Small Business on Capitol Hill

Lawmakers and others in the Capitol Hill community are in full swing this month addressing small business issues. Here are some highlights of recent action on the Hill:

Health Insurance: Reps. Ron Kind (D-Wis.) and Wally Herger (R-Calif.) late last night introduced legislation aiming to improve an entrepreneur's ability to afford health insurance. The National Small Business Association says H.R 3660, the Equity for Our Nation's Self-Employed Act, would correct a significant error in the tax code that penalizes self-employed individuals.

Corporations currently can deduct the cost of premiums as a business expense and forego all payroll taxes on these expenses. The self-employed can't take that deduction and so must pay an additional 15.3 percent tax on their health insurance premiums. Small business is the only sector of the U.S. economy that experiences such a substantial tax penalty on the cost of their employer-provided health coverage.

Military: The Senate last night passed a bill to authorize funding for the Defense Department, but also includes language designed to expand business opportunities for veterans and to help reservists keep their businesses going during deployment. Sens. John Kerry (D-Mass.) and Olympia Snowe (R-Maine), who are chairman and ranking member of the Senate panel overseeing small businesses, sponsored the amendment. Separately, their panel is holding a hearing Wednesday morning on improving Internet access for small firms.

Access to Capital: The House Small Business Committee this week voted to adopt the Small Business Investment Improvements Act introduced by Rep. Jason Altmire (D-Pa.), chairman of the Subcommittee on Investigation and Oversight, to aid entrepreneurs in securing funding. H.R. 3567 would overhaul two Small Business Administration programs designed to aid small firms. It also would create the Angel Investment Program to offer seed capital. The panel is holding a hearing Thursday morning on the issue of small enterprises' access to money to grow their businesses. Meanwhile, a House Small Business subcommittee was scheduled to hold a hearing this morning on renewable energy tax incentive possibilities.

'No-Match' Social Security Regulations: Meanwhile, the National Federation of Independent Business Legal Foundation said it plans to file a brief urging the federal district court in northern California to require the Homeland Security Department to comply with the Regulatory Flexibility Act and conduct a regulatory flexibility analysis on its new "no-match" regulations. The rules require employers that receive a "no-match" letter from the Social Security Administration to fire the employee, or risk civil or criminal penalties, unless the discrepancy can be resolved between the SSA and the employee within 90 days. The rules aim to decrease the use of falsified Social Security numbers.

The lobbying group said Homeland Security Secretary Michael Chertoff certified these regulations without conducting a regulatory flexibility analysis to determine the rules' economic impact on small entities as required by the Regulatory Flexibility Act.

Separately, the Small Business Administration's Office of Advocacy last week sent a letter to Homeland Security saying it believes the department's assessment that small businesses would not be affected by this "no-match" issue was wrong.

By Sharon McLoone |  September 26, 2007; 1:39 PM ET Regulation Legislation
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I was pleased to learn that a House Government Oversight Subcommittee had held hearings on September 26th about contracting abuse practices minority firms are receiving. Unfortunately, Congress has not heard yet half the bias that does exist, in government contracting, not only against minorities and women, but against small businesses in general.

My company, for example, has lost over $3M over solicitations, which reeked with bias and/or endemic contracting abuse practices. I have reported these practices - in a well-documented report - to the Air Force with absolutely no success and no follow-up. OK, there are penalties for the violations, but nobody is enforcing them so what good are they?

I was so determined to demonstrate this bias and abuse that I brought up (and won) in 2005 - at considerable expense - a size protest test case (SIZ-2005-05-09-22) for the sole purpose of demonstrating that 'size protests' do not bring justice to small businesses when they win their cases and the 'protest system' needs to be overhauled. ² Again, no progress has been made on that front either. And. . . there's more.

GAO is currently reviewing my mammoth test case protest (B-309911) challenging the legality of the so call 'FAR exemptions.' These 'exemptions' have illegally, diverted $640 Billion worth of Federal contracts away from small businesses over the last decade! I have documented - with the full support of the trade groups, which represent our constituency of 10 million small businesses, that these FAR exemptions have no statutory basis nor authority to exempt small businesses on contracts from $3,000 to $100,000.

In spite of having numerous Members of Congress confirmed the allegations, and demand investigations, as my Congressman, John Mica, has, regulators have continued - through these 'exemptions' - to influence the procurement community and damage the rights of small businesses to access contracts Congress intended - by statute - for them to have. The regulators' actions, my dear friends, have been worse than 9/11 and Katrina combined!

In spite of a very recent (Sept. 4th) historic SBA ruling which has received little, if any, media attention, confirming the illegality of these exemptions, the government, specifically GSA, is now attempting to prevent GAO from ruling on this mammoth protest claiming (get a hold of this) that. . . "I am not an interested party" due to (you know what) the same illegal FAR exemptions, I challenged! How arrogant can that be?

Using a whistle blower statute, I wrote the OFPP Administrator requesting him to 'determine the 'consistency (or inconsistency) of the FAR exemptions with applicable law' to help OFPP rescind the exemptions, but I am yet to receive even an acknowledgement of my request. I have also appealed to the Office of Advocacy for an opinion which would support the SBA's historic position, but there has been silence in those fronts as well. I am beginning to feel government officials are, purposely, avoiding the issues like a plague. Where is Mother Theresa?

Attorneys who have read the GSA opinion - in defense of these 'exemptions' - have acknowledged that GSA's entire opinion justifying the exemptions is not based on any statute nor authority, but on the fact that the 'exemptions' have had tenure (i.e., the principle of stare decisis.) In laymen's terms, they have been in force for a long time and - in the eyes of the government - have been assumed to be OK. In other words, no matter how abusive they have been, it is OK - so the government assumes - for small businesses to be abused, screwed and discriminated against.

Let's face it, these 'FAR exemptions' were written solely to promote and market a government procurement vehicle. . . at our expense! No, this is not fair and the small business community says. . no mas!

The 'exemptions' are 'discrimination a-la-1950s style.' Supporting the 'exemptions' is like defending 'segregation' because it was assumed, at the time, that 'discriminating against a race' was OK since there was no enforcement of the laws that prohibited such practices! Come on. . . who are the regulators kidding! If you're reading this, I urge you to speak up, your views and opinion do count and YOU can make a difference.

Let me leave you with the wise words of one of our own, Hank Wilfong, President of NASDB, who said, "The struggle continues, until we succeed-and we shall..."

Raul Espinosa, Founder and Spokesperson
Fairness in Procurement Alliance (FPA)

Posted by: Raul Espinosa | September 29, 2007 7:57 AM

Sharon - I am a Service Disabled Vet - this week the House committee on Small Business is convening a hearing on changes to small business programs. The Federal government has only achieved .7% out of a 3% goal to SDV's. There have and are several pieces of legislation pending in the House committee to right the wrong (all the way back to the 109th Congress). But the committee will not allow these pieces of legislation to see the light of day - could you use the power of the pen to expose this debacle. The Vets are ticked ask "VET Force" or the Association for Service Disabled Vets ASDV or view last weeks American Legion testimony in front of the same committee. The Vet and SDV businesses need a outspoken person from the press to bust this open and display the hypocrisy We are Vet pro in the news and Vet nothing when the doors are closed - the Vets keep trying need reinforcements.

Posted by: Chuck Pietsch | October 1, 2007 2:21 PM

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