Bipartisan Bill Aims to Protect Small Businesses from Fraud in Federal Contract Procurement Process
WASHINGTON, DC – U.S. Senators Gary Peters (D-MI) and Susan Collins (R-ME) announced they will be introducing bipartisan legislation to help protect small businesses from falling victim to fraud when they register to procure federal contracts. The Procurement Fraud Prevention Act would require small businesses to be notified that free assistance is available for help in procuring federal contracts through federal programs, including Procurement Technical Assistance Centers (PTACs), the Small Business Administration (SBA), and the Minority Business Development Agency (MBDA). Many business owners are unaware these resources exist and fall victim to scams that mislead them into paying high sums of money for contract procurement assistance.
“From defense and auto parts manufacturing to construction and even catering, Michigan small businesses provide a wide variety of goods and services to the federal government while creating jobs in their local communities,” said Senator Peters. “It is important business owners are equipped with tools and knowledge to protect their companies against scams while taking advantage of new business opportunities. I’m pleased to join Senator Collins in introducing this commonsense, bipartisan bill to better educate small businesses about existing, free federal resources so they can spend their hard-earned money reinvesting in their businesses and creating more jobs.”
“The goods and services provided by the private sector are critically important to the federal government’s operations,” said Senator Collins. “Unfortunately, the procurement process can be complex and difficult to navigate, which can deter small businesses from competing for contracts or lead them to hire unnecessary and expensive consultants. Our legislation would ensure that more small businesses are aware of the free tools and resources already available to them so they can focus on making competitive bids, growing their companies, and creating jobs in their communities.”
All small businesses applying for federal contracting opportunities must register in the General Services Administration’s (GSA) System for Award Management (SAM). Unfortunately, bad actors disguised as vendors or government officials obtain businesses’ contact from this public database and email business owners directly after they have registered asking for high sums of money in return for registration and contracting assistance. Some scammers even impersonate government officials in order to mislead businesses into paying for these services. As a result, many small businesses unwittingly sign up for services they were not seeking at the cost of hundreds or thousands of dollars. While various firms provide legitimate contracting assistance, bad actors intentionally use predatory tactics to drain money from small businesses.
The Procurement Fraud Prevention Act requires GSA and Office of Management and Budget (OMB) to ensure that any direct communication to a small business about its registration in a procurement system, including SAM, contains information about cost-free federal procurement technical assistance services available through PTACs, SBA, MBDA, and other programs. These services are readily available through federal, local, and private investment to help small businesses succeed.
PTACs across the country regularly report small businesses coming to them after these fraudulent encounters, seeking corrective action, with some PTACs reporting up to 10 fraudulent solicitations per week. Michigan is home to 10 PTACs and over 850,000 small businesses that account for half of the state’s private workforce.
“The nation’s small businesses are being exploited by fraudulent operators who mislead federal contracting newcomers into believing that they must pay exorbitant registration fees in order to be eligible for government contracts,” said Terri Bennett, president of the Association of Procurement Technical Assistance Centers (APTAC). “The legislation introduced by Senator Gary Peters and Senator Susan Collins will require federal agencies to be proactive in notifying small businesses that the help they need is available at no cost through programs like the nationwide network of Procurement Technical Assistance Centers (PTACs). This should go a long way to stop the exploitation of small businesses.”
“Small businesses would benefit greatly from the Procurement Fraud Prevention Act,” said John Arensmeyer, Founder & CEO of Small Business Majority. “Many small businesses are falling victim to scams after they register with the System for Award Management to compete for a contract because they do not realize they are entitled to free registration and procurement assistance through existing federal programs. Small business owners have enough to worry about without scammers making them think they need to pay additional fees to compete, and we encourage lawmakers to approve the Procurement Fraud Prevention Act in order to make the federal contract procurement process as painless as possible for small firms.”