. Bring real oversight to Wall Street. Work to make college affordable. And fix the economy to help the middle class. I'm Al Franken. I approve this message. Because it's time to get to work.


SCRIPT: "Honest Differences"
Announcer: Honest differences on the issues that matter to your family. The economy: Al Franken supports tax breaks for the middle class. A five thousand-dollar tax credit to help families pay for college. Stop giveaways to the special interests. Norm Coleman? He supported George Bush's economic plan all the way, voting for budgets that have left us ten trillion dollars in debt. It's Al Franken who will stand up for the middle class. For a change.

Al Franken: I'm Al Franken, and I approve this message.


GoodBiz113's take: During this election year, while far too many candidates have stooped to unleashing petty, baseless and mean-spirited attacks on their opponents, it's refreshing to see and hear specific, pragmatic and forthright proposals -- especially those that pertain directly to economy-propelling small businesses.

SOURCE: Al Franken for U.S. Senate
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Bush Administration Failing to Safeguard Taxpayer Dollars Targeted to Small Businesses

Today, Sen. John Kerry [D-Mass., pictured] called on the Bush administration to protect taxpayer investments in government-backed small-business loans, and reinstate a program that uses lenders to recoup losses from defaulted loans.

There is currently an estimated $404 million in fixed asset loans through the U.S. Small Business Administration’s [SBA] CDC/504 Program in default. Yet, the Bush administration has failed to request $2 million to fund the program that reimburses 504 lenders for loan-recovery costs and, last Friday, the Bush administration announced it intends to suspend the program.

“The Bush administration’s willingness to stick taxpayers with a $400 million bill is just bad business,” said Sen. Kerry, chairman of the Committee on Small Business and Entrepreneurship. “The choice is clear: Spend $2 million today to help recover up to $404 million in defaulted loans, or continue on the current course of failed oversight and inadequate liquidation staff.”

Last week, the Bush administration admitted it made a mistake in the agency’s 2008 and 2009 budgets to cover costs incurred by Certified Development Companies [CDCs] that liquidate the defaulted 504 loans. However, instead of working with Congress to reprogram funds or seek additional funding in the budget, the SBA has changed the rules for lenders currently liquidating loans, and is working to get rid of the program. At the same time, the agency does not have enough resources to liquidate almost 1,000 defaulted 504 loans worth an estimated $404 million, currently in some stage of liquidation.

In 2000, Congress passed a law to delegate liquidation authority to CDCs because the SBA did not have a good track record for maximizing recoveries. After seven years, the SBA finally established reimbursement rates in April 2007. Then, on Friday, April 4, 2008, the SBA announced it would no longer provide those incentives to CDCs for future liquidations, and would reduce the reimbursement rate for CDCs for loans they were in the process of liquidating.

In 2003, SBA eliminated almost 200 staff from across the country who were responsible for overseeing loan liquidation, leaving only about eight full-time staff to oversee 504 loans in default.

Last year, Sen. Kerry introduced bipartisan legislation that would strengthen liquidation aspects of the 504 loan program. The Small Business Lending Reauthorization and Improvements Act, S. 1256, passed out of the committee, but Republican leadership in the Senate has blocked full Senate consideration.


Below, are Senator Kerry’s two letters to the Small Business Administration:

April 7, 2008

The Honorable Steven C. Preston
Administrator
U.S. Small Business Administration
409 Third Street, S.W.
Washington, D.C. 20416

Dear Administrator Preston:

Last week I wrote to you and asked if you would delay publishing a notice in the Federal Register that would interfere with the liquidation of defaulted 504 loans. The notice is controversial, and I wanted to work with you to pursue what I believed, in talking to the SBA and the SBA’s lending partners, would be a better solution to address your lack of funding for reimbursements and the overall liquidation problem. Unfortunately, you went forward and published the notice despite my objections.

Because the underlying problem was caused by the SBA’s accounting error, I have a hard time understanding why the Administration has refused the Committee’s suggestion to seek a reprogramming or amend its budget request in order to correct the agency’s own mistake. Moreover, preservation of the 504 liquidation reimbursement program will save the SBA money in the long run.

If SBA estimates it will need about $2 million for reimbursements, that seems like a wise investment -- as opposed to continuing with the current liquidation system, in which SBA has let more than 200 of the almost 1,000 defaulted loans languish for so long that, in SBA’s words, there is “little or no remaining residual value” to recover, and therefore expects to charge them off.

The Committee has been told those loans are worth as much as $100 million. If the reimbursements were to continue, and CDCs were to continue to liquidate loans, even if they recovered a mere $4 million, the SBA would still be ahead.

Please provide the Committee with the total number and dollar amount of 504 loans to be charged off, and how that will affect the subsidy rate and fees on the borrowers and lenders who pay to participate in the 504 Loan Guaranty Program.

Please also provide the Committee with the estimated funding SBA would need to continue the reimbursements, instead of permanently suspending the practice, and explain why you will not pursue the funding in order to reimburse CDCs for their liquidation efforts and help protect the SBA’s 504 loan program.

I ask that you please provide the Committee with a response by Monday, April 14, 2008.

