FAR-Reaching Bailout

More and more people are starting to understand why approving the $700 billion Emergency Economic Stabilization Act is necessary to keep credit markets flowing.


But the American Small Business League (ASBL) has gone so far as to accuse the Wall Street rescue bill of having “anti-small business” language.


The bill does NOT say, “Don’t give government contracts to minorities.” What Section 107 of the House and Senate bills does is give Treasury Secretary Henry Paulson the authority to “waive provisions of the Federal Acquisition Regulation where compelling circumstances make compliance contrary to the public interest.”


Lloyd Chapman, president and founder of the ASBL is worried because FAR safeguards minority procurement of government contracts. “Minorities are losing 90% of all the small business contracts to large businesses,” says Chapman. Boeing, Halliburton, and Lockheed are just some of the companies receiving this small business money. Businesses? Yes. Small? Definitely not.


The bailout legislation says that the waiver can only be used under certain conditions. First, it must be reported to Congress within seven days. Also, the bailout bill says that if provisions related to minority contracting are waived, the secretary must develop alternate procedures to ensure the inclusion of minority contractors.


Chapman wants to know why there is not a time limit on this waiver and why the bill doesn’t spell out the specific “procedures to ensure the inclusion of minority contractors.”


The SBA’s office of the inspector general, which is responsible to detect and deter fraud in the agencies programs, declined to comment and directed all inquiries about audits to the Website.


“One of the most important challenges facing the Small Business Administration and the entire federal government today is that large businesses are receiving small business procurement awards, and agencies are receiving credit for these awards,” according to a 2005 memo from Harold Damelin, the inspector general of the SBA.


With the inclusion of Section 107 it seems as if the Bush administration is basically saying “We want to repeal the law, but trust us. We’re going to make every effort to include small businesses.” The problem is this: When the administration was being held accountable by the Small Business Act they did not make every effort to include small businesses. So, it is understandable why the ASBL wants lawmakers to question the necessity of Section 107 in the bailout bill.


Chapman says the SBA is appealing a federal ruling that orders it to release the names of firms that have received small business contracts. He says the ASBL has spent a quarter of a million dollars in federal court to find out the names of the large businesses who received contracts designated for small businesses. “What do you think that means?” he asks.


It means House and Senate members should still vote yes on the bailout. Small businesses won’t need contracts if they can’t get credit

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