[Congressional Record Volume 147, Number 24 (Tuesday, February 27, 2001)]
[Senate]
[Pages S1620-S1623]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BOND (for himself and Mr. Kerry):
  S. 395. A bill to ensure the independence and nonpartisan operation 
of the

[[Page S1621]]

Office of Advocacy of the Small Business Administration; to the 
Committee on Small Business.
  Mr. BOND. Mr. President, I rise in support of the Independent Office 
of Advocacy Act of 2001. This bill is designed to build on the success 
achieved by the Office of Advocacy over the past 24 years. It is 
intended to strengthen that foundation to make the Office of Advocacy a 
stronger, more effective advocate for all small businesses throughout 
the United States. This bill was approved unanimously by the Senate 
during the 106th Congress; however, it was not taken up in the House of 
Representatives prior to the adjournment last month. It is my 
understanding the House Committee on Small Business under its new 
chairman, Don Manzullo, is likely to act on similar legislation this 
year.
  The Office of Advocacy is a unique office within the Federal 
Government. It is part of the Small Business Administration, SBA/
Agency, and its director, the Chief Counsel for Advocacy, is nominated 
by the President and confirmed by the Senate. At the same time, the 
Office is also intended to be the independent voice for small business 
within the Federal Government. It is supposed to develop proposals for 
changing government policies to help small businesses, and it is 
supposed to represent the views and interests of small businesses 
before other Federal agencies.
  As the director of the Office of Advocacy, the Chief Counsel for 
Advocacy has a dual responsibility. On the one hand, he is the 
independent watchdog for small business. On the other hand, he is also 
a part of the President's administration. As you can imagine, those are 
sometimes difficult roles to play simultaneously.
  The Independent Office of Advocacy Act of 2001 would make the Office 
of Advocacy and the Chief Counsel for Advocacy a fully independent 
advocate within the executive branch acting on behalf of the small 
business community. The bill would establish a clear mandate that the 
Office of Advocacy will fight on behalf of small businesses regardless 
of the position taken on critical issues by the President and his 
administration.
  The Independent Office of Advocacy Act of 2001 would direct the Chief 
Counsel to submit an annual report on Federal agency compliance with 
the Regulatory Flexibility Act to the President and the Senate and 
House Committees on Small Business. The Reg Flex Act is a very 
important weapon in the war against the over-regulation of small 
businesses. When the Senate first debated this bill in the 106th 
Congress, I offered an amendment at the request of Senator Fred 
Thompson, chairman of the Government Affairs Committee, that would 
direct the Chief Counsel for Advocacy to send a copy of the report to 
the Senate Government Affairs Committee. In addition, my amendment also 
required that copies of the report be sent to the House Committee on 
Government Reform and the House and Senate Committees on the Judiciary. 
I believe these changes make good sense for each of the committees to 
receive this report on Reg Flex compliance, and I have included them in 
the version of the bill being introduced and debated today.
  The Office of Advocacy as envisioned by the Independent Office of 
Advocacy Act 2001 would be unique within the executive branch. The 
Chief Counsel for Advocacy would be a wide-ranging advocate, who would 
be free to take positions contrary to the administration's policies and 
to advocate change in government programs and attitudes as they impact 
small businesses. During its consideration of the bill in 1999, the 
Committee on Small Business adopted unanimously an amendment I offered, 
which was cosponsored by Senator John Kerry, the committee's ranking 
Democrat, to require the Chief Counsel to be appointed ``from civilian 
life.'' This qualification is intended to emphasize that the person 
nominated to serve in this important role should have a strong small 
business background.
  In 1976, Congress established the Office of Advocacy in the SBA to be 
the eyes, ears and voice for small business within the Federal 
Government. Over time, it has been assumed that the Office of Advocacy 
is the ``independent'' voice for small business. While I strongly 
believe that the Office of Advocacy and the Chief Counsel should be 
independent and free to advocate or support positions that might be 
contrary to the administration's policies, I have come to find that the 
Office has not been as independent as necessary to do the job for small 
business.
  For example, funding for the Office of Advocacy comes from the 
salaries and expense account of the SBA's budget. Staffing is allocated 
by the SBA Administrator to the Office of Advocacy from the overall 
staff allocation for the Agency. In 1990, there were 70 full-time 
employees working on behalf of small businesses in the Office of 
Advocacy. Today's allocation of staff is 49, and fewer are actually on-
board as the result of the longstanding hiring freeze at the SBA. The 
independence of the Office is diminished when the Office of Advocacy 
staff is reduced to allow for increased staffing for new programs and 
additional initiatives in other areas of SBA, at the discretion of the 
Administrator.
  In addition, the General Accounting Office, GAO, undertook a report 
for me on personnel practices at the SBA, GAO/GGD-99-68. I was alarmed 
by the GAO's finding that during the past eight years, the Assistant 
Advocates and Regional Advocates hired by the Office of Advocacy shared 
many of the attributes of schedule C political appointees. In fact 
Regional Advocates are frequently cleared by the White House personnel 
office--the same procedure followed for approving Schedule C political 
appointees.

