[Senate Report 106-146]
[From the U.S. Government Publishing Office]
Calendar No. 267
106th Congress Report
1st Session SENATE 106-146
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INDEPENDENT OFFICE OF ADVOCACY ACT
_______
August 27, 1999.--Ordered to be printed
Filed under authority of the order of the Senate of August 5, 1999
_______
Mr. Bond, from the Committee on Small Business, submitted the following
R E P O R T
[To accompany S. 1346]
The Committee on Small Business, to which was referred the
bill (S. 1346) to ensure the independence and nonpartisan
operation of the Office of Advocacy of the Small Business
Administration having considered the same, reports favorably
thereon with amendments and recommends that the bill, as
amended, do pass.
On July 15, 1999, the Committee on Small Business
considered S. 1346. The Committee adopted an amendment offered
by Chairman Bond and Ranking Democrat Kerry. As amended, the
bill provides for the independent and nonpartisan operation of
the Office of Advocacy of the Small Business Administration.
Having considered S. 1346, as amended, the Committee reports
favorably thereon without further amendment and recommends that
the bill do pass.
I. Need For Legislation
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 to
represent the views and interests of small businesses before
other Federal agencies.
The General Accounting Office (GAO) recently published a
report on personnel practices at the SBA (GAO/GGD-99-68). The
GAO reported that Assistant and Regional Advocates hired by the
Office of Advocacy share many of the attributes of Schedule C
political appointees. Regional Advocates, who are senior staff
in the Office of Advocacy, are frequently cleared by the White
House personnel office, which is the same procedure followed
for approving Schedule C and non-career SES political
appointees. The report raises questions, concerns and
suspicions regarding the independence of the Office of
Advocacy, and the Committee approves legislation to address
issues raised in the report.
The Independent Office of Advocacy Act responds to these
concerns and is designed to build a firewall to prevent the
political intrusion into the management of day-to-day
operations of the Office of Advocacy. The bill requires 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 also continues 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). The special hiring authority, which is
limited only to employees within the Office of Advocacy, is
beneficial because it allows the Chief Counsel to hire quickly
those persons who can best assist the Office in responding to
changing issues and problems confronting small businesses.
As the director of the Office of Advocacy, the Chief
Counsel for Advocacy has a dual responsibility. On the one
hand, this individual is the independent watchdog for small
business. On the other hand, he or she is also a part of the
President's Administration. These two roles are sometimes very
difficult roles to play simultaneously.
The Independent Office of Advocacy Act is designed to 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
continue to fight on behalf of small businesses regardless of
the position taken on critical issues by the President and the
Administration.
The Office of Advocacy as envisioned by the Independent
Office of Advocacy Act will be unique within the Executive
Branch. The Chief Counsel for Advocacy will be a wide-ranging
advocate, who will be free to advocate change in government
programs and attitudes as they impact small businesses.
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 the Committee believes that the Office of
Advocacy and the Chief Counsel should be independent and free
to continue to advocate or support positions that might be
contrary to the Administration's policies, it has become
apparent the Office is not as independent as necessary to do
the job adequately 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. The FY 1999 allocation of
staff is 49, and fewer are actually on-board as the result of
the hiring freeze imposed by the SBA Administrator. 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.
II. Description Of The Bill
The Independent Office of Advocacy Act (S. 1346) provides
for an effective, independent advocate for small business
within the Federal government that is not restricted by the
views or policies of the Small Business Administration (SBA/
Agency) or any other agency. The Act is designed to make the
Office of Advocacy and the Chief Counsel for Advocacy a full
independent advocate within the Executive Branch acting on
behalf of the small business community.
Under this bill, the Office of Advocacy will be unique
within the Executive Branch. The Chief Counsel for Advocacy
will be a wide-ranging advocate, who will be free to take
positions contrary to the Administration's policies and to
advocate change in government programs and attitudes as they
impact small business.
The Act establishes for the first time in the Small
Business Act that the Office of Advocacy has the statutory
independence and adequate financial resources to be an advocate
for the small business community. In addition to the statement
of the Office's independence, the bill provides for a separate
authorization to fund the Office of Advocacy. As designed in
this bill, its annual budget would be a separate account in the
SBA budget, similar to the separate accounts for the Office of
Inspector General and the Business Loans Program. SBA is
directed to provide appropriate and adequate office space at
the SBA headquarters and its field office locations, together
with equipment, office supplies, and communications facilities
and services as are necessary to support the requirements of
the Office of Advocacy.
Each appropriation request submitted by the Administration
to the Congress would also provide for the number of full-time
employees who would work within the Office of Advocacy. The
Chief Counsel for Advocacy would not need the approval of the
SBA Administrator to hire staff. The bill continues 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).
Section 4 of the Independent Office of Advocacy Act sets
forth in detail the functions of the Office of Advocacy as
intended by the Congress. The Chief Counsel will head up the
Office of Advocacy. The Chief Counsel will be appointed by the
President from civilian life with the advice and consent of the
Senate without regard to the person's political affiliation. To
be eligible for the position, the nominee cannot have served in
any position at SBA during the preceding five years of the
appointment.
