THE BLOG
10/19/2009 08:01 pm ET | Updated May 25, 2011

Justice Department Drops Appeal of Federal Court Ruling

The U.S. Department of Justice has dropped its appeal of a ruling by the U.S. District Court for the Northern District of California awarding legal fees to the American Small Business League (ASBL). The case was scheduled to be heard by the 9th Circuit Court of Appeals early next year. (http://www.asbl.com/documents/order_dismissingAppeal_SBA_names.pdf, http://www.asbl.com/documents/motion_dismissAppeal_SBA_Fees.pdf)

Prior to dropping its appeal, the Justice Department offered to drop its appeal of the District Court's ruling for attorney's fees if the ASBL agreed to waive legal fees it incurred during the appellant process. The ASBL declined the Justice Department's offer stating that it preferred to have the case heard by the 9th Circuit Court of Appeals.

The ASBL requested the specific names of the firms that were coded as small businesses for FY 2005 and 2006 and the specific dollar amounts that were awarded to those firms from the U.S. Small Business Administration (SBA). The request was made under the Freedom of Information Act (FOIA).

The SBA refused to comply with the ASBL's request for the data. During litigation, the SBA claimed that it had no information in its possession regarding the specific names of firms that had received federal small business contracts.

In the court's ruling, United States District Judge Marilyn H. Patel stated, "The court finds it curious the SBA's argument that it does not 'control' the very information it needs to carry out its duties and functions." (www.asbl.com/documents/26-2.pdf)

As a result of Patel's ruling, the SBA was ordered to turn over the requested information and pay all of the legal fees incurred by the ASBL during the initial litigation process. The information the ASBL finally obtained indicated that the SBA, the General Services Administration (GSA) and virtually every other federal agency diverted billions of dollars in federal small business contracts to Fortune 500 firms and dozens of large businesses in Europe and Asia. (http://www.asbl.com/documents/20090825TopSmallBusinessContractors2008.pdf)

Some of the firms that received federal small business contracts included Boeing, Lockheed Martin, Northrop Grumman, Raytheon, General Dynamics, GTSI, Rolls-Royce, Dell Computer, Thales Communications, and British Aerospace (BAE).

The ASBL has estimated that legitimate small businesses are losing over $100 billion a year in federal small business contracts to corporate giants.

The ASBL drafted legislation titled, the Fairness and Transparency in Contracting Act, or H.R. 2568, which would halt the flow of federal small business contracts to large businesses. On May 21, 2009, Congressman Hank Johnson (D-GA-4) introduced the bill into the U.S. House of Representatives. To date, the bill has 15 co-sponsors and has been endorsed by more than 50 chambers of commerce and business organizations around the country.