  The facts discussed in the GAO report cast the Office of Advocacy in 
a whole new light. The report raised questions, concerns and suspicions 
regarding the independence of the Office of Advocacy. Has there been a 
time when the Office did not pursue a matter as vigorously as it might 
have were it not for direct or indirect political influence? Prior to 
receipt of the GAO Report, my response was a resounding ``No.'' But 
since receipt of the GAO report, a question mark arises.
  Let me take a moment and note that I will be unrelenting in my 
efforts to insure the complete independence of the Office of Advocacy 
in all matters, at all times, for the continued benefit of all small 
businesses. However, so long as the administration controls the budget 
allocated to the Office of Advocacy and controls who is hired, the 
independence of the Office may be in jeopardy. We must correct this 
situation, and the sooner we do it, the better it will be for the small 
business community. As our government is changing over to President 
Bush's administration, this would be a opportune time to establish, 
once and for all, the actual independence of the Office of Advocacy.
  The Independent Office of Advocacy Act of 2001 builds a firewall to 
prevent the political intrusion into the management of day-to-day 
operations of the Office of Advocacy. The bill would require that the 
SBA's budget include a separate account for the Office of Advocacy. No 
longer would its funds come from the general operating account of the 
Agency. The separate account would also provide for the number of full-
time employees who would work within the Office of Advocacy. No longer 
would the Chief Counsel for Advocacy have to seek approval from the SBA 
Administrator to hire staff for the Office of Advocacy.
  The bill would also continue the practice of allowing the Chief 
Counsel to hire individuals critical to the mission of the Office of 
Advocacy without going through the normal competitive procedures 
directed by federal law and the Office of Personnel Management, (OPM). 
I believe this special hiring authority, which is limited only to 
employees within the Office of Advocacy, is beneficial because it 
allows the Chief Council to hire quickly those persons who can best 
asset the Office in responding to changing issues and problems 
confronting small businesses.
  Mr. President, the Independent Office of Advocacy Act is a sound 
bill. It is the product of a great deal of thoughtful, objective review 
and consideration by me, the staff of the Committee on Small Business, 
representatives of the small business community, former Chief Counsels 
for Advocacy and others. These individuals have also devoted much time 
and effort in actively participating in a committee roundtable 
discussion on the Office of Advocacy, which my committee held on April 
21, 1999. As I stated earlier, the

[[Page S1622]]

Committee on Small Business approved this bill by a unanimous 17-0 
vote, and it was later approved unanimously by the Senate. I urge each 
of my colleagues to review this legislation closely.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 395

       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 ``Independent Office of 
     Advocacy Act of 2001''.

     SEC. 2. FINDINGS.

