S. 633 (112th): Small Business Contracting Fraud Prevention Act of 2011

112th Congress, 2011–2013. Text as of Sep 22, 2011 (Referred to House Committee).

Status & Summary | PDF | Source: GPO

I

112th CONGRESS

1st Session

S. 633

IN THE HOUSE OF REPRESENTATIVES

September 22, 2011

Referred to the Committee on Small Business

AN ACT

To prevent fraud in small business contracting, and for other purposes.

1.

Short title

This Act may be cited as the Small Business Contracting Fraud Prevention Act of 2011.

2.

Definitions

In this Act—

(1)

the term 8(a) program means the program under section 8(a) of the Small Business Act (15 U.S.C. 637(a));

(2)

the terms Administration and Administrator mean the Small Business Administration and the Administrator thereof, respectively;

(3)

the terms HUBZone and HUBZone small business concern and HUBZone map have the meanings given those terms in section 3(p) of the Small Business Act (15 U.S.C. 632(p)), as amended by this Act; and

(4)

the term recertification means a determination by the Administrator that a business concern that was previously determined to be a qualified HUBZone small business concern is a qualified HUBZone small business concern under section 3(p)(5) of the Small Business Act (15 U.S.C. 632(p)(5)).

3.

Fraud deterrence at the Small Business Administration

Section 16 of the Small Business Act (15 U.S.C. 645) is amended—

(1)

in subsection (d)—

(A)

in paragraph (1)—

(i)

in the matter preceding subparagraph (A), by striking Whoever and all that follows through oneself or another and inserting the following: A person shall be subject to the penalties and remedies described in paragraph (2) if the person misrepresents the status of any concern or person as a small business concern, a qualified HUBZone small business concern, a small business concern owned and controlled by socially and economically disadvantaged individuals, a small business concern owned and controlled by women, or a small business concern owned and controlled by service-disabled veterans, in order to obtain for any person;

(ii)

by amending subparagraph (A) to read as follows:

(A)

prime contract, subcontract, grant, or cooperative agreement to be awarded under subsection (a) or (m) of section 8, or section 9, 15, 31, or 36;

;

(iii)

by striking subparagraph (B);

(iv)

by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively; and

(v)

in subparagraph (C), as so redesignated, by striking , shall be and all that follows and inserting a period;

(B)

in paragraph (2)—

(i)

by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively; and

(ii)

by inserting after subparagraph (B) the following:

(C)

be subject to the civil remedies under subchapter III of chapter 37 of title 31, United States Code (commonly known as the False Claims Act);

; and

(C)

by adding at the end the following:

(3)
(A)

In the case of a violation of paragraph (1)(A), (g), or (h), for purposes of a proceeding described in subparagraph (A) or (C) of paragraph (2), the amount of the loss to the Federal Government or the damages sustained by the Federal Government, as applicable, shall be an amount equal to the amount that the Federal Government paid to the person that received a contract, grant, or cooperative agreement described in paragraph (1)(A), (g), or (h), respectively.

(B)

In the case of a violation of subparagraph (B) or (C) of paragraph (1), for the purpose of a proceeding described in subparagraph (A) or (C) of paragraph (2), the amount of the loss to the Federal Government or the damages sustained by the Federal Government, as applicable, shall be an amount equal to the portion of any payment by the Federal Government under a prime contract that was used for a subcontract described in subparagraph (B) or (C) of paragraph (1), respectively.

(C)

In a proceeding described in subparagraph (A) or (B), no credit shall be applied against any loss or damages to the Federal Government for the fair market value of the property or services provided to the Federal Government.

;

(2)

by striking subsection (e) and inserting the following:

(e)

Any representation of the status of any concern or person as a small business concern, a HUBZone small business concern, a small business concern owned and controlled by socially and economically disadvantaged individuals, a small business concern owned and controlled by women, or a small business concern owned and controlled by service-disabled veterans, in order to obtain any prime contract, subcontract, grant, or cooperative agreement described in subsection (d)(1) shall be made in writing or through the Online Representations and Certifications Application process required under section 4.1201 of the Federal Acquisition Regulation, or any successor thereto.

; and

(3)

by adding at the end the following:

(g)

A person shall be subject to the penalties and remedies described in subsection (d)(2) if the person misrepresents the status of any concern or person as a small business concern, a qualified HUBZone small business concern, a small business concern owned and controlled by socially and economically disadvantaged individuals, a small business concern owned and controlled by women, or a small business concern owned and controlled by service-disabled veterans—

(1)

in order to allow any person to participate in any program of the Administration; or

(2)

in relation to a protest of a contract award or proposed contract award made under regulations issued by the Administration.

(h)
(1)

A person that submits a request for payment on a contract or subcontract that is awarded under subsection (a) or (m) of section 8, or section 9, 15, 31, or 36, shall be deemed to have submitted a certification that the person complied with regulations issued by the Administration governing the percentage of work that the person is required to perform on the contract or subcontract, unless the person states, in writing, that the person did not comply with the regulations.