Sincerely,

John F. Kerry
Chairman

***

April 3, 2008

The Honorable Steven C. Preston
Administrator
U.S. Small Business Administration
409 Third Street, S.W.
Washington, D.C. 20416

Re: Compensation to CDCs for 504 Loan Liquidation Expenses

Dear Administrator Preston:

I am writing to urge the Small Business Administration to delay publishing a notice in the Federal Register that would interfere with the liquidation of defaulted 504 loans. Specifically, I am referring to the Agency’s intention to publish a notice tomorrow that would reduce the compensation rates for costs incurred by authorized Certified Development Companies to liquidate defaulted 504 loans, and then 90 days after the publication of that notice to suspend all compensation for any 504 loan debenture not yet purchased.

I understand that the Agency made a mistake in not requesting funding to reimburse authorized Certified Development Companies for these purposes in its FY2008 and FY2009 budgets, and I appreciate your leadership in admitting that mistake to our Committee. Nevertheless, I do not believe the solution is suspending reimbursements, which will exacerbate SBA’s liquidation problems.

We are told that SBA has nearly 1,000 loans, worth about $404 million, in some state of liquidation spread among the Little Rock, Fresno and district offices -- with only about eight staff dedicated to 504 liquidation, supported by district counsel who have many responsibilities. The growing number of loans in liquidation validates my concern and opposition to the Agency’s elimination of the almost 200 liquidation staff in the districts more than four years ago.

If the Agency stops compensating authorized Certified Development Companies that are currently helping liquidate defaulted loans, it will reduce their activities and exacerbate the SBA’s existing problems.

A better solution is for the Agency to right its budget mistake by seeking permission from the appropriators to reprogram funding to cover the estimated amounts needed -- a modest $1 million or $2 million by SBA’s estimates -- or send up an amended budget request for FY2009, as the President did in July 2005 for the FY2006 budget, requesting the appropriate funding. Otherwise, the longer SBA takes to liquidate loans, the less ability it has to recover funds through the property or from the guarantors, increasing the risk of writing off loans that average about $500,000.

It would be far more cost-effective to seek the modest amounts for compensation than to increase the number of loans SBA must write off. The Administration should also consider requesting additional funding for the now obvious shortage of liquidation staff.

Further, there is a question as to whether the SBA even has the right to change the maximum compensation rates that were published in the final rule on April 12, 2007, without putting the change out for public comment.

We understand from conversations with staff that the SBA is relying upon a provision in the Administrative Procedures Act to take the action in question. Before publishing this notice, please submit to the Committee an explanation, in detail, with statutory and regulatory references, of what legal justification the Agency is relying upon to suspend the notice and comment procedure its proposed action would normally require.

Last, my staff sought information from the SBA regarding this issue a month ago, on February 29th, 2008. The Agency never responded until it requested a briefing for yesterday, in which the Committee was informed that the Agency would publish the notice in less than 48 hours. Given the Agency’s silence for a month, and then the very short notice, I would hope that you would delay publication of the changed and suspended compensation fees, at the very least until the Committee receives the Agency’s legal justification for moving forward.

Sincerely,

John F. Kerry
Chairman


GoodBiz113's take: Once again, Sen. Kerry has stepped up to speak truth to power, to protect small-business owners' interests. We're fortunate to have his advocacy -- especially, during these challenging economic times.

SOURCES: GovTrack.us, U.S. Senate Committee on Small Business and Entrepreneurship
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Bush Budget a Bust for America's 27 Million Small Businesses

Today, Sen. John Kerry [D-Mass.] said the president's proposed budget cuts critical small-business programs and falls short of repairing the deep cuts to the agency over the last seven years. Excluding disaster loan funding, the proposed budget for next year represents a 28 percent cut for the Small Business Administration [SBA] since President Bush took over in 2001 – the largest cut of all the federal agencies – and a three percent cut from 2008 appropriations. The president's request of $657 million, including disaster loan program funds, for the SBA is only 0.02 percent of the entire $3.1 trillion budget.

"Unfortunately, this budget is more of the same from the Bush administration for America’s 27 million small businesses," said Kerry, chairman of the Committee on Small Business and Entrepreneurship. "The Bush budget fails to provide the critical investment to finance startups and grow existing businesses.

"Last year, nearly 900,000 jobs were created or retained due to government-backed loans and venture-capital deals to small businesses. But we’re already seeing these loans on the decline this year as a result of the mortgage crisis, so we need to do everything we can to boost these programs. This is not the time to be making cuts."

Once again, the Bush administration proposes no funding for small-business loan programs, and deeply cuts counseling and outreach programs; e.g., Small Business Development Centers [SBDCs], Women's Business Centers [WBCs], and technical assistance programs.

"The significant proposed cuts to business counseling programs will have a detrimental impact on our ability to help small businesses succeed," Kerry noted. "I will work with my colleagues in a bipartisan way to reverse the severe Bush administration cuts -- just as the Democratic-led Congress did last year, when we restored $40 million to core small-business programs."

