TITLE: B-300248, SBA's Imposition of Oversight Review Fees on PLP Lenders, January 15, 2004
BNUMBER: B-300248
DATE: January 15, 2004
************************************************************************************
B-300248, SBA's Imposition of Oversight Review Fees on PLP Lenders, January 15, 2004
B-300248
January 15, 2004
The Honorable Christopher S. Bond
Committee on Small Business and Entrepreneurship
United States Senate
Subject: SBA's Imposition of Oversight Review Fees on PLP Lenders
Dear Senator Bond:
This legal opinion is a supplement to Small Business Administration:
Progress Made But Improvements Needed in Lender Oversight, GAO-03-90, our
report to you on the Small Business Administration's (SBA) oversight of
lenders who make SBA-guaranteed loans under section 7(a) of the Small
Business Act, 15 U.S.C. sect. 636. As we reported, in implementing the
section 7(a) program, SBA has increased its reliance on private lenders to
provide small businesses with access to credit, in part through its
Preferred Lender Program (PLP). Under the PLP, eligible lenders may make
section 7(a) loans without prior SBA approval, but SBA is required by the
Small Business Act to evaluate PLP lenders' participation in this program
at least annually. We reported that it is essential that this SBA
oversight be conducted effectively because of the great autonomy that PLP
lenders exercise in making section 7(a) loans.
In the course of evaluating SBA's oversight of PLP lenders, we learned
that SBA has contracted with a private firm to assist in conducting these
PLP lender oversight reviews. We also learned that the contractor is paid
not from SBA's appropriated funds but rather from fees imposed by SBA on
the lenders that the lenders pay directly to the contractor. We believed
this arrangement raised questions about whether SBA was in compliance with
certain appropriations restrictions, but because these legal issues were
beyond the scope of our report and required additional factual
investigation, we agreed with your staff to issue a separate legal opinion
addressing them. We have now obtained the necessary information to analyze
these issues and we are issuing this opinion as a supplement to our
previous report.[1]
As discussed in more detail below, we conclude that SBA is not authorized
to fund its PLP oversight reviews by charging a fee to the PLP lenders and
that doing so contravenes the Miscellaneous Receipts Statute. Furthermore,
we conclude that SBA has improperly augmented its appropriations by not
bearing the costs of the PLP oversight reviews itself and instead using
the fees collected from PLP lenders to pay for these costs. SBA should
cease these practices unless and until Congress authorizes them, and in
the meantime, it should identify the review costs paid by lenders to its
contractor and pay these costs itself from appropriations accounts
available for this purpose.
BACKGROUND
SBA helps small businesses obtain access to credit primarily through loan
guarantee programs authorized by section 7(a) and other provisions of the
Small Business Act. SBA guarantees up to 85 percent of loans made by
lenders participating in the section 7(a) program, and lenders that SBA
designates as "preferred" or "certified" have greater autonomy and
authority in making SBA-guaranteed loans than other participating lenders.
Preferred and certified lenders may process, close, service, and liquidate
SBA-guaranteed loans, and preferred lenders have full authority to make
loans without prior SBA approval, making their own assessments about
borrower eligibility and creditworthiness. PLP lenders tend to be the
largest section 7(a) program lenders, and they account for slightly over
half of section 7(a) lending.
Although SBA has delegated certain of its loan authority to certified and
PLP lenders, SBA remains responsible for the activities of these lenders.
SBA carries out this responsibility by periodically reviewing and renewing
lenders' eligibility status.[2] With respect to PLP lenders in particular,
SBA is specifically required by the Small Business Programs Improvement
Act of 1996, Pub. L. No. 104-208, sect.103(h), 110 Stat. 3009, 15 U.S.C.
