[Federal Register Volume 61, Number 18 (Friday, January 26, 1996)]
[Rules and Regulations]
[Pages 2398-2401]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1161]



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SMALL BUSINESS ADMINISTRATION
13 CFR Part 105


Standards of Conduct and Other Employee Responsibilities

AGENCY: Small Business Administration.

ACTION: Final rule.

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SUMMARY: The Small Business Administration (SBA) amends its regulations 
governing employee standards of conduct. This amendment repeals 
provisions that are superseded by the Office of Government Ethics (OGE) 
Uniform Standards of Conduct for Employees of the Executive Branch (5 
CFR Part 2635); amends one provision by adding the Associate General 
Counsel for General Law as an Assistant Standards of Conduct Counselor; 
and renumbers the remaining provisions with several minor technical 
amendments.

EFFECTIVE DATE: This rule is effective February 26, 1996.

FOR FURTHER INFORMATION CONTACT: Robinson S. Nunn, Chief Counsel for 
Ethics, Office of the General Counsel, U.S. Small Business 
Administration, 409 Third Street SW., Washington, D.C. 20416, (202) 
205-6867, or Martin D. Teckler, Deputy General Counsel (202) 205-6642.

SUPPLEMENTARY INFORMATION: The Small Business Administration repeals 
numerous provisions of its existing standards of conduct regulations at 
13 CFR Part 105 as either superseded by the Office of Government 
Ethics' (OGE) Uniform Standards of Ethical Conduct for Employees of the 
Executive Branch (5 CFR Part 2635), eliminated by other regulatory 
authority, or determined to be inappropriate for continued inclusion in 
this part. SBA repeals the following sections of 13 CFR Part 105: 
105.101 through 105.301; 105.401; 105.402; 105.405; 105.406 through 
105.408; 105.501 through 105.505; 105.506 except paragraph (g)(1); 
105.507 through 105.515; 105.518 through 105.521 and 105.901. The 
remaining provisions of 13 CFR Part 105 are renumbered and renamed 
``Standards of Conduct and Employee Restrictions and 
Responsibilities.''
    In place of SBA's former standards at 13 CFR Part 105, SBA issues a 
residual cross reference provision at new 13 CFR section 105.101 to 
refer to the uniform Standards of Conduct and financial disclosure 
regulations for Executive Branch employees and SBA's Supplemental 
Standards of Conduct regulation. Additionally, SBA reissues, in the new 
13 CFR Part 105, several provisions regarding other employee 
responsibilities.
    Proposed changes to Part 105 were published in the Federal Register 
on November 27, 1995 (60 FR 58260). The public was invited to comment 
during a thirty day comment period. SBA received seven comments (all of 
which concerned post-employment restrictions) during that time period. 
SBA discusses the comments and SBA's response here.
    Section 105.201, ``Definitions'': This section provides definitions 
unique to SBA which are applicable throughout Part 105. The definition 
of ``SBA Assistance'' (Sec. 105.201(e)) was proposed to be amended to 
include all participating lenders, including banks, as recipients of 
SBA Assistance. This proposal generated several comments, which noted 
that SBA employees with specialized knowledge losing jobs due to 
downsizing would now be precluded from employment with participating 
lenders, and that such employment is often the only means available to 
such employees to maintain a customary standard of living and make use 
of education and skills. SBA employees commented that the SBA would be 
unable to attract private sector employees to the SBA if they believe 
that they will be unmarketable when they leave the government. In 
addition, participants in SBA's financial programs commented that the 
interpretation would deny them a qualified universe of potential 
employees to the detriment of the delivery of SBA's programs.
    As a result of these comments, and those relative to the other 
sections contained in the proposal (discussed below), SBA has 
determined that revision of the definition will be deferred. This final 
rule therefore merely restates the existing definition of SBA 
Assistance, and does not adopt the proposed change, pending further 
review.
    SBA also received three comments concerning Section 105.202, 
``Employment of Former Employee by Person Previously the Recipient of 
SBA Assistance''. This section, the first of two sections providing 
restrictions relating to former SBA employees, was not changed by the 
proposed rule, although the preamble to this section did not make that 
fact completely clear. All of the comments were directed at the effect 
on Sec. 105.202 of the addition of participating lenders as recipients 
of SBA Assistance to the definition section of section 105.201(e).
    All three commenters were concerned that agency employees losing 
their employment as a result of an involuntary separation or those 
otherwise seeking post-SBA employment would be unfairly denied 
employment best suited for their specialized knowledge and education 
and would be unable the maintain their lifestyles and support their 
families by virtue of section 105.202. One of the commenters also 
argued that 105.202 should not apply to Certified Development Companies 
(CDC's), because they are not business enterprises receiving loans from 
the agency and should therefore be exempt from this rule.
    As set forth above, the proposed rule made no change to section 
105.202 which is based upon section 13 of the Small Business Act. To 
the extent all of these comments were directed at the addition of 
participating lenders to the Sec. 105.201 definition of SBA Assistance, 
that issue is addressed by the withdrawal of the proposal.
    The same issue arises in connection with section 105.203 ``SBA 
Assistance to Person Employing Former SBA Employee.'' This section is 
based on the same provision of the Small Business Act as section 
105.202. It prohibits SBA from providing assistance to any Person who 
has as an employee, owner, partner, attorney, agent, owner of stock, 
officer, director, creditor, or debtor, any individual who, within one 
year prior to the request for such assistance, was an SBA employee, 
without the prior approval of the SBA Standards of Conduct Counselor.
    Additionally, this section sets forth the criteria to be used in 
reviewing such applications for SBA Assistance.
    SBA received one comment on this section to the effect that this 
provision unfairly penalizes a business which hires a qualified former 
SBA employee.
    As discussed above, to the extent that the impact of this section 
was proposed to be altered by adding Participating lenders as 
recipients of Assistance, the provision is unaffected by this rule. 
However, it is SBA's intent to revisit both sections 105.202 and 
105.203 at a later point keeping in mind the comments received in this 
rulemaking.
    SBA received no other comments on this rule. For a detailed 
description of the other changes made to this rule, please refer to 
SBA's proposed rules, published at 60 FR 58260 (November 27, 1995). 