       The Congress finds that--
       (1) excessive regulations continue to burden United States 
     small businesses;
       (2) Federal agencies are reluctant to comply with the 
     requirements of chapter 6 of title 5, United States Code, and 
     continue to propose regulations that impose disproportionate 
     burdens on small businesses;
       (3) the Office of Advocacy of the Small Business 
     Administration (referred to in this Act as the ``Office'') is 
     an effective advocate for small businesses that can help to 
     ensure that agencies are responsive to small businesses and 
     that agencies comply with their statutory obligations under 
     chapter 6 of title 5, United States Code, and under the Small 
     Business Regulatory Enforcement Fairness Act of 1996 (Public 
     Law 104-121; 106 Stat. 4249 et seq.);
       (4) the independence of the Office is essential to ensure 
     that it can serve as an effective advocate for small 
     businesses without being restricted by the views or policies 
     of the Small Business Administration or any other executive 
     branch agency;
       (5) the Office needs sufficient resources to conduct the 
     research required to assess effectively the impact of 
     regulations on small businesses; and
       (6) the research, information, and expertise of the Office 
     make it a valuable adviser to Congress as well as the 
     executive branch agencies with which the Office works on 
     behalf of small businesses.

     SEC. 3. PURPOSES.

       The purposes of this Act are--
       (1) to ensure that the Office has the statutory 
     independence and adequate financial resources to advocate for 
     and on behalf of small business;
       (2) to require that the Office report to the Chairmen and 
     Ranking Members of the Committees on Small Business of the 
     Senate and the House of Representatives and the Administrator 
     of the Small Business Administration in order to keep them 
     fully and currently informed about issues and regulations 
     affecting small businesses and the necessity for corrective 
     action by the regulatory agency or the Congress;
       (3) to provide a separate authorization for appropriations 
     for the Office;
       (4) to authorize the Office to report to the President and 
     to the Congress regarding agency compliance with chapter 6 of 
     title 5, United States Code; and
       (5) to enhance the role of the Office pursuant to chapter 6 
     of title 5, United States Code.

     SEC. 4. OFFICE OF ADVOCACY.

       (a) In General.--Title II of Public Law 94-305 (15 U.S.C. 
     634a et seq.) is amended by striking sections 201 through 203 
     and inserting the following:

     ``SEC. 201. SHORT TITLE.

       ``This title may be cited as the `Office of Advocacy Act'.

     ``SEC. 202. DEFINITIONS.

       ``In this title--
       ``(1) the term `Administration' means the Small Business 
     Administration;
       ``(2) the term `Administrator' means the Administrator of 
     the Small Business Administration;
       ``(3) the term `Chief Counsel' means the Chief Counsel for 
     Advocacy appointed under section 203; and
       ``(4) the term `Office' means the Office of Advocacy 
     established under section 203.

     ``SEC. 203. ESTABLISHMENT OF OFFICE OF ADVOCACY.