(2)

A person shall be subject to the penalties and remedies described in subsection (d)(2) if the person—

(A)

uses the services of a business other than the business awarded the contract or subcontract to perform a greater percentage of work under a contract than is permitted by regulations issued by the Administration; or

(B)

willfully participates in a scheme to circumvent regulations issued by the Administration governing the percentage of work that a contractor is required to perform on a contract.

.

4.

Veterans integrity in contracting

(a)

Definition

Section 3(q)(1) of the Small Business Act (15 U.S.C. 632(q)(1)) is amended by striking means a veteran and all that follows and inserting the following: “means—

(A)

a veteran with a service-connected disability rated by the Secretary of Veterans Affairs as zero percent or more disabling; or

(B)

a former member of the Armed Forces who is retired, separated, or placed on the temporary disability retired list for physical disability under chapter 61 of title 10, United States Code.

.

(b)

Veterans contracting

Section 4 of the Small Business Act (15 U.S.C. 633) is amended by adding at the end the following:

(g)

Veteran status

(1)

In general

A business concern seeking status as a small business concern owned and controlled by service-disabled veterans shall—

(A)

submit an annual certification indicating that the business concern is a small business concern owned and controlled by service-disabled veterans by means of the Online Representations and Certifications Application process required under section 4.1201 of the Federal Acquisition Regulation, or any successor thereto; and

(B)

register with—

(i)

the Central Contractor Registration database maintained under subpart 4.11 of the Federal Acquisition Regulation, or any successor thereto; and

(ii)

the VetBiz database of the Department of Veterans Affairs, or any successor thereto.

(2)

Verification of status

(A)

Veterans Affairs

The Secretary of Veterans Affairs shall determine whether a business concern registered with the VetBiz database of the Department of Veterans Affairs, or any successor thereto, as a small business concern owned and controlled by veterans or a small business concern owned and controlled by service-disabled veterans is owned and controlled by a veteran or a service-disabled veteran, as the case may be.

(B)

Federal agencies generally

The head of each Federal agency shall—

(i)

for a sole source contract awarded to a small business concern owned and controlled by service-disabled veterans or a contract awarded with competition restricted to small business concerns owned and controlled by service-disabled veterans under section 36, determine whether a business concern submitting a proposal for the contract is a small business concern owned and controlled by service-disabled veterans; and

(ii)

use the VetBiz database of the Department of Veterans Affairs, or any successor thereto, in determining whether a business concern is a small business concern owned and controlled by service-disabled veterans.

(3)

Debarment and suspension

If the Administrator determines that a business concern knowingly and willfully misrepresented that the business concern is a small business concern owned and controlled by service-disabled veterans, the Administrator may debar or suspend the business concern from contracting with the United States.

.

(c)

Integration of databases

The Administrator for Federal Procurement Policy and the Secretary of Veterans Affairs shall ensure that data is shared on an ongoing basis between the VetBiz database of the Department of Veterans Affairs and the Central Contractor Registration database maintained under subpart 4.11 of the Federal Acquisition Regulation.

(d)

Effective date

(1)

In general

The amendment made by subsection (b) and the requirements under subsection (c) shall take effect on the date on which the Secretary of Veterans Affairs (referred to in this subsection as the Secretary) publishes in the Federal Register a determination that the Department of Veterans Affairs has the necessary resources and capacity to carry out the additional responsibility of determining whether small business concerns registered with the VetBiz database of the Department of Veterans Affairs are owned and controlled by a veteran or a service-disabled veteran, as the case may be, in accordance with subsection (g) of section 4 of the Small Business Act (15 U.S.C. 633), as added by subsection (b).

(2)

Timeline

If the Secretary determines that the Secretary is not able to publish the determination under paragraph (1) before the date that is 1 year after the date of enactment of this Act, the Secretary shall, not later than 1 year after the date of enactment of this Act, submit a report containing an estimate of the date on which the Secretary will publish the determination under paragraph (1) to the Committee on Small Business and Entrepreneurship and the Committee on Veterans’ Affairs of the Senate and the Committee on Small Business and the Committee on Veterans’ Affairs of the House of Representatives.

5.

Section 8(a) program improvements

(a)

Review of effectiveness

Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) is amended by adding at the end the following:

(22)

Not later than 3 years after the date of enactment of this paragraph, and every 3 years thereafter, the Comptroller General of the United States shall—

(A)

conduct an evaluation of the effectiveness of the program under this subsection, including an examination of—

(i)

the number and size of contracts applied for, as compared to the number received by, small business concerns after successfully completing the program;

(ii)

the percentage of small business concerns that continue to operate during the 3-year period beginning on the date on which the small business concerns successfully complete the program;

(iii)

whether the business of small business concerns increases during the 3-year period beginning on the date on which the small business concerns successfully complete the program; and

(iv)

the number of training sessions offered under the program; and

(B)

submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report regarding each evaluation under subparagraph (A).

.