sect. 634 note, to have a standard program mandating lender assessments at
least annually; it has implemented this requirement by regulations calling
for PLP lender reviews at least once a year and renewals of PLP lenders'
eligibility status at least every 2 years based on the results of these
annual reviews. 13 C.F.R. sections 120.441(b), 120.451(d), (e). Since
1998, SBA has conducted these annual PLP reviews using a "review team"
consisting of an SBA employee and one or more employees of an outside
contractor, Thompson, Cobb, Bazilio and Associates, P.C. (Thompson
Cobb).[3] The annual PLP reviews must include, among other things, an
assessment of defaults, loans, and recoveries of loans made by each
lender. The objectives of the reviews are to determine: (1) whether the
lenders process, service, and liquidate loans according to SBA standards;
and (2) whether they should be allowed to continue in the Preferred Lender
Program. After a review team analyzes a lender's policies and reviews
documents in a sample of the lender's loan files, the contractor produces
a summary of findings and recommendations and the SBA team member reviews
it. The contractor then submits a report to SBA, which prepares a final
report. SBA has sole authority and responsibility to issue findings,
require lenders to take corrective action, and impose sanctions on lenders
for noncompliance with SBA standards.
SBA does not use its congressionally appropriated funds to pay its PLP
review contractor. Instead, SBA imposes a fee on lenders pursuant to its
contract with Thomson Cobb, and the lenders are instructed to pay the fee
directly to the contractor before commencement of the review. Prior to the
start of each fiscal year, SBA and the contractor negotiate the amount of
the fee based on a sliding scale corresponding to lender categories and
reflecting the contractor's employee salaries, travel, and administrative
expenses. SBA notifies PLP lenders by letter of the date they will be
reviewed and instructs them about payment to the contractor.
ANALYSIS
SBA's practices relating to review of lenders in its Preferred Lender
Program raise two basic legal issues: (1) whether SBA has authority to
impose fees on PLP lenders for review of the lenders' performance; and (2)
whether SBA has authority to retain and use any fees it imposes or instead
must deposit them into the U.S. Treasury as monies received "for the
Government" under 31 U.S.C. sect. 3302(b), known as the Miscellaneous
Receipts Statute. We conclude that the answer to both of these questions
is no, as discussed below.
I. SBA's Imposition of Fees on PLP Lenders for Review of Their Performance
When Congress establishes a new program or activity, it also must decide
how to finance it. Typically it does this by appropriating funds from the
U.S. Treasury. In addition to providing necessary funds, a congressional
appropriation establishes a maximum authorized program level, meaning that
an agency cannot, absent statutory authorization, operate beyond the level
that can be paid for by its appropriations. See 72 Comp. Gen. 164, 165
(1993). An agency may not circumvent these limitations by augmenting its
appropriations from sources outside the government. Id.; see also U.S.
General Accounting Office, Principles of Federal Appropriations Law, 6-103
(2d ed. 1992). One of the objectives of these limitations is to prevent
agencies from avoiding or usurping Congress' "power of the purse."
One of the circumstances in which an agency may fund its operations using
monies in addition to its appropriations is where Congress authorizes
imposition of so-called user fees. User-fee financing entails having some
or all of the government's costs of running a program borne by its
participants. User fees are often used to finance new spending by
replacing or supplementing agency appropriations. They also serve to
foster more business-like practices in the government, by making agencies
rely solely on outside fees to finance their operations, as well as to
provide revenues for deficit reduction. U.S. General Accounting Office,
Principles of Federal Appropriations Law, 15-132 (2d ed. 2001); see
generally Federal User Fees: Budgetary Treatment, Status, and Emerging
Management Issues, GAO/AIMD-98-11 (Washington, D.C.: December 1997).
In general, agencies may impose user fees under the Independent Offices
Appropriation Act, 31 U.S.C. sect. 9701, known as the User Charge Statute,
which authorizes agencies to impose fees to offset the government's cost
of providing "a service or thing of value." In addition, under other
statutes, Congress sometimes authorizes agencies not only to charge user
fees but also to retain and use them, either for limited purposes or
without restriction.[4] Without such a specific authorization, however,
agencies may not retain or use fees collected under the User Charge
Statute or other laws but must deposit them into the U.S Treasury as
required by the Miscellaneous Receipts Statute, 31 U.S.C. sect. 3302. That
act requires "an official or agent of the Government receiving money for
the Government from any source" to "deposit the money in the Treasury as
soon as practicable without deduction for any charge," except as provided
by another law. 31 U.S.C. sect. 3302(a), (b) (emphasis added); see also 31
U.S.C. sect. 9701 Revision Note.