Specifically, the proposed 2009 budget:

* Lacks funding for loans and venture capital programs. The budget yet again provides no funding for the SBA’s largest loan programs – 7[a] and 504 – and provides no increase in the authority to back new loans. The president has recommended a program level of $17.5 billion for 7[a] loans, and $7.5 billion for the 504 program — the same as his last two budget proposals. There is no money for the Small Business Investment Company [SBIC] debenture program, and the president has recommended the same program level of $3 billion for the last six years. Last year, nearly 100,000 businesses received 7[a] loans -- a $14 billion investment in the economy, which created or retained over 624,000 jobs. Nearly 200,000 jobs were created or retained from the 504 loan program, which lent nearly 11,000 small businesses more than $6 billion in loans. The SBIC program helped create or retain almost 63,000 jobs in 2007.

* Eliminates all funding for the Microloan Program and Microloan Technical Assistance. This year’s proposed budget increases the program level for the microloan program from $21 million to $25 million, but doesn’t fund it. It continues shifting the cost to the lenders. This is the second consecutive year that the president has made this proposal; for the previous three consecutive years, he sought to eliminate the SBA’s microloan program altogether. Microloans proportionately help more women and minorities than other programs. The proposal also eliminates the counseling assistance program, Microloan Technical Assistance, which is essential to help microentrepreneurs succeed and repay their loans. Last year, 2,437 small businesses received more than $31 million in microloans nationwide.

* Eliminates low-income capital program. President Bush requested no new funding for the New Markets Venture Capital program.

* Cuts funding for key counseling programs. The President's budget proposal makes significant cuts to grants for Small Business Development Centers and Women's Business Centers, reducing their proposed budgets by $10 million and more than $1 million, respectively. Over the last seven years, SBDCs and WBCs have essentially been flat-funded, which equals real cuts for these centers due to their funding level not keeping up with inflation. In addition, with the elimination of the Microloan Technical Assistance program, the president proposes that SBDCs and WBCs would pick up the slack, despite already reduced funding. Last year, SBDCs assisted 600,665 businesses, and WBCs assisted 147,000 businesses. The Program for Investment in Micro-entrepreneurs [PRIME], which provides counseling to low-income entrepreneurs, has also been eliminated.

* Provides no new funding for Procurement Center Representatives [PCRs]. The proposed budget provides no new funding to hire additional PCRs. Currently there are about 57 PCRs -- although only around 30 have full-time PCR duties -- to monitor contract bundling and breakout contracts for small firms. This falls far short of the 100 PCRs that Congress has been calling for to oversee nearly $400 billion in federal contracts.

* Cuts funding for critical assistance programs, and eliminates line-item transparency. President Bush continues to propose cuts to funding for the 7[j], HUBZone and Native American outreach programs, as well as roll the funding into the overall agency operating budget. This reduces transparency and creates uncertainty as to how much funding the programs will receive.

GoodBiz113's take: While President Bush has repeatedly declared his support of small businesses -- most notably, during annual press conferences kicking off April's National Small Business Week -- his actions don't support his spirited words. America's 27 million small businesses are fortunate to have Sen. Kerry advocating for us in a bipartisan manner, and for holding the Bush administration accountable for the deleterious ramifications of its truly unfortunate funding choices.

SOURCES: U.S. Senate Committee on Small Business and Entrepreneurship, U.S. Small Business Administration
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House Committee Calls for Sweeping Reforms to SBIR Program; Velázquez Critiques President Bush's Final State of the Union Address

As the specter of a recession looms, small-business innovation becomes an increasingly vital asset to our economy. It was technology startups, after all, that led the way back to growth during our last slowdown.

During a hearing on the Small Business Innovation and Research [SBIR] program today, witnesses underscored its importance in ensuring American competitiveness. They also offered compelling evidence of a need to reform various parts of the initiative.

"SBIR is the largest government-wide research and development program, and it has helped turn some of the nation’s best ideas into tangible market realities," said Rep. Nydia Velázquez [D-N.Y.], chairwoman of the House Committee on Small Business. "Unfortunately, many entrepreneurs are still not getting the access to the R&D funds they need. That puts them at great disadvantage and robs our economy of the type of innovation we require most."

The SBIR was created by Congress in 1982, and is scheduled to sunset on Sept. 30, 2008. Throughout its history, the program has used small firms to help federal agencies meet their R&D goals. It has also fostered considerable technological innovation and prompted the commercialization of resulting products and services. However, as technology and national priorities change, the initiative is failing to keep pace.

"Even in a challenging economy, SBIR has helped small firms create jobs and wealth. We must continue to strengthen this program and align its focus with today’s technological realities," said Velázquez.

When the SBIR Reauthorization Act of 2000 was passed, technologies such as wireless communications, high definition television and hybrid cars were still in relative infancy. While that law made several modifications, the program is in need of further modernization. Witnesses also pointed to a need for increasing SBIR grants; suggested streamlining the application process; and called for greater flexibility to allow participating firms to leverage private-sector funds.

"One sure way to keep the American economy on the right track is to reform this initiative with an emphasis on providing resources for economically viable technologies," Velázquez noted. "We should increase competition within SBIR, ensure that awards go to projects that will produce the greatest return for taxpayers, and do everything possible to help today’s small firms bring forth tomorrow’s goods and services."

Click link for video clips of today's full committee hearing.

For the list of witnesses and their testimonies, click here.