(b)

Other improvements

In order to improve the 8(a) program, the Administrator shall—

(1)

not later than 90 days after the date of enactment of this Act, begin to—

(A)

evaluate the feasibility of—

(i)

using additional third-party data sources;

(ii)

making unannounced visits of sites that are selected randomly or using risk-based criteria;

(iii)

using fraud detection tools, including data-mining techniques; and

(iv)

conducting financial and analytical training for the business opportunity specialists of the Administration;

(B)

evaluate the feasibility and advisability of amending regulations applicable the 8(a) program to require that calculations of the adjusted net worth or total assets of an individual include assets held by the spouse of the individual; and

(C)

develop a more consistent enforcement strategy that includes the suspension or debarment of contractors that knowingly make misrepresentations in order to qualify for the 8(a) program; and

(2)

not later than 1 year after the date on which the Comptroller General submits the report under section 8(a)(22)(B) of the Small Business Act, as added by subsection (c), issue, in final form, proposed regulations of the Administration that—

(A)

determine the economic disadvantage of a participant in the 8(a) program based on the income and asset levels of the participant at the time of application and annual recertification for the 8(a) program; and

(B)

limit the ability of a small business concern to participate in the 8(a) program if an immediate family member of an owner of the small business concern is, or has been, a participant in the 8(a) program, in the same industry.

6.

HUBZone improvements

(a)

Purpose

The purpose of this section is to reform and improve the HUBZone program of the Administration.

(b)

In general

The Administrator shall—

(1)

ensure the HUBZone map is—

(A)

accurate and up-to-date; and

(B)

revised as new data is made available to maintain the accuracy and currency of the HUBZone map;

(2)

implement policies for ensuring that only HUBZone small business concerns determined to be qualified under section 3(p)(5) of the Small Business Act (15 U.S.C. 632(p)(5)) are participating in the HUBZone program, including through the appropriate use of technology to control costs and maximize, among other benefits, uniformity, completeness, simplicity, and efficiency;

(3)

submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report regarding any application to be designated as a HUBZone small business concern or for recertification for which the Administrator has not made a determination as of the date that is 60 days after the date on which the application was submitted or initiated, which shall include a plan and timetable for ensuring the timely processing of the applications; and

(4)

develop measures and implement plans to assess the effectiveness of the HUBZone program that—

(A)

require the identification of a baseline point in time to allow the assessment of economic development under the HUBZone program, including creating additional jobs; and

(B)

take into account—

(i)

the economic characteristics of the HUBZone; and

(ii)

contracts being counted under multiple socioeconomic subcategories.

(c)

Employment percentage

Section 3(p) of the Small Business Act (15 U.S.C. 632(p)) is amended—

(1)

in paragraph (5), by adding at the end the following:

(E)

Employment percentage during interim period

(i)

Definition

In this subparagraph, the term interim period means the period beginning on the date on which the Administrator determines that a HUBZone small business concern is qualified under subparagraph (A) and ending on the day before the date on which a contract under the HUBZone program for which the HUBZone small business concern submits a bid is awarded.

(ii)

Interim period

During the interim period, the Administrator may not determine that the HUBZone small business is not qualified under subparagraph (A) based on a failure to meet the applicable employment percentage under subparagraph (A)(i)(I), unless the HUBZone small business concern—

(I)

has not attempted to maintain the applicable employment percentage under subparagraph (A)(i)(I); or

(II)

does not meet the applicable employment percentage—

(aa)

on the date on which the HUBZone small business concern submits a bid for a contract under the HUBZone program; or

(bb)

on the date on which the HUBZone small business concern is awarded a contract under the HUBZone program.

; and

(2)

by adding at the end the following:

(8)

HUBZone program

The term HUBZone program means the program established under section 31.

(9)

HUBZone map

The term HUBZone map means the map used by the Administration to identify HUBZones.

.

(d)

Redesignated areas

Section 3(p)(4)(C)(i) of the Small Business Act (15 U.S.C. 632(p)(4)(C)(i)) is amended to read as follows:

(i)

3 years after the first date on which the Administrator publishes a HUBZone map that is based on the results from the 2010 decennial census; or

.

7.

Annual report on suspension, debarment, and prosecution

The Administrator shall submit an annual report to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives that contains—

(1)

the number of debarments from participation in programs of the Administration issued by the Administrator during the 1-year period preceding the date of the report, including—

(A)

the number of debarments that were based on a conviction; and

(B)

the number of debarments that were fact-based and did not involve a conviction;

(2)

the number of suspensions from participation in programs of the Administration issued by the Administrator during the 1-year period preceding the date of the report, including—

(A)

the number of suspensions issued that were based upon indictments; and

(B)

the number of suspensions issued that were fact-based and did not involve an indictment;

(3)

the number of suspension and debarments issued by the Administrator during the 1-year period preceding the date of the report that were based upon referrals from offices of the Administration, other than the Office of Inspector General;

(4)

the number of suspension and debarments issued by the Administrator during the 1-year period preceding the date of the report based upon referrals from the Office of Inspector General; and

(5)

the number of persons that the Administrator declined to debar or suspend after a referral described in paragraph (8), and the reason for each such decision.

Passed the Senate September 21, 2011.

Nancy Erickson,

Secretary