SBA maintains that its PLP lender review program is operated in compliance
with the foregoing appropriations laws restrictions. According to SBA, the
review fees paid by PLP lenders to SBA's contractor do not constitute an
improper augmentation of SBA's appropriations because the contractor, not
SBA, receives the fees, and SBA remains solely responsible for making
ultimate findings of a PLP lender's acceptability, requiring corrective
action, and imposing sanctions. Nor do the review fees constitute user
fees, according to SBA, but rather are payments made to the contractor
under a no-cost contract with the government. Moreover, SBA believes, the
review fees are not "money for the Government" and so are not required to
be deposited into the Treasury under the Miscellaneous Receipts Statute.
For the reasons discussed below, we disagree with SBA's position.
A. SBA's Authority to Conduct Reviews Funded by Its Appropriations
As noted above, the Small Business Programs Improvement Act of 1996
imposes responsibility on SBA--not on PLP lenders or SBA's contractor--to
conduct the annual reviews of PLP lenders. We agree that SBA may contract
with a third party to assist in carrying out this statutory function. The
question is whether the contractor is performing services for which SBA
must pay compensation and if so, whether such compensation may be paid
only from SBA's appropriations or also from fees imposed on the PLP
lenders.
Also as noted above, an agency's funding is limited to its appropriations
accounts absent specific congressional authorization to use monies
obtained from outside sources. In the case of SBA, Congress has created
several appropriations accounts by which the agency may carry out its
programs, including a Salaries and Expenses (S&E) Account and a Business
Loans Program Account.[5] SBA's S&E Account may be used for "current or
running expenses of a miscellaneous character arising out of and directly
related to the agency's work." See B-221536, June 12, 1986; 38 Comp. Gen.
758, 762 (1959). Similarly, line items in SBA's Business Loans Program
Account make these funds available for, among other things, the costs of
direct and guaranteed loans and administrative expenses to operate these
loan programs.[6] The Business Loan Program Account amounts appropriated
for administrative expenses are authorized to be transferred to and merged
with the S&E Account, and the S&E Account is available for SBA's necessary
expenses not otherwise provided for.
SBA has told us that pursuant to these authorizations, it transfers the
amount of the administrative expenses line item in its Business Loans
Program Account into its S&E Account and then uses this account to pay for
the portion of the PLP reviews performed by its own employees. SBA does
not use its S&E Account to pay for the portion of the PLP reviews
performed by its contractor's employees, but instead constructively "pays"
these employees by directing the lenders to pay the SBA-imposed review
fees to the contractor. SBA believes, and we agree, that the costs of
reviewing PLP lenders' performance and determining whether they should be
allowed to continue in the loan program are the types of costs for which
SBA's S&E Account and Business Loans Program Account administrative
expenses line item are available, and we therefore conclude that SBA's use
of these accounts to pay for its own employees' PLP review activities is
proper. Use of these accounts for payment of the contractor's employees
also would be proper, but SBA has elected not to make payments from these
accounts; thus we turn to whether Congress has authorized SBA to fund the
reviews through the alternative means of user fees.
B. SBA's Authority to Conduct Reviews Funded By User Fees
Congress has specifically authorized SBA to impose, retain, and spend user
fees in certain instances, but these instances do not include SBA's
conduct of PLP reviews.[7] Nor does the User Charge Statute, which
generally is available to agencies, authorize SBA to impose user fees on
PLP lenders--much less to retain or use them. This is because the User
Charge Statute does not supercede any other law "prohibiting the
determination and collection of charges and the disposition of those
charges," 31 U.S.C. sect. 9701(c)(1), and such a law exists in SBA's case:
section 5(b)(12) of the Small Business Act, 15 U.S.C. sect. 634(b)(12).