[[Page 2399]]


Compliance With Executive Orders 12612, 12778 and 12866; the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq.; and the Paperwork Reduction Act, 
44 U.S.C. ch. 35

    SBA certifies that this rule will not be considered a significant 
rule within the meaning of Executive Order 12866 and does not have a 
significant economic impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et 
seq. 
    For purposes of Executive Order 12612, SBA certifies that this rule 
does not have federalism implications. For purposes of Executive Order 
12778, SBA certifies that this rule is drafted, to the extent 
practicable, in accordance with the standards set forth in section 2 of 
that Order.
    For purposes of the Paperwork Reduction Act, SBA certifies that 
this rule, if promulgated in final, will impose no new reporting or 
recordkeeping requirements.

List of Subjects in 13 CFR Part 105

    Conflict of interests.

    For the reasons set forth above, part 105 of title 13, Code of 
Federal Regulations, is revised to read as follows:

PART 105--STANDARDS OF CONDUCT AND EMPLOYEE RESTRICTIONS AND 
RESPONSIBILITIES

Standards of Conduct

Sec.
105.101  Cross reference to employee ethical conduct standards and 
financial disclosure regulations.

Restrictions and Responsibilities Related to SBA Employees and Former 
Employees

105.201  Definitions.
105.202  Employment of former employee by person previously the 
recipient of SBA Assistance.
105.203  SBA Assistance to person employing former SBA employee.
105.204  Assistance to SBA employees or members of their household.
105.205  Duty to report irregularities.
105.206  Applicable rules and directions.
105.207  Politically motivated activities with respect to the 
Minority Small Business Program.
105.208  Penalties.

Restrictions on SBA Assistance to Other Individuals

105.301  Assistance to officers or employees of other Government 
organizations.
105.302  Assistance to employees or members of quasi-Government 
organizations.

Administrative Provisions

105.401  Standards of Conduct Committee.
105.402  Standards of Conduct Counselors.
105.403  Designated Agency Ethics Officials.

    Authority: 5 U.S.C. 7301; 15 U.S.C. 634, 637(a)(18) and (a)(19), 
642, and 645(a).

Standards of Conduct


Sec. 105.101   Cross-reference to employee ethical conduct standards 
and financial disclosure regulations.

    In addition to this Part, Small Business Administration (SBA) 
employees should refer to the Uniform Standards of Ethical Conduct for 
Executive Branch employees at 5 CFR Part 2635, the SBA Supplemental 
Standards of Ethical Conduct at 5 CFR Chapter XLIV, and the Uniform 
Financial Disclosure regulation for Executive Branch employees at 5 CFR 
Part 2634.

Restrictions and Responsibilities Related to SBA Employees and Former 
Employees


Sec. 105.201  Definitions.