Velázquez: President Bush’s Final State of the Union Speech Falls Short on Proposals to Help Small Firms Spur the Economy

President George W. Bush delivered his final State of the Union address last night, and spoke about the bipartisan economic stimulus plan that Democrats negotiated on behalf of America’s entrepreneurs and working families. The $147 billion stimulus package is meant to spur the lagging economy, and includes short-term provisions to help small businesses. These include a one-year doubling of the capital expensing limit from $125,000 to $250,000, and an opportunity to write off 50 percent of depreciation for certain equipment purchases in 2008.

All are steps in the right direction, Velázquez observed, but President Bush needed to have spoken about long-term support for the 26.8 million small firms that comprise the economic engine of the United States. He mentioned small businesses only once, and those who tuned into his speech were left wondering if the final 50 weeks of his administration will be just like his first seven years—full of empty promises.

"The president has missed yet another opportunity to address the long-term concerns of small-business owners," said Velázquez. "In the face of a recession, it is clear that it is Democrats who will do whatever is necessary to help American entrepreneurs."

Several of the top concerns of small firms were particularly suspect in their absence from the president’s speech. He failed to adequately broach such items as health care, energy costs and the need for affordable capital.

"Everyone is feeling the credit crunch and rising costs, but entrepreneurs are being hit particularly hard," Velázquez noted. "That harms their ability to grow their businesses, and robs the economy of their full contributions.

"The president said we should empower people to grow the economy. Unfortunately, his State of the Union address failed to lay out a vision to do that."

SOURCES: Library of Congress, U.S. House Committee on Small Business, U.S. Small Business Administration, The White House [photo]

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Kerry Questions Bush Administration’s Decision to Withhold Fraud Findings; Seeks Explanation on Agency’s Decision to Heavily Redact IG's Report

Today, Sen. John Kerry [D-Mass.] called on the Bush administration to provide a detailed explanation as to why they chose to withhold from public scrutiny large portions of a recent Inspector General’s report on fraudulent loans made by Business Loan Center, LLC. The Small Business Administration [SBA] took the highly unusual step of requesting that the Inspector General redact large portions of its report -- including the majority of its recommendations, the agency’s responses to those recommendations, and the Inspector General’s comments on the agency’s response.

“The Bush administration’s failure to provide proper oversight of this lender, or take wise action when they detected problems, resulted in years of undetected fraud,” said Kerry, who serves as chairman of the Committee on Small Business and Entrepreneurship. “We can’t get to the heart of the problem if the administration keeps hiding the facts from public view.

“The administration must explain their rationale for suppressing the Inspector General’s recommendations and their response. In order to combat future fraud and protect the integrity of this vital small-business loan program, the American people need access to all the relevant information.”

According to the Inspector General’s report, 19 individuals -- including a former executive vice president of the Business Loan Center [BLX] -- were charged with fraud for allegedly making more than $76 million in fraudulent loans to unqualified borrowers. After the SBA Inspector General conducted an audit of the agency’s oversight of BLX from 2001 to 2006, the SBA asserted that the Inspector General can’t fully disclose parts of the report because of exemptions in the Freedom of Information Act [FOIA] that protect trade secrets, deliberative process privilege, and banking examinations.

In his letter to the SBA Administrator Steven Preston, Sen. Kerry requested that the agency provide their “handbook,” or documents, that guide the agency on FOIA exemptions; fully explain the basis of each redaction; and give details about how the agency will respond to the report’s recommendations. In the near future, Kerry will also hold a hearing on this issue.

***

The full text of Sen Kerry's letter to SBA Administrator Steven Preston follows:

October 23, 2007

VIA FACSIMILE & FIRST-CLASS MAIL

The Honorable Steven C. Preston
Administrator
U.S. Small Business Administration
409 Third Street, SW, Room 7000
Washington, DC 20416

Re: U.S. Small Business Administration’s Inspector General’s Report No. 7-28 on SBA’s Oversight of Business Loan Center, LLC

Dear Administrator Preston:

As you know, the U.S. Small Business Administration’s Office of Inspector General issued Report No. 7-28 on SBA’s Oversight of Business Loan Center, LLC [OIG’s report] on July 11, 2007. The report resulted from an audit performed due to an OIG investigation of allegations regarding fraudulent loans originated by Business Loan Center, LLC. The OIG report was posted last week on the OIG Web site so the public could have access to it, but was heavily redacted at the request of SBA. In response to the redacted report, I am writing to request the following documents:

* Any Freedom of Information Act [FOIA] handbook or guidance that SBA utilizes;

* A detailed explanation of the FOIA exemption and basis of the assertion of such exemption for each redaction made to the IG’s report.

I understand that SBA is asserting three exemptions — trade secrets, deliberative process privilege, and banking examination — to deny full public disclosure of the IG report. The OIG has stated that it does not necessarily agree with the extent of the redactions, and I am inclined to agree. For example, it is surprising to see that the first three of the OIG’s recommendations, and both the agency response to the OIG recommendations and the OIG’s comments on the response, were redacted. What is the justification for those redactions?

Other examples of questionable redactions include: large portions of the “Results in Brief” section; the titles of some sections in the full “Results” portion of the report; and the entire Chronology of Events [Appendix III]. Please provide the exemptions you are citing and detailed justifications for those and all other redactions in the report.

Furthermore, please explain what the SBA is doing to respond to the recommendations in the report to improve lender oversight in order to mitigate any further fraud.

I request that you provide these documents no later than October 30, 2007. Thank you for your timely attention to this matter.