Section 5(b)(12) authorizes SBA to "impose, retain and use only those fees
which are specifically authorized by law or which [were] in effect on
September 30, 1994, and in the amounts and at the rates in effect on such
date, except that the Administrator may, subject to approval in
appropriations Acts, impose, retain and utilize additional fees" specified
in section 5(b)(12) (emphasis added). SBA's imposition of PLP review fees
is not "specifically authorized" by law, nor were such fees in effect on
September 30, 1994. We therefore conclude that section 5(b)(12) precludes
SBA from imposing PLP review fees.
SBA takes the position that the limitations in section 5(b)(12) do not
apply to the PLP lender review fees and that it is not imposing user fees
under the User Charge Statute. Although SBA acknowledges that its
regulations provide for assessment of fees to cover the costs of PLP
lender reviews, see 13 C.F.R. sect. 120.454, SBA states that the PLP fees
are not being assessed under that regulation. According to SBA, it is the
contractor, not SBA, that is assessing the PLP review fees, and thus the
fees belong to the contractor, not SBA. SBA further maintains that it is
simply using a no-cost contract to obtain the contractor's services and
thus the fees paid to the contractor are not user fees.
We disagree. It is SBA, not the contractor, that is the entity legally
responsible for conducting the PLP reviews. But for its contract with SBA,
the contractor would have no connection to the PLP lenders that would
enable it to collect the review fees, and the lenders pay the fees to the
contractor only because of SBA's requirement. In Motor Coach Industries,
Inc. v. Dole, 725 F.2d 958 (4^th Cir. 1984), the Fourth Circuit Court of
Appeals made clear that arrangements similar to SBA's are deemed to
involve funds that are public in character and that must be deposited in
the Treasury under the Miscellaneous Receipts Statute. In that case, the
Federal Aviation Administration (FAA) charged landing and mobile lounge
fees under the User Charge Statute to airlines using Dulles Airport for
services that the FAA provided. When the FAA wanted to purchase ground
transport buses for the airport, rather than requesting an additional
appropriation from Congress, the FAA entered into contracts with the
airlines by which they would pay amounts into an Air Carrier Trust Fund
(Trust) in lieu of paying the user fees.
The court ruled that the amounts deposited into the Trust were public
monies that should have been deposited into the Treasury. The court relied
on several factors, including that the payments were made to enable the
FAA to carry out its statutory mission and that the FAA maintained close
control and supervision over the Trust's operations, disbursements, and
other details of administration. As the court characterized the
arrangement, the Trust was an attempt:
"to bypass normal appropriations channels, . . . [an act which] undermined
the integrity of the congressional appropriations process . . .Viewed
realistically, the Trust was an attempt by the FAA to divert funds from
their intended destination--the United States Treasury. Although the
purpose for which the FAA sought the funds was laudable, its methods
certainly cannot be praised. Were the contract between the Trust and [one
of the airlines] left intact, the agency's end-run around normal
appropriation channels would have been successful, enabling it effectively
to supplement its budget by $3 million without congressional action."
Motor Coach Industries, 725 F.2d at 967-68 (footnote omitted).
As in Motor Coach Industries, PLP lenders pay review fees to SBA's
contractor to enable SBA to carry out its mission. In addition, SBA
maintains close control and supervision over the fees: it determines the
amount of the fee, instructs the lenders to pay the fee, and dictates the
purposes for which the fee is to be used. Further, it is SBA, not the PLP
lenders, that has contracted for conduct of the lender reviews and it is
SBA that determines the tasks and information required to carry out the
contract. Finally, SBA requires PLP lenders to pay its contractor as a
condition of retaining their PLP status. Based on these factors, we
conclude that SBA has imposed user fees on the PLP lenders in
contravention of section 5(b)(12).
