[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 633 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                 S. 633

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 17, 2011

 Ms. Snowe (for herself, Ms. Landrieu, Mr. Brown of Massachusetts, Mr. 
 Merkley, and Mr. Enzi) introduced the following bill; which was read 
       twice and referred to the Committee on Small Business and 
                            Entrepreneurship

_______________________________________________________________________

                                 A BILL


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

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

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

SEC. 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)).

SEC. 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.''.

SEC. 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.--Not later than 1 year after the date 
of enactment of this Act, 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.

SEC. 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.

SEC. 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''.

SEC. 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.
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