IB 

Union Calendar No. 531 

112TH CONGRESS 

2D SESSION H. R. 4206 

[Report No. 112–728, Part I] 

To amend the Small Business Act to provide for increased penalties for 

contracting fraud, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 19, 2012 

Mr. COFFMAN of Colorado (for himself and Mr. GRAVES of Missouri) introduced the following bill; which was referred to the Committee on Small 

Business, and in addition to the Committee on the Judiciary, for a period 

to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee 

concerned 

DECEMBER 21, 2012 

Additional sponsors: Mr. TIPTON and Mrs. ELLMERS

DECEMBER 21, 2012 

Reported from the Committee on Small Business with amendments 

[Omit the part struck through and insert the part printed in italic] 

DECEMBER 21, 2012 

The Committee on the Judiciary discharged; committed to the Committee of 

the Whole House on the State of the Union and ordered to be printed 


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A BILL 

To amend the Small Business Act to provide for increased 

penalties for contracting fraud, and for other purposes. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Contracting Oversight 

5 for Small Business Jobs Act of 2012’’. 

6 SEC. 2. INCREASED PENALTIES FOR FRAUD. 

7 (a) IN GENERAL.—Chapter 47 of title 18, United 

8 States Code, is amended by adding at the end the fol9 lowing: 

10 ‘‘§ 1041. Misrepresentation of status as a small busi11 ness concern 

12 ‘‘(a) IN GENERAL.—Whoever knowingly— 

13 ‘‘(1) falsifies, conceals, or covers up by any 

14 trick, scheme, or device a material fact; 

15 ‘‘(2) makes any materially false, fictitious, or 

16 fraudulent statement or representation; or 

17 ‘‘(3) makes or uses any false writing or docu18 ment, including electronically, knowing the same to 

19 contain any materially false, fictitious, or fraudulent 

20 statement or entry; 

21 concerning status as a small business concern or compli22 ance with the requirements of the Small Business Act in 

23 an effort to obtain, retain, or complete a federal govern24 ment contract shall be fined $1,000,000 or in a sum equal 

25 to twice the amount or value of goods or services under 


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1 the contract or order, whichever is greater, imprisoned not 

2 more than 5 years, or both.’’. 

3 (b) TECHNICAL AMENDMENT.—The table of sections 

4 for such chapter is amended by inserting after the item 

5 relating to the following section: relating to section 1040 

6 the following: 

‘‘1041. Misrepresentation of status as a small business concern.’’. 

7 SEC. 3. SAFE HARBOR FOR GOOD FAITH COMPLIANCE EF8 FORTS. 

9 (a) SMALL BUSINESS FRAUD.—Section 16(d) of the 

10 Small Business Act (15 U.S.C. 16(d)) is amended by in11 serting after paragraph (2) the following: 

12 ‘‘(3) LIMITATION ON LIABILITY.—This sub13 section shall not apply to any conduct in violation of 

14 subsection (a) if the defendant acted in reliance on 

15 a written advisory opinion from a licensed attorney 

16 who is not an employee of the defendant.’’. 

17 (b) MISREPRESENTATION OF STATUS.—Section 1041 

18 of title 18, United States Code, as added by section 2 of 

19 this Act, is amended by inserting after subsection (a) the 

20 following: 

21 ‘‘(b) EXCEPTION.—This section shall not apply to 

22 any conduct in violation of paragraph (2) or (3) of sub23 section (a) if the defendant acted in reliance on a written 

24 advisory opinion from a licensed attorney who is not an 

25 employee of the defendant.’’. 


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1 (c) REGULATIONS.—Not later than 270 days after 

2 the date of enactment of this Act, the Administrator of 

3 the Small Business Administration shall issue rules defin4 ing what constitutes an adequate advisory opinion for pur5 poses of section 16(d)(3) of the Small Business Act. 