Sincerely,

John F. Kerry
Chairman

GoodBiz113's take: Thank you, Sen. Kerry, for holding federal agencies' feet to the fire. Please keep doing so until all agencies and the Bush administration “get it”: When the 110th Congress gavelled into session in January, a “new sheriff” suddenly took the reins; i.e., one that will boldly speak truth to power in the interest of promoting transparency, integrity, accountability and fairness for all.

Source: U.S. Senate Committee on Small Business and Entrepreneurship
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Sens. Kerry, Snowe Demand Timeline for Implementation of Women’s Contracting Program

Yesterday, Sens. John Kerry [D-Mass.] and Olympia J. Snowe [R-Maine, pictured], chairman and ranking member of the Committee on Small Business and Entrepreneurship, demanded that the Bush administration provide a timeline for implementing a 2000 law which requires that women-owned small businesses receive 5% of federal government contracts. For seven years, the Bush administration has failed to create the Women’s Procurement Program, which mandates that women have equal access to federal contracts. In 2006, only 3.4% of federal contracts were awarded to female-owned businesses -- far short of the federal requirement, costing women-owned businesses an estimated $6 billion in potential revenue.

“When it comes to leveling the contracting playing field for women entrepreneurs, Congress threw the first pitch in 2000, but the Bush administration still refuses to step up to the plate,” Sen. Kerry declared. “After seven years of delays, I am tired of listening to excuses. Sen. Snowe and I want to see a timeline for implementing this program now, so that women small business owners aren’t denied another $6 billion in contracts.”

“The end of Fiscal Year 2007 has come and gone, and the Women’s Contracting Set-Aside Program has not been implemented as promised,” said Sen. Snowe. “Our nation’s women-owned small businesses have waited long enough, and I call on the SBA to set this program in motion as expeditiously as possible.”

The Bush administration testified at a July 2007 hearing that the Women’s Procurement Program would be implemented by Sept. 30, 2007. When it became apparent that the deadline would not be met, Sens. Kerry and Snowe pressed the administration in a hearing in September to provide a time frame for implementation. After seven years of delays, the administration again refused to commit to implementing the program within a certain period of time.

***

Following, is the full text of the letter sent to Small Business Administration [SBA] chief Steven C. Preston:

October 17, 2007

The Honorable Steven C. Preston
Administrator
U.S. Small Business Administration
409 Third Street, S.W.
Washington, DC 20416

Dear Administrator Preston:

As chairman and ranking member of the Senate Committee on Small Business and Entrepreneurship, we would like to express our deep concerns about the long-delayed implementation of the Women’s Contracting Set-Aside Program. The Small Business Administration [SBA] recently released Fiscal Year 2006 small-business “goaling” results that continue to illustrate just how far the government is from reaching its women-owned and agencywide small-business goals. Women-owned small businesses only achieved 3.4% of the 5% statutory goal.

The women’s set-aside program enacted in December 2000 authorized, on a discretionary basis, contracting officers to “set aside” competition for federal contracts to women-owned small businesses. The program required SBA to conduct a study determining which industries would be characterized as underrepresented. The study was finally completed and made available to the public in April of this year. Regrettably, nearly seven years after enactment, women-owned small businesses are still waiting for the program to be implemented.

During a committee hearing on July 18th, the SBA pledged to implement the women set-aside program by the “end of this fiscal year.” Also, in a September 20th hearing on expanding federal contracting opportunities for women business owners, we strongly urged you to follow through on your earlier commitment to implement the program by the end of the fiscal year. The end of Fiscal Year 2007 has come and gone, and the program has not been implemented, as promised. We hope that you would agree that women-owned small businesses have waited long enough.

We cannot emphasize enough the importance of your immediate attention to this vital issue. Please provide a response with a specific timeline for implementation of the women’s contracting set-aside program within 10 working days of receipt of this letter.

Sincerely,

John F. Kerry
Olympia J. Snowe

Source: U.S. Senate Committee on Small Business and Entrepreneurship
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Bush Vetoes Bipartisan SCHIP Bill; 72% of Americans Favor Increased Children's Health Insurance Funding

One week after the U.S. Senate passed bipartisan legislation that will improve accessibility of the State Children’s Health Insurance Program [SCHIP] program -- a plan that provides health insurance for millions of kids who wouldn't otherwise have health care -- President Bush vetoed the bill to increase funding by $35 billion.

Why should GoodBiz113 readers care? First off, SCHIP is simply good, solid, humane legislation. Secondly, because Sens. John Kerry [D-Mass.] and Olympia Snowe [R-Maine], both of whom devotedly serve on the Committee for Small Business and Entrepreneurship, had attached an amendment to the legislation to enroll more children in the program -- i.e., children of small-business owners, their employeees, self-employed people, and entrepreneurs.

Bush's proposal of a mere $5 billion funding increase would not have even kept pace with inflation and spiraling medical costs. Further, for a president whose generous tax cuts for the wealthy, and whose administration has erased a budget surplus, crying for frugality now seems unconscionably incongruent.

Recent polls have shown that an overwhelming majority of people -- 72%, according to a Washington Post-ABC News survey -- favor the proposed SCHIP funding measure. Fully 86% of the American people support reauthorizing SCHIP.

