Chris Gunn discusses the Small Business League's court victory in obtaining records on the Small Business Administration's public relations practices. The crux of the issue is (1) that the Small Business League believes funds that are supposed to be dedicated for small business are, in fact, being diverted to large companies and (2) that the SBA is trying to conceal this fact.

In Mr. Gunn's words:

"Since 2003, more than a dozen federal investigations have uncovered billions of dollars a month in federal small business contracts are going to corporate giants. In Report 5-15, the SBA’s own Office of Inspector General (IG) referred to the issue as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today” (http://www.asbl.com/documents/05-15.pdf)"


Listen in to this interview, conducted by Mike Siegel, as this very important issue is discussed.

Who is Chris Gunn?

Christopher Gunn was named the ASBL's Director of Communications in 2007. Mr. Gunn works closely with ASBL constituents, legislators and the media as a means of producing highly effective media campaigns. Mr. Gunn is responsible for creating broad based, highly effective media campaigns, which encompass top media outlets in every medium. He creates and communicates the vision and strategy of the ASBL with his leadership skills and innovative ideas. Mr. Gunn is deeply involved with the development and distribution of ASBL communications at the national, state, and local level. He received his BS in Journalism from California Polytechnic State University, San Luis Obispo with an emphasis in Print Journalism.

Transcript:

Siegel: Welcome back in. Good to have you with us at the BOSS Business Brief where we deal with those factors that affect small business, particularly in this country, and insights that will help you understand what is happening and the dynamics of what is happening and why maybe sometimes small business is behind the eight ball. One of the organizations that are trying to get the small business community out from behind that eight ball is the American Small Business League, and they have apparently just won a lawsuit regarding the small business Administration and the freedom of information act. They have won the ability to get some information from the Small Business Administration, which didn't want to release it voluntarily. It is all about what may be, of course we don't know until we see the documents, but will very possibly be very damaging public relations contracts awarded by the SBA to a company called APCO Worldwide. Now, this is an international public relations firm. They specialize in crisis management and it may be that the SBA is spending money to try to limit the damage from a lot of these American Small Business League lawsuits to expose the truth that in the end there has been in fact a lot of money awarded by the SBA to companies that are not small businesses but are in fact very large corporate entities, and even foreign companies. So, the SBA may be acting against the very intent of its existence. Chris Gunn is with us, public relations director of the American Small Business League. Mr. Gunn, how are you? Good to talk to you.
Gunn: I am very well, thank you. It is good to be here.
Siegel: Am I correct about that, that you have won this lawsuit? Talk to us about the concept of the SBA hiring a crisis management public relations firm.
Gunn: Yes, absolutely. We won the lawsuit. We were able to actually get these documents, or rather the contracts themselves, from the SBA – the un-redacted contracts. This indicates that the SBA in fact spent large sums of money on pubic relations activities with APCO Worldwide. So, our question is, exactly what is the SBA doing? And actually, when we got out there and we requested this information and we started pursuing this information under Freedom of Information and actually went through with t he litigation, the question we were looking to answer was, "what is the SBA doing in terms of its public relations activities, in terms of covering up its role in the diversion of federal small business contracts to large corporations. One of the things that you eluded to was that, in fact, for years we have seen large corporations continue to receive small business contracts. In fact, billions of dollars a year in small business contracts, contracts that by law should be going to small businesses, and the SBA perennially has maintained that it is the result of simple miscoding or harmless computer errors, and really have failed to really focus on the crux of the issue, which is that this diversion of small business contracts is actually hurting the small business community. We think that t hey have been working counter to their mission. So, with this lawsuit it is a step in the right direction in terms of (A) transparency and accountability, making sure that we are aware of what the SBA is doing in terms of its public relations activities, and (B) that we are able to obtain that information and make sure that they are serving the interests of the small business community as opposed to serving the interests of others.
Siegel: Well, the problem with this is that, in a sense, is it correct to say violates the intent and the purpose of even the creation of the small business administration, which is to foster small business activity, to support small business activity. I gather the reason you are going through all of these legal processes and lawsuits is to get to the truth about whether they are giving money to entities that should not be getting Small Business Administration money. Is that correct?
Gunn: That is correct, yeah. For a number of years we have seen things that, you know, raised eyebrows in the small business community from the SBA. Things like, say for example, a press release in 2007 where they claimed that it was a myth that large corporations are receiving small business contracts. To counter that we actually had a handful of investigations, even investigations of the SBA own inspector general, who said that this issue is one of the most important challenges facing the SBA and the entire federal government today. So, I would say that not only have their actions been counter to what their mission is, but it has led us to the idea that, and the impression rather, that the SBA is actively engaging in this diversion of small business contracts to large corporations, or at least aiding and embedding the diversion of small business contracts to large corporations as a means of say, for example, meeting the government's small business goals.
Siegel: In other words, instead of, if I hear you correctly, instead of in good faith wanting to come clean about what they are doing, they actually hire this public relations firm to try to mitigate the public damage that they suffer from the exposing of this information that they are funding large corporations. I understand that this APCO Worldwide received $30,000 for a one day meeting with the SBA to deal with mitigation of some of that public relations damage because of your organization?
Gunn: That is absolutely true. Yeah.
Siegel: $30,000 of public… that's public money.
Gunn: Yeah. $30,000 for APCO for literally a one day session with trainers and an additional $7500 paid to APCO for message development. Now, we have heard from the SBA and they have come out and said, well, this was during a time when we were starting to deal with Katrina and, you know, we were looking to train our staff on ways to adequately respond to, you know, the problems that arose as a result of Katrina. But really what it comes down to it is hard to ignore. It is hard to ignore something like this. It is hard to ignore the activities and the things that the SBA's press office has done. I would agree with everything you just said.
Siegel: Well, if you have that happening, if a federal organization is paying a lot of money to a major firm specializing in crisis management, crisis communication, and they want to deter or deflect investigations of them, that is not operating in he public interest, number #1. So, small businesses can't feel comforted by that, about the SBA. But also, this goes way back before Katrina, does it not? Haven't there been a dozen investigations of the SBA including by the inspector general of the SBA, by the SBA Office of Advocacy as well, where they have taken to task the SBA for these behaviors of giving money to large corporations? Has that not been the case?
Gunn: Yes, that has absolutely been the case. In fact, we have seen 15 federal investigations since 2003, which have found that large corporations are receiving small business contracts and the federal government is taking credit for those contracts. So, I think that you are absolutely right. It is a situation where the federal government as a whole has not taken a role of accountability when it comes to this issue and they have constantly pointed fingers in different directions. I think that the federal governments been chasing its tail around on this issue for so long that, you know, of course they hired this PR firm to help them to further that messaging. You know, to make sure that nothing was going to circle back and come back and bite them. It is unbelievable, it really is. Not only did we uncover this $37,500 of expenditures with APCO, but we also saw egregious spending as a result of this lawsuit in the form of a contract bid that the SBA signed with the White House Writers Group to produce a series of speeches, three speeches, for the administrator of the SBA at the time, Steven Preston. $16,500 for three speeches. So, it seems like an egregious waste of public dollars, tax dollars, American tax dollars. Now, what we should be doing is taking those dollars and seeing what we can do to put those dollars to work for the small business community as opposed to putting them to work building a propaganda machine designed to mislead the public about the diversion of small business contracts to large corporations and widespread fraud and abuse that is being overseen by the SBA.