6 (d) SMALL BUSINESS COMPLIANCE GUIDE.—Not 

7 later than 270 days after the date of enactment of this 

8 Act, the Administrator of the Small Business Administra9 tion shall issue (pursuant to section 212 of the Small 

10 Business Regulatory Enforcement Fairness Act of 1996) 

11 a compliance guide to assist business concerns in accu12 rately determining their status as a small business con13 cern. On the date that the Administrator issues the compli14 ance guide under this section, the Administrator shall also 

15 issue a version of the compliance guide translated into 

16 Spanish and such translation may be provided in digital 

17 form by the Administrator. 

18 SEC. 4. OFFICE OF HEARINGS AND APPEALS. 

19 (a) CHIEF HEARING OFFICER.—Section 4(b)(1) of 

20 the Small Business Act is amended by adding at the end 

21 the following: ‘‘One shall be designated at the time of his 

22 or her appointment as the Chief Hearing Officer, who 

23 shall head and administer the Office of Hearings and Ap24 peals within the Administration.’’. 


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1 (b) OFFICE OF HEARINGS AND APPEALS ESTAB2 LISHED IN ADMINISTRATION.—Section 5 of the Small 

3 Business Act (15 U.S.C. 634) is amended by adding at 

4 the end the following: 

5 ‘‘(i) OFFICE OF HEARINGS AND APPEALS.— 

6 ‘‘(1) IN GENERAL.—There is established in the 

7 Administration an Office of Hearings and Appeals— 

8 ‘‘(A) to impartially decide such matters, 

9 where Congress designates that a hearing on 

10 the record is required or which the Adminis11 trator designates by regulation or otherwise; 

12 and 

13 ‘‘(B) which shall contain the Administra14 tion’s Freedom of Information/Privacy Acts Of15 fice. 

16 ‘‘(2) CHIEF HEARING OFFICER.—The Chief 

17 Hearing Officer shall be a career member of the 

18 Senior Executive Service and an attorney duly li19 censed by any State, commonwealth, territory, or the 

20 District of Columbia. 

21 ‘‘(A) DUTIES.—The Chief Hearing Officer 

22 shall— 

23 ‘‘(i) serve as the Chief Administrative 

24 Law Judge; and 


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1 ‘‘(ii) be responsible for the operation 

2 and management of the Office of Hearings 

3 and Appeals, pursuant to the rules of prac4 tice established by the Administrator. 

5 ‘‘(B) ALTERNATIVE DISPUTE RESOLU6 TION.—The Chief Hearing Officer may also as7 sign a matter for mediation or other means of 

8 alternative dispute resolution. 

9 ‘‘(3) ADMINISTRATIVE LAW JUDGES.— 

10 ‘‘(A) IN GENERAL.—An administrative law 

11 judge shall be an attorney duly licensed by any 

12 State, commonwealth, territory, or the District 

13 of Columbia. 

14 ‘‘(B) CONDITIONS OF EMPLOYMENT.—(i) 

15 An administrative law judge shall serve in the 

16 excepted service as an employee of the Adminis17 tration under section 2103 of title 5, United 

18 States Code, and under the supervision of the 

19 Chief Hearing Officer. 

20 ‘‘(ii) Administrative law judge positions 

21 shall be classified at Senior Level, as such term 

22 is defined in section 5376 of title 5, United 

23 States Code. 

24 ‘‘(iii) Compensation for administrative law 

25 judge positions shall be set in accordance with 


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1 the pay rates of section 5376 of title 5, United 

2 States Code. 

3 ‘‘(C) TREATMENT OF CURRENT PER4 SONNEL.—An individual serving as a Judge in 

5 the Office of Hearings and Appeals (as that po6 sition and office are designated in section 

7 134.101 of title 13, Code of Federal Regula8 tions (as in effect on January 1, 2012)) on the 

9 effective date of this subsection shall be consid10 ered as qualified to be and redesignated as ad11 ministrative law judges. 

12 ‘‘(D) POWERS.—An administrative law 

13 judge shall have the authority to conduct hear14 ings in accordance with sections 554, 556, and 

15 557 of title 5, United States Code.’’. 