Because of the independent nature of the office, the
Committee established the office in such a manner so that the
incumbent Chief Counsel would not feel that his or her job were
in jeopardy by taking a position critical of or in opposition
to an Administration initiative. To strengthen this position,
the bill provides that the President must notify the Congress
30 days in advance before removing the Chief Counsel from
office.
Section 4 sets forth the primary functions of the Office of
Advocacy, which the Committee views as wide-ranging and
comprehensive insofar as are the needs and problems confronting
small businesses nationwide. In setting forth the
responsibilities of the Office ofAdvocacy, the Committee
intends for the Office to serve as focal point to receive complaints,
criticisms and suggestions concerning the policies and programs of the
federal government that affect small businesses.
The Committee believes that the authority enunciated in
Section 4 is significant, and it included a specific subsection
(g) ``Information From Federal Agencies'' to enable the Office
and the Chief Counsel to carry out its responsibilities.
Basically, the Committee directs each Federal agency to provide
to the Chief Counsel all information that the Chief Counsel
believes is necessary in carrying out the responsibilities of
the Office of Advocacy.
In addition, the section spells out special powers that are
conferred on the Chief Counsel. Without regard for the civil
service laws and regulations, the Chief Counsel may hire and
terminate those individuals who are considered necessary to
carry out the duties of the Office. This subsection is intended
to include the regular staff of the office of Advocacy and such
consultants and experts on a temporary or intermittent basis
that the Chief Counsel may choose to hire. The hiring authority
rests with the Chief Counsel. Nothing in the Act should be
interpreted to require that the Chief Counsel obtain the
approval, concurrence or review by the SBA Administrator or any
other person within the Administration. The authority of the
Chief Counsel to hire staff, consultants and experts will be
limited by the amounts appropriated annually by the Congress.
Section 4 also includes a requirement that the
Administrator of SBA provide the Office of Advocacy with
adequate office space, equipment, office supplies, and
communications facilities and services both in SBA's central
offices and field offices that are deemed necessary for the
efficient and effective operation of the Office of Advocacy.
This provision is similar to the requirement for SBA to support
the Office of Inspector General.
The bill requires and authorizes the Chief Counsel to
submit certain reports to the President and the Congress,
including an annual report on the Regulatory Flexibility Act.
The Committee believes strongly that these reports should not
be subject to the mandatory review and editing that has
historically been required by past and current Administrations.
In order for the Committee to carry out its responsibilities on
behalf of the small business community, it is important that it
receive regular reports from the Chief Counsel that have not
been submitted to the Office of Management and Budget or any
other Federal department or agency for editing and/or approval.
The bill authorizes such sums as are necessary for carrying
out the responsibilities of the Office of Advocacy. The amounts
appropriated should remain available until spent and should not
be limited to fiscal year limitations. This subsection is
intended to give the Chief Counsel the flexibility to respond
to matters that come before the Office of Advocacy without the
pressures of obligating funds, perhaps prematurely, prior to
the end of a fiscal year.
Since there is a sitting Chief Counsel for Advocacy who was
reviewed and approved by the Committee and the full Senate, it
is the intention of the Committee that the incumbent will
continue to serve subject to the requirements of this bill once
enacted.
iii. committee vote
In compliance with rule XXVI(7)(b) of the Standing Rules of
the Senate, the following votes on S. 1346 were recorded on
July 15, 1999. A motion by Senator Bond to adopt an amendment
offered by Senator Bond and Senator Kerry passed by a unanimous
voice vote. A motion by Senator Bond to adopt the Independent
Office of Advocacy Act, with an amendment, was approved by a
unanimous recorded vote, with the following Senators voting in
the affirmative: Bond, Kerry, Burns, Coverdell, Bennett, Snowe,
Enzi, Fitzgerald, Crapo, Abraham, Levin, Harkin, Lieberman,
Wellstone, Cleland, Landrieu and Edwards.
iv. cost estimate
In compliance with rule XXVI(11)(a)(1) of the Standing
Rules of the Senate, the Committee estimates the cost of the
legislation will be equal to the amounts indicated by the
Congressional Budget Office in the following letter.
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 23, 1999.
Hon. Christopher S. Bond,
Chairman, Committee on Small Business,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1346, the
Independent Office of Advocacy Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark Hadley.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
S. 1346--Independent Office of Advocacy Act
S. 1346 would authorize the appropriation of such sums as
may be necessary for the Office of Advocacy within the Small
Business Administration (SBA). The bill would clarify the
office's role and would codify requirements for reports to the
Congress on issues and regulations affecting small businesses.
Based on information from the SBA, CBO estimates that the
office will spend about $4 million in 1999. Assuming
appropriations of the necessary amounts, we estimate that SBA
would spend about $5 million a year over the 2000-2004 period
to implement S. 1346. The increase in estimated costs would
primarily cover anticipated inflation.
S. 1346 would not affect direct spending or receipts;
therefore, pay-as-you-go procedures would not apply. S. 1346
contains no intergovernment or private-sector mandates as
defined in the Unfunded Mandates Reform Act and would not
affect the budgets of state, local, or tribal governments.
The CBO staff contact is Mark Hadley. This estimate was
approved by Paul N. Van de Water, Assistant Director for Budget
Analysis.