Siegel: Why is this not being covered more thoroughly by the mainstream media about the SBA and its misuse of those funds?
Gunn: That is a great question. That is a really good question. You know, it is one of those issues that we have asked ourselves. We have certainly raised this question with a number of media outlets across the country and, you know, we have gotten some interest and some raised eyebrows, but when it comes down to it I think that oftentimes small business issues are less intriguing to the mainstream media as they should be. There are 27 million small businesses in the United States. The SBA is designed to serve the interest of those 27 million and yet when the SBA does something like spend $37,500 of American tax dollars on a propaganda machine, it is almost ignored in the media for the most part. It is something that we grapple with on a day-to-day basis.
Siegel: On another matter, and you w ill still be following through with the lawsuits and continue to try to get to the truth about the SBA's mishandling of those funds, is that correct?
Gunn: We certainly will.
Siegel: What is this latest that the Department of Defense is now saying it wants to create its own secret black list to exclude any business they choose arbitrarily from federal contracting programs. Now, the first thing that crosses my mind is that maybe it is companies that may be questionable about their alliances or their affiliations, or maybe they do business with North Korea. I don't know, but something about them that is troubling to the Department of Defense, but if they create a secret list, a black list, and exclude any business they choose arbitrarily without having to explain it, that becomes pretty damaging to the possibility that a small business might be able to get a contract with the Department of Defense.
Gunn: Absolutely. It is zero accountability. It is something that I think the public is largely unaware of and it is something that is nearly a certainty if there wasn't so much turmoil regarding the Defense Reauthorization Act of 2011 with don't ask/don't tell, etc. If those things weren't there, this would be the type of legislation that would be pushed through pretty readily. Had we not brought this to the attention of the public, I think that most people would be pretty much unaware of the fact that, you know, Department of Defense officials could pretty quickly blacklist any company, fail to notify that company, and just simply just cut off their contracting processes.
Siegel: Let's put this in context, if we could. The government has a mandate by law, a law passed by congress, that says 23% of purchases by the federal government must be to small business as defined in the law. It may be that not 23% but maybe 17-19% only is going to small business. If that is true now, that number could be dramatically reduced later if the Department of Defense has this arbitrary power to blacklist any company it wants. Wouldn't that violate, potentially at least, ,the law that is on the books requiring 23% of all federal contracts to go to small business?
Gunn: I think it violates a series of laws, including the Small Business Act. There is potential that this may in fact be unconstitutional. It doesn't seem reasonable that you would essentially… it is a de facto department, if you will. If the federal government or even DOD is given the ability to blacklist a company at their will, there is potential for that blacklist to reflect on that business with other business with other federal agencies. So, I think there is a very real possibility that that could turn into de fact debarments of federal contractors across the federal government's contracting programs. So, not only would it have an adverse effect on, say, the government's adherence to its 23% goal, but it may just put people out of business. It is something that we are incredibly concerned about. One of the questions that we have raised, and I will try to be not as focused as I think I probably could be with this issue, but one of the things I think we have raised is that there are a lot of decenters out there. A lot of people who maybe have problems with the way the federal government buys its goods and services, has problems with the fact that the government isn't hitting its 23% small business goal, and our concern is that they could use this ability to blacklist folks as a deterrent, if you will. There is no accountability. They could blacklists whoever they want regardless of whether or not they were a security risk or not.
Siegel: In other words, if somebody wants to complain about the policy of not fulfilling the 23% of all contracts going to small business, they Department of Defense could turn around and say, look, you w ant to keep your mouth shut or we are going to blacklist you.
Gunn: Exactly.
Siegel: Well, it is a troubling matter, and you see it is very consistent with what is happening at the SBA. That is why the two kind of come together, because at least it seems to me that with the SBA giving substantial funds to large corporations or shell companies that appear to be small but are actually in the umbrella of a large corporation, and then you have the Department of Defense with that ability to blacklist any company, this is going to be inherently damaging to every small business in America, putting those two policies together, because those funds are not going to get to small business. It is almost as if there is an intent to create large corporate entities taking control of the economy at the expense of small business. That is what is scary in the long run.
Gunn: Absolutely. Absolutely. I think it goes as deep as you want to go, it really does. If you were to say, for example, look at the structure of the Department of Defense's contracting. 70% of the government's purchases go through the Department of Defense and 14 companies were involved in this major subcontracting program through DOD, received 1 in 6 dollars the DOD awards. If you crossed one of those companies, who knows what would happen to you. That is one of the serious concerns that we have. No one should have this type of unchecked power over government contracting programs, and small businesses should not be put in the line of fire like that.
Siegel: Well, you have articulated it very well. I appreciate you being on the program as always with these updates and I thank you for that. Hopefully, small business people across the country will take a look at this. Where is your website? I am sure you have this information there as well.
Gunn: It is www.asbl.com and we have got that info right there on the front page.
Siegel: Fantastic. Mr. Gunn, thank you very much. Always a pleasure to talk to you. Have a good one. Boy, t hat is scary stuff for small business, let me tell you. My name is Mike Siegel, good to have you with us at the BOSS Business Brief.