More specifically, as GoodBiz113 reported last week ["OPEN: Small-Business Owners Hold the Line on Hiring, Remain Focused on Growth in Uncertain Economy"], nearly early eight in 10 [79%] small businesses would consider proposed health-care policy solutions as a way to make health care accessible. More than half support a plan that would "ensure every child in the U.S. has health insurance" [58%], or "provide tax credits to low-income workers to help pay for health care" [54%].

Still, the president stubbornly refuses to acknowledge the will of Americans on this issue -- just as he does on the war in Iraq, which he contends is key to our nation's security. He fails to recognize that security of the nation's children also is in jeopardy when it comes to lack of health care.

"If government-supported health care is good enough for President Bush, why isn’t it good enough for America’s children?" poses senior Sen. Ted Kennedy [D-Mass., pictured above], who introduced SCHIP legislation 10 years ago. "We can be a voice for the nation's children -- a voice that every member of Congress needs to hear. If government-supported health care is good enough for Congress, it’s good enough for America’s children."

Exercise Your Voice
On Oct. 18, Congress will vote on overriding Bush's veto. If you'd like to voice your views to your elected officials before then, please do so at your earliest possible opportunity.

You can find your U.S. Senators here: http://www.senate.gov/

You can locate your U.S. House representative via this link: http://www.house.gov/

Sources: ABC News, OPEN from American Express, Washington Post
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Sens. Kerry and Snowe to Press Administration on Women’s Business Center Funding, Contracting Program

Today, Senators John Kerry [D-Mass., pictured] and Olympia J. Snowe [R-Maine], chairman and ranking member of the U.S. Senate Committee on Small Business and Entrepreneurship, outlined specific questions about Women’s Business Center funding they expect the Bush administration to answer at a hearing on Thursday.

Kerry and Snowe have called on the administration to comply with the law, and to fund established and successful Women’s Business Centers as soon as possible. The committee is holding a hearing on women’s business issues on Thursday, Sept. 20, 2007, featuring testimony from female entrepreneurs, the Small Business Administration [SBA], the agency’s inspector general, and the Government Accountability Office [GAO].

“The law was meant to help these successful centers train and assist women entrepreneurs, not starve them of the resources they need to complete their mission,” said Kerry. “I’m disappointed that the SBA is stalling to implement this important program, and at Thursday’s hearing we will demand answers and accountability. I strongly urge Administrator Preston and the rest of the agency to do what’s in the best interest of Women’s Business Centers and their clients, and make these grants available as soon as possible.”

In addition to Women’s Business Center funding, Thursday’s hearing will also focus on the Women’s Procurement Program which was signed into law in 2000. Despite repeated, bipartisan calls, the Bush administration has failed to implement this program over the last seven years.

“We hope it’s the intention of the SBA to come to this hearing prepared to provide detailed answers on how they plan to implement this crucial new grant program,” Sen. Snowe said. “It’s imperative that these centers who are aiding dedicated and successful women entrepreneurs get the funding necessary to their cause.”

Sens. Kerry and Snowe sent a letter to the SBA in August to encourage the agency to temporarily tailor its grant-making process so that Women’s Business Centers could receive renewal grants by Jan. 1, 2008. Instead of taking the advice of Congress, the SBA contends that they are not able to do so under present law. In May, Kerry also asked the Inspector General to investigate funding delays to some Women’s Business Centers.

The Women’s Business Center Renewal Grants program was passed as part of the emergency appropriations bill signed by President Bush in May, and builds on the Women's Business Center Sustainability Pilot Program introduced by Sen. Kerry in 1999. Since then, Congress has worked in a bipartisan way to ensure that centers with a proven track record of success continue to receive matching funding from the SBA.

* * *

Following, is the text of the letter that Kerry and Snowe sent to SBA Administrator Steven C. Preston:

Dear Administrator Preston:

Thank you for replying to our letter regarding Women’s Business Centers and implementation of the Renewal Grants program. We are concerned with your response to specific issues, and would like your agency to come prepared to fully answer questions outlined below at the hearing, “Expanding Opportunities for Women Entrepreneurs: The Future of Women’s Small Business Programs,” on Sept. 20, 2007.

The hearing will partly focus on the management and benefits of the Women’s Business Center program, including renewal grants for graduated and graduating centers. Please be prepared to address the following issues and further explain some of the statements in your letter:

* Implementation and authority. On May 25, 2007, the President signed into law a bill that created the Renewal Grants program. The program became effective immediately and, therefore, the SBA had the authority to provide grants under sub-section [m]. Nevertheless, the reply says, “The SBA cannot operate under the newly legislated guidelines until the date to repeal the old guidelines [October 1, 2007] has passed.” What is preventing the SBA from using this authority?

* Funding and the Grant Process. The SBA contends that it cannot implement the program because, “Until the agency is funded for FY2008, grant disbursement is not possible.” We understand that the SBA cannot obligate or disburse funds until it has appropriations. However, it is our understanding that the request for proposals could be published and responses accepted, with the caveat of being subject to funding, before this time. This would give the SBA additional time and allow for the funds to be awarded immediately after the appropriations bill is enacted, thus helping established centers receive their funding more quickly. Is there anything precluding the agency from requesting proposals before the FY2008 appropriations bill is signed into law?

