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Key Test of High Court Ruling

SAN FRANCISCO–(BUSINESS WIRE)–The American Small Business League (“ASBL”) announced Wednesday that a federal judge in San Francisco has ordered the Department of Defense to disclose key records shedding light on whether big defense contractors like Lockheed Martin complied with laws requiring them to subcontract to small businesses. The case was one of the first tests of a recent Supreme Court ruling.

The November 24 ruling by U.S. District Judge William Alsup, in a Freedom of Information Act lawsuit brought by ASBL, forces the Pentagon to turn over evaluations of whether Lockheed and its subsidiary Sikorsky complied with small business subcontracting goals. At an earlier stage of the case, government documents disclosed that there was a “huge gap” between Sikorsky’s small business subcontracting goals and its subcontracting performance. A document released this year during the case showed that the government once recommended “probation” for Sikorsky if it did not increase its small business subcontracting goals and performance.

ASBL President Lloyd Chapman said his group was pleased with the ruling. “The prime contractors haven’t complied with the Small Business Act for decades. Small businesses create 98 percent of net new jobs in America. The public needs to know if they’re getting the share of Pentagon dollars that they deserve and that Congress intended when it passed the Small Business Act. Small businesses are being cheated out of defense dollars,” he said, citing a 2015 Pentagon study which showed that under the Comprehensive Subcontracting Plan “Test Program,” subcontracts to small businesses had been cut in half, from 46 percent in 1995 to 24 percent in 2014.

Judge Alsup ordered the Pentagon to release documents showing that a Lockheed report was “considered not accurate,” that its suppliers were “not validating their size at time of award,” and that a small business goal was “not met” because the company “failed to meet the SB goal” by a certain percentage.

The Court’s decision was mixed. The judge said Lockheed could withhold some documents under a new Supreme Court ruling which changed the standard governing when corporate documents can be kept confidential under the Freedom of Information Act. Judge Alsup, however, said he was “sympathetic” to ASBL and its “steep uphill battle” under the new Supreme Court standard, noting that in 25 years as a lawyer and 20 years as a judge, he had learned “how prolifically companies claim confidentiality, including over documents that, once scrutinized, contain standard fare blather and even publicly available information.”

Contacts

Karl Olson and Aaron Field

Attorneys for American Small Business League

Cannata, O’Toole, Fickes & Olson LLP

(415) 409-8900

Lloyd Chapman

American Small Business League

(415) 215-6281