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New Federal Policy To Protect Fraudulent Firms Coming In January

Any day now, the Small Business Administration (SBA) will announce the final rule on the “safe harbor from fraud penalties” policy Congress included in the 2013 National Defense Authorization Act (NDAA) that President Obama signed into law.

Under the “safe harbor from fraud penalties” policy a Fortune 500 firm, any large business and even foreign owned corporate giants can misrepresent their subsidiaries and divisions as legitimate small businesses to hijack billions of dollars in federal small business contracts. If they are caught, all they need to do is claim they “acted in good faith” and they can avoid any and all penalties for federal contacting fraud.

Before Congress passed the “safe harbor from fraud penalties” policy, large businesses that misrepresented themselves to steal federal small business contracts could face stiff penalties.

Under section 16 (d) of the Small Business Act, any firm that misrepresents itself as a small business to illegally receive federal small business contracts could be punished by up to ten years in prison, a fine of up to $500,000 per occurrence or both.

Now all fraudulent firms need to do when they are caught is to simply say they “acted in good faith” and they are off the hook. No jail time, no fines, nothing.

I think they should have called it the “Help protect me from Lloyd Chapman law.” That would seem appropriate to me since I am the only private citizen in America that has ever publicly opposed the decade old government policy of diverting billions of dollars in federal small business contracts to Fortune 500 firms and big businesses around the world. (Rolls Royce, British Aerospace Engineering etc.) 

I don’t think it’s just a coincidence that the “safe harbor from fraud penalties” policy was passed by Congress after I began to call for investigations by the GAO and FBI and criminal prosecutions of large businesses that have continued to misrepresent themselves as small businesses year after year to hijack hundreds of billions of dollars in federal small business contracts.

It was also widely known that I began to work with some of the largest law firms in America to go after fraudulent firms under the False Claims Act.

Our corrupt government also needed to pass the “safe harbor from fraud penalties” policy to protect all those fraudulent firms they use to fabricate and totally misrepresent the government’s compliance with federal law that requires that a minimum of 23% of the total value of all federal contracts be awarded to small businesses.

Last year the feds claimed they awarded 23.39% of all federal contracts to small businesses. Most of the major media outlets that covered the story went along with the government’s claim and failed to mention of the top 100 recipients of federal small business contracts, over 75% were actually large businesses.

Imagine the level of fraud and corruption in our federal government when every year since 2005 the Office of Inspector General for the Small Business Administration has reported the diversion of federal small business contracts to large businesses as the number one problem at the SBA and then Congress passes legislation to protect the fraudulent firms.

In 2005, the SBA OIG released Report 5-15 that described the rampant fraud in federal small business programs as, “One of the most important challenges facing the Small Business Administration (SBA) and the entire Federal Government today…”

If you want to know how the United States Government really works forget what you learned in civics class. Look at the statement Presidential candidate Barrack Obama released in 2008.

“It is time to end the diversion of federal small business contracts to corporate giants.”

Then realize after he was elected President, he signed legislation that created the “safe harbor from fraud penalties” policy that will obviously only encourage more fraud and abuse in federal small business contracting programs and divert even more federal small business contracts to corporate giants and their subsidiaries.

How does that saying go, “America, the best government money can buy?”

If you have trouble commenting on any of my blogs please let me know by calling 707-789-9575 or comments@ASBL.com. If you are from the NSA or another government agency that likes to try and hijack the topic of by blogs, it’s really become quite obvious, hasn’t it?

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Lloyd Chapman

Lloyd Chapman

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