16 SEC. 5. REQUIREMENT FRAUDULENT BUSINESSES BE SUS17 PENDED OR DEBARRED. 

18 (a) IN GENERAL.—Section 16(d)(2) 16(d)(2)(C) of 

19 the Small Business Act (15 U.S.C. 645(d)(3) 

20 645(d)(2)(C)) is amended by striking ‘‘on the basis that 

21 such misrepresentation indicates a lack of business integ22 rity that seriously and directly affects the present respon23 sibility to perform any contract awarded by the Federal 

24 Government or a subcontract under such a contract’’ and 

25 inserting ‘‘if the misrepresentation is established by a preVerDate Mar 15 2010 23:10 Dec 21, 2012 Jkt 029200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4206.RH H4206

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1 ponderance of the evidence (in the case of debarment) or 

2 adequate evidence (in the case of suspension)’’. 

3 (b) REVISION TO FAR.—Not later than 270 days 

4 after the date of enactment of this Act, the Federal Acqui5 sition Regulation shall be revised to implement the amend6 ment made by this section. 

7 (c) PUBLICATION OF PROCEDURES REGARDING SUS8 PENSION AND DEBARMENT.—Not later than 270 days 

9 after the date of enactment of this Act, the Administrator 

10 shall publish on the Administration’s Web site the stand11 ard operating procedures for suspension and debarment 

12 in effect, and the name and contact information for the 

13 individual designated by the Administrator as the senior 

14 individual responsible for suspension and debarment pro15 ceedings. 

16 (d) REQUIRED REGULATIONS.—Not later than 270 

17 days after the date of enactment of this Act, the Adminis18 trator of the Small Business Administration shall issue 

19 regulations defining the term ‘‘adequate evidence’’ for pur20 poses of section 16(d)(2) of the Small Business Act. 

21 SEC. 6. ANNUAL REPORT ON SUSPENSIONS AND 

22 DEBARMENTS PROPOSED BY SMALL BUSI23 NESS ADMINISTRATION. 

24 (a) REPORT REQUIREMENT.—The Administrator of 

25 the Small Business Administration shall submit each year 


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1 to the Committee on Small Business and Entrepreneur2 ship of the Senate, and the Committee on Small Business 

3 of the House of Representatives a report on the suspen4 sion and debarment actions taken by the Administrator 

5 during the year preceding the year of submission of the 

6 report. 

7 (b) MATTERS COVERED.—The report required by 

8 subsection (a) shall include the following information for 

9 the year covered by the report: 

10 (1) NUMBER.—The number of contractors pro11 posed for suspension or debarment. 

12 (2) SOURCE.—The office within a Federal 

13 agency that originated each proposal for suspension 

14 or debarment. 

15 (3) REASONS.—The reason for each proposal 

16 for suspension or debarment. 

17 (4) RESULTS.—The result of each proposal for 

18 suspension or debarment, and the reason for such 

19 result. 

20 (5) REFERRALS.—The number of suspensions 

21 or debarments referred to the Inspector General of 

22 the Small Business Administration or another agen23 cy, or to the Attorney General (for purposes of this 

24 paragraph, the Administrator may redact identifying 

25 information on names of companies or other inforVerDate Mar 15 2010 23:10 Dec 21, 2012 Jkt 029200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4206.RH H4206

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1 mation in order to protect the integrity of any ongo2 ing criminal or civil investigation). 

3 SEC. 7. SENSE OF CONGRESS. 

4 It is the sense of Congress that the Administrator 

5 of the Small Business Administration should present to 

6 the Inspector General of the Administration or the Attor7 ney General any evidence of a violation or potential viola8 tion of section 1041, title 18, United States Code, or sec9 tion 16(d) of the Small Business Act, presented in a pro10 ceeding conducted by the Office of Hearings and Appeals 

11 established in section 4 of this Act. 


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Union Calendar No. 531 

112TH CONGRESS 

2D SESSION H. R. 4206 

[Report No. 112–728, Part I] 

A BILL 

To amend the Small Business Act to provide for inother purposes. creased penalties for contracting fraud, and for 

DECEMBER 21, 2012 

Reported from the Committee on Small Business with 

amendments 

DECEMBER 21, 2012 

The Committee on the Judiciary discharged; committed 

the Union and ordered to be printed to the Committee of the Whole House on the State of 


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