* Selection criteria. The reply correctly notes that the new law gives graduated centers “funding priority,” but then incorrectly contends that “The graduated center priority implies that all graduated centers would qualify based on years in the program, and not on performance.” This amendment requires grant approval to be based upon criteria developed by the SBA. These criteria are required to be based on the same conditions that are currently being used in awarding grants under the Sustainability Pilot program. Centers must meet those criteria in order to receive a grant. Please explain where the legislation states that centers should receive funding based on years in the program, “regardless of their performance.”

* Funding of New Centers. The SBA contends that the priority funding for graduated centers will preclude the funding of new centers. This is not the case. The amendment states that if funding is limited, established centers should be funded before new centers. We want to see access to counseling for women business owners expanded through new centers. At the same time, it is fiscally responsible for the government to continue building on its investment instead of losing those investments and starting new funding commitments that it might need to abandon later. Women’s Business Centers would receive a significant increase in the Senate appropriations for FY2008 -- $16.88 million, or $4 million more than last year. That should be sufficient to fund existing, graduated, and new centers. Please tell us how much the SBA requested for FY2007 and FY2008 for Women’s Business Centers, and on what appropriation the SBA based its conclusion that it could not fund new centers.

* Implementation. Please describe, in detail, the plan the SBA expects to follow in implementing the new renewal grant program. Please be prepared to tell us when [with specific dates] the SBA expects to publish the announcement, how soon the awards would be made after enactment of SBA’s appropriations for FY2008, and when the actual funds will be disbursed.

It is the intent of this legislation that successful, established centers begin receiving grants as soon as possible. We recognize for this to occur, that it will require everyone to work together, and we assure you that we are fully committed to working with you. Women business owners are an integral and vital part of our economy, and Women’s Business Centers play an important role in supporting them.

We look forward to your response at the hearing this week.

Sincerely,

John Kerry
Olympia Snowe

Sources: Peace Corps Online [photo], U.S. Senate Committee on Small Business and Entrepreneurship
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Committee Seeks to Strengthen Key Initiatives for Sustained Economic Development

In many underserved neighborhoods, small businesses are an important engine of growth and revitalization, bringing much needed jobs and commerce. Oftentimes, the individuals wishing to start these businesses have difficulty securing adequate finances, leaving their aspirations stalled in the planning phase.

Today, the House Committee on Small Business examined two key initiatives that support economic revitalization in some of these disadvantaged communities: 1] the Microloan Program, and 2] the Program for Investment in Micro-Enterprise [PRIME] -- both of which fall under the purview of the Small Business Administration [SBA].

"There are many budding entrepreneurs who strive to open their own business, but due to a lack of experience or limited credit history, cannot secure capital," said Nydia M. Velázquez, committee chairwoman. "The microloan and PRIME programs have been instrumental in turning their dreams into reality."

Since its inception in 1994, the microloan program has provided credit to more than 700,000 small firms -- many headed by women, minorities and others who are facing challenges getting their ventures off the ground. These businesses have helped bring economic growth to areas where it is desperately needed, creating or retaining about 10,000 jobs in 2006, according to the SBA.

With a default rate of less than two percent, these investments have not only increased prosperity, but have done so while maintaining a better repayment record than traditional loans made by commercial lenders.

"These programs have been vital in moving people not just from welfare to work, but from welfare to business ownership -- an amazing accomplishment," Chairwoman Velázquez noted.

Despite this record of success, the Bush administration has proposed to eliminate the microloan program each year for the past four years. In its latest budget request, it has recommended increasing the cost of the loans for the borrowers, and to completely eliminate PRIME. At the hearing, members rejected these proposals and outlined ways to strengthen the current programs, making capital more affordable for borrowers.

Currently, microloan recipients cannot use their repayment history to improve their credit score. Building a strong credit history is a challenge for many business owners. By changing the current system, borrowers could improve their credit records, thus increasing the stability of their business and their ability to obtain future funding.

The committee also proposed reducing costs and providing greater flexibility, allowing lenders to better meet the needs of their clients. In striving for these goals, members seek to make loans more accessible for the next generation of entrepreneurs.

"For many aspiring business owners, a microloan is their only option, and we simply cannot allow these entrepreneurs to be left behind," Chairwoman Velázquez said. "The answer is simple: these programs must be permitted to continue, and any proposal to diminish them must be firmly rejected."

GoodBiz113's take: SBA's microloan and PRIME programs need to be sustained in order to help ensure that future businesses can thrive in underserved areas. Further, we'd like to see the changes proposed by Velázquez's committee embraced by her colleagues and the White House, and implemented ASAP.

Sources: PBS [file photo], U.S. House Small Business Committee
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GoodBiz113 Issues Open Memo to Leaders of Congressional Small Business Committees

TO: Sen. John Kerry [D-Mass.], Chair, and Sen. Olympia Snowe [R-Maine], Ranking Member, U.S. Senate Committee on Small Business & Entrepreneurship; and Rep. Nydia Velazquez [D-N.Y.], Chair, and Rep. Steve Chabot [R-Ohio], Ranking Member, U.S. House Committee on Small Business

FROM: Kari Larson, Editor & Publisher, GoodBiz113

SUBJECT: Striving for Enforced Compliance, Accountability and Transparency

Last Friday, President George W. Bush praised America's small-business owners and employees, and proclaimed the week of April 22-28 as a time to recognize "their important role in ensuring that America remains the economic leader of the world."

