[Congressional Record Volume 157, Number 141 (Wednesday, September 21, 2011)]
[Senate]
[Pages S5846-S5848]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SMALL BUSINESS CONTRACTING FRAUD PREVENTION ACT OF 2011
Mr. REID. Mr. President, I ask unanimous consent that the Committee
on Small Business be discharged from further consideration of S. 633
and the Senate proceed to its consideration.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report the bill by title.
The legislative clerk read as follows:
A bill (S. 633) to prevent fraud in small business
contracting, and for other purposes.
There being no objection, the Senate proceeded to consider the bill.
Mrs. MURRAY. Mr. President, I rise today to address the Department of
Veterans Affairs' role in S. 633, the Small Business Contracting Fraud
Prevention Act of 2011.
As introduced, S. 633 contains a provision that would require the
Department of Veterans Affairs, through its Center for Veterans
Enterprise, to verify the status of any small business seeking to be
registered as a veteran-owned or service-disabled veteran-owned small
business. S. 633 would also require the head of each Federal agency to
confirm the status of any service-disabled veteran-owned small business
before permitting that business to compete for Federal sole-source or
set-aside contracts.
I agree that governmentwide verification of veteran-owned and
service-disabled veteran-owned small business status is an important
step towards fraud prevention. But we must ensure that enactment of S.
633 does not add to the backlog of veterans currently awaiting
verification of their small businesses, and that veterans' businesses
are not unfairly delayed in their ability to compete for contracts.
I am pleased that Senators Landrieu and Snowe have agreed to my
amendment to S. 633. Under my amendment, the verification provisions in
S. 633 would not take effect until the Department of Veterans Affairs
first certifies it possesses the necessary resources and capacity to
undertake the new requirements imposed by S. 633. This means that the
Department gets to set the timeline for implementing the provisions so
that implementation is done right.
Mr. REID. Mr. President, I ask unanimous consent that the Murray
amendment at the desk be agreed to, the bill, as amended, be read a
third time and passed, the motions to reconsider be laid upon the
table, and any statements relating to the measure be printed in the
Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment (No. 652) was agreed to, as follows:
(Purpose: To delay the effective date of the veterans contracting
provisions)
On page 10, beginning on line 8, strike ``Not later than 1
year after the date of enactment of this Act, the'' and
insert ``The''.
On page 10, between lines 15 and 16, insert the following:
(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.
The bill (S. 633), as amended, was ordered to be engrossed for a
third reading, was read the third time, and passed, as follows:
S. 633
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
[[Page S5847]]
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.--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.
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:
[[Page S5848]]
``(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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