V. Evaluation of Regulatory Impact
In compliance with rule XXVI(11)(b) of the Standing Rules
of the Senate, it is the opinion of the Committee that no
significant additional regulatory impact will be incurred in
carrying out the provisions of this legislation. There will be
no additional impact of the personal privacy of companies or
individuals who utilize the assistance authorized by this
legislation.
VI. Changes In Existing Law
In the opinion of the Committee, it is necessary to
dispense with the requirement of rule XXVI(12) of the Standing
Rules of the Senate in order to expedite the business of the
Senate.
VI. Section-By-Section Analysis
Section 1. Short title
The Act is titled the ``Independent Office of Advocacy
Act.''
Section 2. Findings
This section describes the need for an effective,
independent advocate for small business within the Federal
government that is not restricted by the views or policies of
the Small Business Administration (SBA/Agency) or any other
agency. This section also sets forth the important role the
Office of Advocacy plays in providing research, information and
its expertise on small business matters to the Congress and the
Executive Branch.
Section 3. Purposes
This section states that the purpose of the Act is to
ensure that the Office of Advocacy has the statutory
independence and adequate financial resources to be an advocate
for small business. The Office of Advocacy is directed to keep
the Senate and House Small Business Committees and the SBA
Administrator informed on matters of importance to small
businesses.
Subsection 3 provides that there will be a separate
authorization for the Office of Advocacy.
Subsections 4 states that the Office of Advocacy will
continue to monitor Agency compliance with the Regulatory
Flexibility Act and will report annually to the Congress.
Subsection 5 states that the purpose of the Act is to enhance
the role of the Office of Advocacy inthe panel review process.
Section 4. Office of Advocacy
Subsection (a) sets forth a new Section 32 of the Small
Business Act (15 U.S.C. 631 et seq.) describing the Office of
Advocacy.
Subsection (a) of Section 32 of the Small Business Act
defines the terms ``Chief Counsel'' and ``Office'' as used in
Section 32.
Subsection (b) of Section 32 establishes within SBA the
Office of Advocacy and designates the Chief Counsel for
Advocacy to manage the Office. This subsection sets forth the
restrictions on who may be nominated by the President to serve
as Chief Counsel. Subsection (b) also requires SBA to submit a
separate budget request each year for the Office of Advocacy.
Subsection (c) of Section 32 describes the primary
functions of the Office of Advocacy:
(1) The Office shall examine the role played by small
business within the U.S. economy;
(2) Directs the Office to examine the effectiveness of
Federal subsidy and assistance programs;
(3) The Office is directed to measure the direct costs of
regulation on small business;
(4) Determine the impact of the U.S. tax system on small
businesses;
(5) Study the ability to the private sector to meet the
credit needs of small business and determine the impact of
government demands for credit on small businesses;
(6) Determine the availability of credit and management
assistance to small businesses;
(7) Evaluate the efforts of Federal agencies and the
private sector to help minority-owned and women-owned small
businesses;
(8) Make recommendations to help in the development and
strengthening of minority-and women-owned small businesses;
(9) Directs the Office of Advocacy to make recommendations
to help small business expand to their full potential and to
assess any common reasons for businesses success and failures;
(10) Develop a set of criteria to be used to define small
businesses; and
(11) Make recommendations on issues and regulations
affecting small business.
Subsection (d) of Section 32 describes additional functions
of the Office of Advocacy. It will serve as a focal point for
receipt of complaints, criticisms and suggestions concerning
the policies and programs of the Federal government that affect
small businesses. The Office will counsel small businesses on
how to resolve their difficulties with the Federal government.
The Office will represent the interests and views of small
businesses before other Federal agencies, and it will encourage
both private and public entities to disseminate information
about services and programs for small businesses. Lastly,
Subsection (d) directs the Office of Advocacy to carry out its
responsibilities under the Regulatory Flexibility Act.
Subsection (e) of Section 32 outlines the staff and powers
of the Office of Advocacy. The Chief Counsel has the authority
to hire staff for the Office of Advocacy and is exempt from the
standard civil service laws governing competitive hiring.
Subsection (f) of Section 32 directs SBA to provide the
Office of Advocacy with adequate office space in the
headquarters and field offices. SBA shall also provide
equipment, office supplies, and communications facilities and
services as are necessary.
Subsection (g) of Section 32 allows for the Chief Counsel
to obtain from each Federal agency such information as needed
to carry out the responsibilities of the Office of Advocacy.
Subsection (h) of Section 32 directs the Chief Counsel to
submit an annual report on Agency compliance with the
requirements of the Regulatory Flexibility Act. Further, the
Chief Counsel can prepare and submit to the President and
Congress such reports as he or she deems necessary. In no case
shall a report from the Office of Advocacy be submitted in
advance to OMB for approval or Administration clearance.
Subsection (i) of Section authorizes to be appropriated
such sums as are necessary for the Office of Advocacy.
A new Subsection (c) permits the incumbent Chief Counsel
for Advocacy to continue to serve in that position after date
of enactment of this Act in accordance with the requirements of
Section 32 of the Small Business Act.