We disagree with SBA's position that the agency's imposition of PLP review
fees is not problematic under section 5(b)(12). According to SBA, the fact
that section 5(b)(12) prohibits the agency's "impos[ition], ret[ention]
and use" of fees except where specifically authorized by law means that it
is only barred from engaging in all three activities, but not just one or
two. Even assuming that SBA's novel reading of section 5(b)(12) were
correct (which we do not concede) and thus SBA could legally impose user
fees on PLP lenders, this would not support SBA's arrangement. The fees
still would have to be deposited into the Treasury as miscellaneous
receipts, which SBA has not done. In any event, as discussed below, we
believe SBA also has constructively retained and used the PLP review fees,
in addition to imposing them, and therefore has violated the prohibition
of section 5(b)(12).
II. SBA's Retention and Use of Its User Fees Imposed on PLP Lenders
Having concluded that SBA has imposed and constructively collected fees
from PLP lenders in contravention of section 5(b)(12), we also conclude
that it has constructively disposed of these fees in violation of section
5(b)(12), because SBA has effectively retained and used the fees without
specific congressional authorization. We believe SBA's constructive
disposition of the fees also violates the Miscellaneous Receipts Statute.
As noted above, the Act generally requires government officials or agents
receiving "money for the Government" from any source to deposit it into
the Treasury. SBA reasons that the PLP review fees are not "money for the
Government" because they are collected by SBA's contractor solely as
compensation for the contractor's work. SBA also asserts that the
contractor is not charging the fees under a delegation of authority from
SBA, nor does the contractor have any duty to turn the fees over to SBA.
Finally, SBA maintains that the Miscellaneous Receipts Statute's
requirement does not apply to review fees assessed on PLP lenders because
these are imposed under its contract with Thompson Cobb, which is a
no-cost contract. According to SBA, GAO and the courts have concluded that
such contracts do not necessarily constitute an improper augmentation
prohibited by the Miscellaneous Receipts Statute.
We disagree with SBA's position, which is in conflict with our prior
decisions and not supported by the courts. A government official or agent
is deemed to receive money for the government under the Miscellaneous
Receipts Statute if the money is to be used to bear the expenses of the
government or pay government obligations. See B-205901, May 19, 1982.
SBA's functions clearly include conducting oversight of PLP lenders,
whether the review is conducted by SBA's own employees or with the
assistance of a contractor. These functions are among the purposes for
which Congress appropriates funds to SBA, in its S&E Account and as
administrative expenses in its Business Loans Program Account. These types
of reviews in other lending programs, and the costs incurred by SBA's own
employees in the PLP reviews, are in fact paid out of SBA appropriations.
Thus the fees paid by PLP lenders represent expenses SBA would have to pay
from its appropriations regardless of whether the expenses were for
actions performed by SBA employees or by a contractor's employees. SBA has
devised an arrangement by which another party incurs these expenses, in
effect using the PLP review fees to substitute for appropriated funds in
paying the cost of the PLP reviews.
In an analogous case, we concluded that amounts recovered by General
Services Administration (GSA) contractors, in connection with audits and
certain other services the contractors performed to collect transportation
overcharges, could not be used as compensation for that work and instead
had to be deposited into the Treasury. See 64 Comp. Gen. 366 (1985). In
that case, GSA sought to conserve its appropriated funds by hiring
contractors to carry out GSA's statutory responsibilities to audit amounts
paid by government agencies to carriers and freight forwarders for
transportation services. The contractors were to collect amounts that had
become delinquent and collectible under the Debt Collection Act, as well
as performing account servicing activities such as auditing transportation
charges, notifying transportation providers of overcharges, and collecting
refunds. The contractors were paid by deducting amounts for their services
from the collected amounts before forwarding the remaining monies to GSA.
We concluded that under the Debt Collection Act, GSA was authorized to pay
the contractors from amounts they collected where the amounts constituted
indebtedness, but could not pay the contractors from non-"indebtedness"
collections such as remittances and other amounts collected in connection
with an audit. These latter amounts had to be deposited into the Treasury
under the Miscellaneous Receipts Statute.