The President's proclamation was issued on the eve of the U.S. Small Business Administration's observance of National Small Business Week in Washington, D.C. [April 23-24]. The two-day conference will focus on small-business accomplishments, including disaster recovery, federal contract procurement and entrepreneurial success. The celebration honors the nation's most outstanding entrepreneurs, and culminates with the selection of the National Small Business Person of the Year for 2007 from among the 53 state small-business winners, including the District of Columbia, Puerto Rico and Guam.

"The state and regional winners who will be a part of this event personify the entrepreneurial spirit that is vital to the growth of the American economy," said SBA Administrator Steven C. Preston [pictured above]. "They are an innovative and diverse group involved in technology, manufacturing, retail, construction, professional services and a host of other industries. We are proud to have them here in Washington, and we are proud to have helped many of them achieve their business success."

View from the Small-Biz Bunker

On the face of things, that's all good. However, it's not unlike watching this weekend's Zurich Classic of New Orleans on TV, then assuming that restoration of the PGA TOUR's lush TPC Louisiana golf course reflects widespread Gulf Coast disaster-recovery efforts in the 19-month wake of Hurricane Katrina. A wide-angle look reveals some major divots in the small-biz realm.

Current small-business set-aside and subcontracting Federal Acquisition Regulations [FAR] are well-intended to engage small businesses in the potentially lucrative realm of government contracting. Unfortunately, actual enforcement of FAR standards leaves a lot to be desired in order to level the playing field for small-business owners, entrepreneurs and their employees -- "the lifeblood of cities and towns across the country," declared President Bush.

Compliance Begins With Education
As with most issues, education is key. Since registering as a woman-owned small business 10 years ago, I've found that some decision-makers in several federally funded entities -- e.g., prime contractors, public agencies, land-grant educational institutions -- are totally unaware of their organization's responsibilities to procure business from small businesses and enterprises owned by minorities, women, veterans and socially disadvantaged populations. In too many cases, even the procurement directors and/or designated small-business liaison officers [SBLOs] neither knew, nor seemed to care, that they're contractually obligated to engage small businesses.

Proposed solution: Remind all federally supported agencies, companies and organizations that they need to comply with FAR set-aside and subcontracting standards, lest their funding be drastically reduced or cut off completely. Encourage each entity to fully educate managers of their procurement requirements -- perhaps by using a carrot-and-stick approach that rewards them for complying; e.g., the University of Minnesota's AIR [Awards Incentive & Recognition] Program, which kicks off July 1, 2007.

While you're at it, please remind DoD's Procurement Technical Assistance Center [PTAC] directors that they're funded to provide free or low-cost counseling to small-business owners wading into the federal contracting waters -- especially, via the General Services Administration [GSA], that convoluted, quasi-public behemoth conceived to somehow streamline the federal procurement process.

[FYI: I met one clever counselor who worked part-time for PTAC, earning all the accompanying benefits for himself and his family, a steady paycheck, etc. He also ran his own small-business consulting enterprise that charged folks -- mostly, his PTAC clients -- $14,000-plus to prepare the 300-page GSA schedules that he strongly suggested they complete in order to help land federal contracts. Legal? I guess. Ethical? You decide.]

Hold All Funded Entities Accountable -- and Do So Transparently
As of this writing, the total U.S. cost of the invasion of Iraq approaches $420 billion. That money has to come from somewhere, and federal agencies are duking it out for their share of the financial pie. Meanwhile, companies large and small are competing for federal contracts. Too often, it seems, one can't discern how federal contracting funds are actually spent.

Proposed solution: Require that all federally funded entities -- including agencies -- publish accounts of exactly how dollars are spent, and make those frequently updated reports easily accessible by virtually anyone via the Internet.

Last year, after noticing that an agency -- one that had previously done a consistent job of communicating with its small-business vendors, their stakeholders, etc. -- hadn't published anything, online or off, in months. Deducing a possible opportunity for my seasoned communications expertise, I queried the agency's Office of Small & Disadvantaged Business Utilization [OSDBU] director. He informed me that he'd retained a small agency to do the work -- two months prior to my call.

Suffice to say, about one or two months later, that OSDBU director left his post [as did the agency's secretary], and no deliverables ever manifested. Further, as much as the new, interim OSDBU director wanted to engage my services, he couldn't, because the creative-services agency commissioned by his predecessor had sapped the communications budget.

In another instance, I had occasion to discuss my concerns about contracting practices with a U.S. Senate legislative assistant. When I asked him about discerning exactly how, if at all, defense contractors, agencies, etc., were fully complying with FAR small-business standards, he replied that it would be impossible to do without subpoenas for each entity.

Allocation of public dollars should be public information. During National Small Business Week, we celebrate the far-reaching contributions of America's 25.8 million small businesses that generally create 60 to 80 percent of the net new jobs, and contribute $918 billion to the U.S. economy. It would greatly benefit all concerned if your committees announced an initiative to enforce full compliance, accountability and transparency regarding FAR's small-business set-aside and subcontracting standards.

Sources: U.S. Small Business Administration, U.S. Census Bureau

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