    (a) Employee means an officer or employee of the SBA regardless of 
grade, status or place of employment, including employees on leave with 
pay or on leave without pay other than those on extended military 
leave. Unless stated otherwise. Employee shall include those within the 
category of Special Government Employee.
    (b) Special Government Employee means an officer or employee of 
SBA, who is retained, appointed or employed to perform temporary duties 
on a full-time or intermittent basis, with or without compensation, for 
not to exceed 130 days during any period of 365 consecutive days.
    (c) Person means an individual, a corporation, a company, an 
association, a firm, a partnership, a society, a joint stock company, 
or any other organization or institution.
    (d) Household member means spouse and minor children of an 
employee, all blood relations of the employee and any spouse who 
resides in the same place of abode with the employee.
    (e) SBA Assistance means financial, contractual, grant, managerial 
or other aid, including size determinations, section 8(a) 
participation, licensing, certification, and other eligibility 
determinations made by SBA. The term also includes an express decision 
to compromise or defer possible litigation or other adverse action.


Sec. 105.202  Employment of former employee by person previously the 
recipient of SBA Assistance.

    (a) No former employee, who occupied a position involving 
discretion over, or who exercised discretion with respect to, the 
granting or administration of SBA Assistance may occupy a position as 
employee, partner, agent, attorney or other representative of a concern 
which has received this SBA Assistance for a period of two years 
following the date of granting or administering such SBA Assistance 
if--
    (1) The date of granting or administering such SBA Assistance was 
within the period of the employee's term of employment; or
    (2) The date of granting or administering such SBA Assistance was 
within one year following the termination of such employment.
    (b) Failure of a recipient of SBA Assistance to comply with these 
provisions may result, in the discretion of SBA, in the requirement for 
immediate repayment of SBA financial Assistance, the immediate 
termination of other SBA Assistance involved or other appropriate 
action.


Sec. 105.203  SBA Assistance to person employing former SBA employee.

    (a) SBA will not provide SBA Assistance to any person who has, as 
an employee, owner, partner, attorney, agent, owner of stock, officer, 
director, creditor or debtor, any individual who, within one year prior 
to the request for such SBA Assistance was an SBA employee, without the 
prior approval of the SBA Standards of Conduct Counselor. The Standards 
of Conduct Counselor will refer matters of a controversial nature to 
the Standards of Conduct Committee for final decision; otherwise, his 
or her decision is final.
    (b) In reviewing requests for approval, the Standards of Conduct 
Counselor will consider:
    (1) The relationship of the former employee with the applicant 
concern;
    (2) The nature of the SBA Assistance requested;
    (3) The position held by the former employee with SBA and its 
relationship to the SBA Assistance requested; and
    (4) Whether an apparent conflict of interest might exist if the SBA 
Assistance were granted.


Sec. 105.204  Assistance to SBA employees or members of their 
household.

    Without the prior written approval of the Standards of Conduct 
Committee, no SBA Assistance, other than Disaster loans under 
subparagraphs (1) and (2) of section 7(b) of the Small Business Act, 
shall be furnished to a person when the sole proprietor, partner, 
officer, director or significant stockholder of the person is an SBA 
employee or a household member.


Sec. 105.205  Duty to report irregularities.

    Every employee shall immediately report to the SBA Inspector 
General any 

[[Page 2400]]
acts of malfeasance or misfeasance or other irregularities, either 
actual or suspected, arising in connection with the performance by SBA 
of any of its official functions.


Sec. 105.206  Applicable rules and directions.

    Every employee shall follow all agency rules, regulations, 
operating procedures, instructions and other proper directions in the 
performance of his official functions.


Sec. 105.207  Politically motivated activities with respect to the 
Minority Small Business Program.

    (a) Any employee who has authority to take, direct others to take, 
recommend, or approve any action with respect to any program or 
activity conducted pursuant to section 8(a) or section 7(j) of the 
Small Business Act, shall not, with respect to any such action, 
exercise or threaten to exercise such authority on the basis of the 
political activity or affiliation of any party. Employees shall 
expeditiously report to the SBA Inspector General any such action for 
which such employee's participation has been solicited or directed.
    (b) Any employee who willfully and knowingly violates this section 
shall be subject to disciplinary action, which may consist of 
separation from service, reduction in grade, suspension, or reprimand.
    (c) This section shall not apply to any action taken as a penalty 
or other enforcement of a violation of any law, rule, or regulation 
prohibiting or restricting political activity.
    (d) The prohibitions in and remedial measures provided for under 
this section with regard to such prohibitions, shall be in addition to, 
and not in lieu of, any other prohibitions, measures or liabilities 
that may arise under any other provision of law.


Sec. 105.208  Penalties.

    Any employee guilty of violating any of the provisions in this Part 
may be disciplined, including removal or suspension from SBA 
employment.

Restrictions on SBA Assistance to Other Individuals


Sec. 105.301  Assistance to officers or employees of other Government 
organizations.