SBA relies on Thomas v. Network Solutions, Inc., 176 F.3d 500 (D.C. Cir.
1999), in contending that the Miscellaneous Receipts Statute does not
apply to money in the hands of a government grantee and, by analogy, a
government contractor such as Thompson Cobb. In the Network Solutions
case, the National Science Foundation (NSF) and Network Solutions entered
into a cooperative agreement in which Network Solutions was to maintain
the nation's registry of Internet domain names. Network Solutions charged
domain name registrants a one-time registration fee and annual fees
thereafter, with 70 % of the fees retained by Network Solutions as payment
for services provided and 30 % of the fees retained in a custodial account
on NSF's behalf. One issue addressed by the D.C. Circuit was whether the
70 % retained by Network Solutions was paid for "a service or thing of
value provided by an agency" under the User Charge Statute, and thus were
not retainable by the company.[8] The court ruled that the domain name
registry was not a government service or thing of value within the meaning
of the User Charge Statute because neither NSF nor any other government
agency was required by law to provide the registry.
SBA argues that under Network Solutions, fees received by its contractor
are not money for the government subject to the Miscellaneous Receipts
Statute or the User Charge Statute. SBA contends that as in Network
Solutions, the fees received by its contractor are for services provided
to individuals and are not due to the government. We disagree. While
Network Solutions involved services that were not provided, supervised, or
managed by the government, more importantly, it involved services the
government was not required to perform. As the court observed, the fact
that NSF could have performed the services did not transform what was a
private activity into a government service. The SBA situation is markedly
different: SBA is statutorily required to review PLP lenders and does so
through its agent, Thompson Cobb. Thus PLP lender review fees paid to
Thompson Cobb are for services directly related to and required for SBA's
review of the lenders, not for services obtained independent of SBA.
SBA's assertion regarding no-cost contracts also is misplaced. Although we
have observed that no-cost contracts do not per se violate the prohibition
against augmentation, we have neither applied nor endorsed the principle
that an agency may avoid the prohibition merely by requiring third parties
to pay for an agency's contractual commitment. Under a typical no-cost
contract, a vendor provides a service that the agency would otherwise
perform, but instead of receiving compensation from the agency, the vendor
charges and retains fees for its services. In certain cases, we have
concluded that such an arrangement does not violate the Miscellaneous
Receipts Statute either because it was authorized by another statute or
the money retained by the contractor did not constitute money used to bear
the expenses of the government or pay government obligations. SBA relies
on our decision in B-283731, Dec. 21, 1999, known as N&N Travel Tours, for
the proposition that no-cost contracts do not result in augmentation
prohibited by the Miscellaneous Receipts Statute. As we found in N&N
Travel Tours, however, Department of Defense (DOD) agencies have specific
statutory authority under 10 U.S.C. sect. 2646 to enter into contracts for
travel-related services that "provide for credits, discounts, or
commissions or other fees to accrue to [DOD]," and we relied on this
authority in determining that the DOD agencies could avoid expending their
appropriated funds through no-cost travel services contracts. SBA has no
similar authority, however. Moreover, prior to enactment of 10 U.S.C.
sect. 2646 in 1998, the D.C. Circuit had held that DOD's retention of
travel agency contractor concession fees in a "morale fund," rather than
depositing them into the Treasury, violated the Miscellaneous Receipts
Statute. Scheduled Airlines Traffic Offices, Inc., v. Department of
Defense, 87 F.3d 1356 (D.C. Cir. 1996).
Finally, SBA's contract with Thompson Cobb also differs substantially from
other arrangements that we have determined do not violate the
Miscellaneous Receipts Statute. In 61 Comp. Gen. 285 (1982), we determined
that the public could obtain microfilm copies of Federal Election
Commission reports from FEC contractors rather than from the FEC itself
and that the contractors could retain the copy fees. Similarly, in our
decision B-166506, Oct. 20, 1975, we determined that the public could
obtain information services from Environmental Protection Agency
contractors rather than directly from EPA and that the contractors could
retain the fees for this service. In both cases, however, we stated that
the contractors, not the agencies, were providing the services to the
public and, in so doing, were not acting as the government's agent.