       ``(a) Establishment.--
       ``(1) In general.--There is established in the 
     Administration an Office of Advocacy.
       ``(2) Appropriation requests.--Each appropriation request 
     prepared and submitted by the Administration under section 
     1108 of title 31, United States Code, shall include a 
     separate request relating to the Office.
       ``(b) Chief Counsel for Advocacy.--
       ``(1) In general.--The management of the Office shall be 
     vested in a Chief Counsel for Advocacy, who shall be 
     appointed from civilian life by the President, by and with 
     the advice and consent of the Senate, without regard to 
     political affiliation and solely on the ground of fitness to 
     perform the duties of the office.
       ``(2) Employment restriction.--The individual appointed to 
     the office of Chief Counsel may not serve as an officer or 
     employee of the Administration during the 5-year period 
     preceding the date of appointment.
       ``(3) Removal.--The Chief Counsel may be removed from 
     office by the President, and the President shall notify the 
     Congress of any such removal not later than 30 days before 
     the date of the removal, except that 30-day prior notice 
     shall not be required in the case of misconduct, neglect of 
     duty, malfeasance, or if there is reasonable cause to believe 
     that the Chief Counsel has committed a crime for which a 
     sentence of imprisonment can be imposed.
       ``(c) Primary Functions.--The Office shall--
       ``(1) examine the role of small business concerns in the 
     economy of the United States and the contribution that small 
     business concerns can make in improving competition, 
     encouraging economic and social mobility for all citizens, 
     restraining inflation, spurring production, expanding 
     employment opportunities, increasing productivity, promoting 
     exports, stimulating innovation and entrepreneurship, and 
     providing the means by which new and untested products and 
     services can be brought to the marketplace;
       ``(2) assess the effectiveness of Federal subsidy and 
     assistance programs for small business concerns and the 
     desirability of reducing the emphasis on those programs and 
     increasing the emphasis on general assistance programs 
     designed to benefit all small business concerns;
       ``(3) measure the direct costs and other effects of 
     government regulation of small business concerns, and make 
     legislative, regulatory, and nonlegislative proposals for 
     eliminating the excessive or unnecessary regulation of small 
     business concerns;
       ``(4) determine the impact of the tax structure on small 
     business concerns and make legislative, regulatory, and other 
     proposals for altering the tax structure to enable all small 
     business concerns to realize their potential for contributing 
     to the improvement of the Nation's economic well-being;
       ``(5) study the ability of financial markets and 
     institutions to meet small business credit needs and 
     determine the impact of government demands on credit for 
     small business concerns;
       ``(6) determine financial resource availability and 
     recommend, with respect to small business concerns, methods 
     for--
       ``(A) delivery of financial assistance to minority and 
     women-owned enterprises, including methods for securing 
     equity capital;
       ``(B) generating markets for goods and services;
       ``(C) providing effective business education, more 
     effective management and technical assistance, and training; 
     and
       ``(D) assistance in complying with Federal, State, and 
     local laws;
       ``(7) evaluate the efforts of Federal agencies and the 
     private sector to assist minority and women-owned small 
     business concerns;
       ``(8) make such recommendations as may be appropriate to 
     assist the development and strengthening of minority, women-
     owned, and other small business concerns;
       ``(9) recommend specific measures for creating an 
     environment in which all businesses will have the 
     opportunity--
       ``(A) to compete effectively and expand to their full 
     potential; and
       ``(B) to ascertain any common reasons for small business 
     successes and failures;
       ``(10) to determine the desirability of developing a set of 
     rational, objective criteria to be used to define small 
     business, and to develop such criteria, if appropriate;
       ``(11) make recommendations and submit reports to the 
     Chairmen and Ranking Members of the Committees on Small 
     Business of the Senate and the House of Representatives and 
     the Administrator with respect to issues and regulations 
     affecting small business concerns and the necessity for 
     corrective action by the Administrator, any Federal 
     department or agency, or the Congress; and
       ``(12) evaluate the efforts of each department and agency 
     of the United States, and of private industry, to assist 
     small business concerns owned and controlled by veterans, as 
     defined in section 3(q) of the Small Business Act (15 U.S.C. 
     632(q)), and small business concerns owned and controlled by 
     serviced-disabled veterans, as defined in such section 3(q), 
     and to provide statistical information on the utilization of 
     such programs by such small business concerns, and to make 
     appropriate recommendations to the Administrator and to the 
     Congress in order to promote the establishment and growth of 
     those small business concerns.
       ``(d) Additional Functions.--The Office shall, on a 
     continuing basis--
       ``(1) serve as a focal point for the receipt of complaints, 
     criticisms, and suggestions concerning the policies and 
     activities of the Administration and any other department or 
     agency of the Federal Government that affects small business 
     concerns;
       ``(2) counsel small business concerns on the means by which 
     to resolve questions and problems concerning the relationship 
     between small business and the Federal Government;
       ``(3) develop proposals for changes in the policies and 
     activities of any agency of the Federal Government that will 
     better fulfill the purposes of this title and communicate 
     such proposals to the appropriate Federal agencies;
       ``(4) represent the views and interests of small business 
     concerns before other Federal agencies whose policies and 
     activities may affect small business;
       ``(5) enlist the cooperation and assistance of public and 
     private agencies, businesses, and other organizations in 
     disseminating information about the programs and services 
     provided by the Federal Government that are of benefit to 
     small business concerns, and information on the means by 
     which small