    (a) SBA must receive a written statement of no objection by the 
pertinent Department or military service before it gives any SBA 
Assistance, other than Disaster loans under subparagraphs (1) and (2) 
of section 7(b) of the Small Business Act, to a person when its sole 
proprietor, partner, officer, director or stockholder with a 10 percent 
or more interest, or a household member, is an employee of another 
Government Department or Agency having a grade of at least GS-13 or its 
equivalent.
    (b) The Standards of Conduct Committee must approve an SBA contract 
with an entity if a sole proprietor, general partner, officer, 
director, or stockholder with a 10 or more percent interest (or a 
household member of such individuals) is an employee of a Government 
Department or Agency. See also 48 CFR part 35, subpart 3.6.
    (c) The Standards of Conduct Committee must approve SBA Assistance, 
other than disaster loans under subparagraphs (1) and (2) of section 
7(b) of the Small Business Act, to a person if its sole proprietor, 
general partner, officer, director or stockholder with a 10 percent or 
more interest (or a household member of such individual) is a member of 
Congress or an appointed official or employee of the legislative or 
judicial branch of the Government.


Sec. 105.302  Assistance to employees or members of quasi-Government 
organizations.

    (a) The Standards of Conduct Committee must approve SBA Assistance, 
other than Disaster loans under subparagraphs (1) and (2) of section 
7(b) of the Small Business Act, to a person if its sole proprietor, 
general partner, officer, director or stockholder with a 10 percent or 
more interest (or a household member) is a member or employee of a 
Small Business Advisory Council or is a SCORE volunteer.
    (b) In reviewing requests for approval, factors the Standards of 
Conduct Committee may consider include whether the granting of the SBA 
Assistance might result in or create the appearance of giving 
preferential treatment, the loss of complete independence or 
impartiality, or adversely affect the confidence of the public in the 
integrity of the Government.

Administrative Provisions


Sec. 105.401  Standards of Conduct Committee.

    (a) The Standards of Conduct Committee will:
    (1) Advise and give direction to SBA management officials 
concerning the administration of this Part and any other rules, 
regulations or directives dealing with conflicts of interest and 
ethical standards of SBA employees; and
    (2) Make decisions on specific requests when its approval is 
required.
    (b) The Standards of Conduct Committee will consist of:
    (1) The General Counsel or, in his or her absence, the Deputy 
General Counsel or, in his or her absence, the Acting General Counsel 
who shall act as Chairman of the Committee;
    (2) The Associate Deputy Administrator for Management and 
Administration, or in his or her absence, the Assistant Administrator 
for Administration; and
    (3) The Director of Human Resources, or in his or her absence, the 
Deputy Director of Human Resources.


Sec. 105.402  Standards of Conduct Counselors.

    (a) The SBA Standards of Conduct Counselor is the Deputy General 
Counsel. The Associate General Counsel for General Law (AGC) is an 
Assistant Standards of Conduct Counselor, and other Assistants may be 
designated by the Standards of Conduct Counselor.
    (b) The Standards of Conduct Counselors and Assistants:
    (1) Provide general advice, assistance and guidance to employees 
concerning this Part and the regulations referred to in Sec. 105.101;
    (2) Monitor the Standards of Conduct Program within their assigned 
areas and provide required reports thereon;
    (3) Review Confidential Financial Disclosure Reports as required 
under 5 CFR part 2634, subpart I, and provide an annual report on 
compliance with filing requirements to the SBA Standards of Conduct 
Counselor as of February 1 of each year; and
    (4) Provide Outside Employment decisions pursuant to 5 CFR 
5401.104.
    (c) Each employee will be periodically informed of the name, 
address and telephone number of the Assistant Standards of Conduct 
Counselor to contact for advice and assistance.
    (d) Employee requests for advice or rulings should be directed to 
the appropriate Standards of Conduct Counselor for appropriate action.


Sec. 105.403  Designated Agency Ethics Officials.

    (a) The Designated Agency Ethics Official, pursuant to the Ethics 
in Government Act of 1978 (5 U.S.C. App.), is the Deputy General 
Counsel. He or she may, in turn, appoint one or more Alternate 
Designated Agency Ethics Officials. The Alternates will assist the 
Designated Agency Ethics Official and act for him or her whenever 
absent.
    (b) The Designated Agency Ethics Official and Alternates administer 
the program for Financial Disclosure Statements under 5 CFR 2634.201, 

[[Page 2401]]
receive and evaluate these statements, and provide advice and counsel 
regarding matters relating to the Ethics in Government Act of 1978 and 
its implementing regulations. The duties and responsibilities of the 
Designated Agency Ethics Official and Alternates are set forth in more 
detail in 5 CFR 2638.203, which is promulgated and amended by the 
Office of Government Ethics.

    Dated: January 19, 1996.
Philip Lader,
Administrator.
[FR Doc. 96-1161 Filed 1-25-96; 8:45 am]
BILLING CODE 8025-01-P