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# Local small business owners on Wednesday spoke out against proposals by the U.S.
- URL: https://www.smdp.com/hector-v-barreto-is-a-former-small-business-owner-and-the-21st-administra-tor-of-the-u-s-small-business-admin-istration-size-does-matter-small-busines/
- Published: 2005-06-30T15:00:00.000Z
- Updated: 2026-10-23T07:21:17.000Z
- Author: Guest Author
- Tags: Business, Santa Monica, #archive-import

*By Daily Press staff*

Local small business owners on Wednesday spoke out against proposals by the U.S. Small Business Administration (SBA) that they claim would strip government contracts from legitimate small businesses in favor of large corporations.

The SBA is currently holding 11 hearings across the country on a number of proposals that would let big businesses continue receiving government contracts intended for small businesses. The hearings take place in the wake of a comment period that ended in April, during which the SBA received more than 6,000 comments — the highest number of responses ever received in the history of the SBA — from small business owners and community activists opposing one or more of the SBA’s proposed policy changes, according to the American Small Business League, a national organization focused on promoting the interests of the 23 million American companies with fewer than 100 employees. The Small Business Act of 1953 requires at least 23 percent of federal contracts go to small businesses. But in December of 2004, the SBA Office of Advocacy reported that more than $2 billion in small business contracts had been awarded Raytheon, Northrop Grumann, Carlyle Group, Electronic Data Systems, Booz Allen Hamilton and Hewlett-Packard.

A series of reports by the SBA Office of Investigator General this year showed that not only are federal agencies awarding small business contracts to large businesses, but the SBA itself is violating size standards for its own procurement, in direct contravention of its mission, according to the American Small Business League.

In 2003, the SBA removed nearly 600 large corporations from its database following an investigation by the American Small Business League. Among those large corporations obtaining small business contracts were Barnes & Noble booksellers, Dole Food Co., AT&T Wireless and Verizon.

“The SBA knows large companies are receiving small business contracts and they’ve refused to do anything about it,” said Lloyd Chapman, president of the American Small Business League. “Their failure to act on these violations speaks louder than words. If SBA officials are serious about helping small businesses, they’ll listen closely to the business owners testifying at these hearings and pay attention to the number of Americans who will continue to lose business because of these proposals.”

Among the changes the SBA is considering is a grandfathering proposal that would allow corporate giants in the U.S. and Europe to keep their small business contracts for up to five more years, even if small business size standards are reduced in the future, according to the American Small Business League.

“The SBA should be doing more to help business owners like me win government contracts, instead of considering proposals that continue their practice of putting big business first,” said Juan Santana of Jungle Communications in San Francisco. “Why would the SBA want to protect big businesses that are currently making money from contracts meant for small businesses? It hurts the American economy and defeats the SBA’s own stated purpose.”

Together with small business owners, the American Small Business League is advocating to revise size standard discrepancies for what constitutes a real small business. In the U.S. today, 98 percent of all firms have fewer than 100 employees, and until 1986 the SBA defined a small business as one with fewer than 100 employees. But in 1986, the SBA changed the definition to allow up to 500 employees, and current policy sets different size standards for every industry. Both of these factors make it increasingly difficult for SBA officials to find fraudulent corporations misrepresenting themselves as small businesses. The ASBL has advocated a return to the simple, 100 employee-based size standard, making it easier for the SBA to discover fraudulent small business and enforce their policies against violators.

“The issue here is the SBA’s failure to enforce size standards, and their bigger failure to punish those corporations who knowingly misrepresent their small business status,” Chapman said. “The more universal and straightforward the standards, the easier it become to monitor their enforcement and weed out fraudulent firms misrepresenting themselves as small businesses to other federal agencies.”

*Originally published in the Santa Monica Daily Press print edition on June 30, 2005.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/063005.pdf?ref=smdp.com)