[[Page S1623]]

     business concerns can participate in or make use of such 
     programs and services; and
       ``(6) carry out the responsibilities of the Office under 
     chapter 6 of title 5, United States Code.
       ``(e) Overhead and Administrative Support.--The 
     Administrator shall provide the Office with appropriate and 
     adequate office space at central and field office locations 
     of the Administration, together with such equipment, office 
     supplies, and communications facilities and services as may 
     be necessary for the operation of such offices, and shall 
     provide necessary maintenance services for such offices and 
     the equipment and facilities located therein.''.
       (b) Reports to Congress.--Title II of Public Law 94-305 (15 
     U.S.C. 634a et seq.) is amended by striking section 206 and 
     inserting the following:

     ``SEC. 206. REPORTS TO CONGRESS.

       ``(a) Annual Reports.--Not less than annually, the Chief 
     Counsel shall submit to the President and to the Committees 
     on Small Business of the Senate and the House of 
     Representatives, the Committee on Governmental Affairs of the 
     Senate, the Committee on Government Reform of the House of 
     Representatives, and the Committees on the Judiciary of the 
     Senate and the House of Representatives a report on agency 
     compliance with chapter 6 of title 5, United States Code.
       ``(b) Additional Reports.--In addition to the reports 
     required under subsection (a) of this section and section 
     203(c)(11), the Chief Counsel may prepare and publish such 
     reports as the Chief Counsel determines to be appropriate.
       ``(c) Prohibition.--No report under this title shall be 
     submitted to the Office of Management and Budget or to any 
     other department or agency of the Federal Government for any 
     purpose before submission of the report to the President and 
     to the Congress.''.
       (c) Authorization of Appropriations.--Title II of Public 
     Law 94-305 (15 U.S.C. 634a et seq.) is amended by striking 
     section 207 and inserting the following:

     ``SEC. 207. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--There are authorized to be appropriated 
     to the Office to carry out this title such sums as may be 
     necessary for each fiscal year.
       ``(b) Availability.--Any amount appropriated under 
     subsection (a) shall remain available, without fiscal year 
     limitation, until expended.''.
       (d) Incumbent Chief Counsel for Advocacy.--The individual 
     serving as the Chief Counsel for Advocacy of the Small 
     Business Administration on the date of enactment of this Act 
     shall continue to serve in that position after such date in 
     accordance with section 203 of the Office of Advocacy Act, as 
     amended by this section.