Rather, the contractors were independent entrepreneurs who provided a
service sought by the public, and thus the fees they collected were not
for the use of the government required to be deposited into the Treasury.
This is not the situation with SBA. PLP lenders are not seeking
independent services from the contractor; they are complying with
requirements imposed by SBA. PLP lenders receive a benefit from SBA's
contractor in the sense that the results of the contractor's review are
used to determine whether the lenders PLP status will be renewed. But
unlike the FEC and EPA contractors, SBA's contractor is not acting
independently of SBA but as SBA's agent, and the review fees paid by the
lenders substitute for payment that SBA would otherwise make.
Consequently, we conclude that SBA's arrangement constitutes an improper
augmentation of its appropriations.
CONCLUSION
In summary, we conclude that SBA is constructively imposing, retaining,
and using PLP review fees without statutory authority, in contravention of
section 5(b)(12) of the Small Business Act and the Miscellaneous Receipts
Statute. In addition, because SBA should pay the costs of PLP oversight
from its appropriations, we conclude that its constructive use of the fees
to pay for costs that would otherwise be paid from its appropriations
constitutes an improper augmentation. SBA should cease these practices
unless and until Congress authorizes them, and in the meantime, it should
identify the review costs paid by lenders to its contractor and pay these
costs itself from appropriations accounts available for this purpose.
If you have any questions concerning these matters, please contact Susan
D. Sawtelle, Associate General Counsel, at (202) 512-6417, Edda
Emmanuelli-Perez, Assistant General Counsel, at (202) 512-2853, or Paul
Thompson, Senior Attorney, at (202) 512-9867. Thomas Armstrong, Assistant
General Counsel, also made key contributions to this opinion.
Sincerely yours,
/Signed/
Anthony H. Gamboa
General Counsel
------------------------
[1] We have also discussed these issues with staff of the Senate Small
Business and Entrepreneurship Committee in the 107^th and 108^th
Congresses and the House and Senate Appropriations Committees, and we are
providing copies of this opinion to those committees.
[2] All section 7(a) lenders are subject to SBA oversight, and under SBA's
standard operating procedures, regular and certified lenders are reviewed
every three years, with certified lenders' eligibility status being
renewed every 2 years.
[3] The initial term of the SBA-Thompson Cobb contract, signed in 1997,
was for one year with an option for four additional years. The contract
has since been renewed.
[4] See, e.g., 21 U.S.C. sect. 379h (fees authorized to be collected by
Food and Drug Administration, credited to its salaries and expenses
account, and made available in accordance with appropriations acts); 7
U.S.C. sect. 3125a(f) (Department of Agriculture authorized to sell
products and services of National Agricultural Library, with proceeds
deposited to its appropriation and available until expended).
[5] See, e.g., Departments of Commerce, Justice and State, The Judiciary,
and Related Agencies Appropriations Act, 2002, Pub. L. No. 107-77, 115
Stat. 796-97 ("2002 SBA Appropriations Act").
[6] These costs, commonly referred to as subsidy costs, are the estimated
long-term costs to the government of direct loans or loan guarantees,
calculated on a net present value basis after adjusting for estimated
defaults, fees, penalties, and other recoveries but excluding
administrative costs. 2 U.S.C. sect. 661a.
[7] For example, the 2002 SBA Appropriations Act authorizes SBA "to charge
fees to cover the cost of publications developed by [SBA], and certain
loan servicing activities: Provided further, That, notwithstanding 31
U.S.C. sect. 3302 [the Miscellaneous Receipts Statute], revenues from all
such activities shall be credited to this account, to be available for
carrying out these purposes without further appropriations." 115 Stat.
796.
[8] Congress ratified retention of the other 30 % of the fees in the
Supplemental Appropriations and Rescissions Act, FY 1998, Pub. L. No.
105-174. 112 Stat. 58 (1998).