  Mr. KERRY. Mr. President, I am pleased to join with my friend and 
colleague, Chairman of the Senate Committee on Small Business, Kit 
Bond, in introducing the ``Independent Office of Advocacy Act.'' This 
legislation will help ensure the Small Business Administration's (SBA) 
Office of Advocacy has the necessary autonomy to remain an independent 
voice for America's small businesses. I would like to thank the 
Chairman and his staff for working with me and my staff to make the 
necessary changes to this legislation to garner bipartisan support.
  This legislation is similar to a bill introduced by Chairman Bond, 
which I supported, during the 106th Congress. While this legislation 
received strong support in the Senate Committee on Small Business and 
on the floor of the Senate, the House did not take any action. I am 
hopeful that this legislation will be enacted during the 107th 
Congress.
  The Independent Office of Advocacy Act rewrites the law that created 
the Small Business Administration's Office of Advocacy to allow for 
increased autonomy. It reaffirms the Office's statutory and financial 
independence by preventing the President from firing the advocate 
without 30 days prior notice to Congress and by creating a separate 
authorization for the Office from that of SBA's. It also states that 
the Chief Counsel shall be appointed without regard to political 
affiliation, and shall not have served in the Administration for a 
period of 5 years prior to the date of appointment.
  The legislation also makes women-owned businesses an equal priority 
of the Office of Advocacy by adding women-owned business to the primary 
functions of the Office of Advocacy, wherever minority owned business 
appears. It also adds new reporting requirements and additional 
functions to the Office of Advocacy with regard to enforcement of the 
Small Business Regulatory Enforcement Fairness Act, SBREFA. The 
provisions regarding SBREFA are already a part of existing law in 
Chapter 6 Title 5 of US Code, and will now, rightly, be added to the 
statute establishing the Office of Advocacy.
  But at its heart, this legislation will allow the Office of Advocacy 
to better represent small business interests before Congress, Federal 
agencies, and the Federal Government without fear of reprisal for 
disagreeing with the position of the current Administration.
  For those of my colleagues without an intimate knowledge of the 
important role the Office of Advocacy and its Chief Counsel play in 
protecting and promoting America's small businesses, I will briefly 
elaborate its important functions and achievements. From studying the 
role of small business in the U.S. economy, to promoting small business 
exports, to lightening the regulatory burden of small businesses 
through the Regulatory Flexibility Act (RFA) and the Small Business 
Regulatory Enforcement Fairness Act, SBREFA, the Office of Advocacy has 
a wide scope of authority and responsibility.
  The U.S. Congress created the Office of Advocacy, headed by a Chief 
Counsel to be appointed by the President from the private sector and 
confirmed by the Senate, in June of 1976. The rationale was to give 
small businesses a louder voice in the councils of government.
  Each year, the Office of Advocacy works to facilitate meetings for 
small business people with congressional staff and executive branch 
officials, and convenes ad hoc issue-specific meetings to discuss small 
business concerns. It has published numerous reports, compiled vast 
amounts of data and successfully lightened the regulatory burden on 
America's small businesses. In the area of contracting, the Office of 
Advocacy developed PRO- Net, a database of small businesses used by 
contracting officers to find small businesses interested in selling to 
the Federal government.
  The U.S. Congress, the Administration and of course, small 
businesses, have all benefitted from the work of the Office of 
Advocacy. For example, between 1998 and 2000, regulatory changes 
supported by the Office of Advocacy saved small businesses around $20 
billion in annual and one-time compliance costs.
  Mr. President, small businesses remain the backbone of the U.S. 
economy, accounting for 99 percent of all employers, providing 75 
percent of all net new jobs, and accounting for 51 percent of private-
sector output. In fact, and this may surprise some of my colleagues, 
small businesses employ 38 percent of high-tech workers, an 
increasingly important sector in our economy.
  Small businesses have also taken the lead in moving people from 
welfare to work and an increasing number of women and minorities are 
turning to small business ownership as a means to gain economic self-
sufficiency. Put simply, small businesses represent what is best in the 
United States economy, providing innovation, competition and 
entrepreneurship.
  Their interests are vast, their activities divergent, and the 
difficulties they face to stay in business are numerous. To provide the 
necessary support to help them, SBA's Office of Advocacy needs our 
support.
  The responsibility and authority given the Office of Advocacy and the 
Chief Counsel are crucial to their ability to be an effective 
independent voice in the Federal Government for small businesses. When 
the Senate Committee on Small Business held a Roundtable meeting about 
the Office of Advocacy with small business concerns on April 21, 1999, 
every person in the room was concerned about the present and future 
state of affairs for the Office of Advocacy. These small businesses 
asked us to do everything we could to protect and strengthen this 
important office. I believe this legislation accomplishes this 
important goal.
  I have always been a strong supporter of the Office of Advocacy and I 
am pleased to join with Chairman Bond in introducing this legislation, 
which will ensure that it remains an independent and effective voice 
representing America's small businesses.
                                 ______