I 

112TH CONGRESS 

2D SESSION H. R. 4206 

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 

A BILL 

To amend the Small Business Act to provide for increased 

penalties for contracting fraud, and for other purposes. 

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’’. 


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1 SEC. 2. INCREASED PENALTIES FOR FRAUD. 

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

3 States Code, is amended by adding at the end the fol4 lowing: 

5 ‘‘§ 1041. Misrepresentation of status as a small busi6 ness concern 

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

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

9 trick, scheme, or device a material fact; 

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

11 fraudulent statement or representation; or 

12 ‘‘(3) makes or uses any false writing or docu13 ment, including electronically, knowing the same to 

14 contain any materially false, fictitious, or fraudulent 

15 statement or entry; 

16 concerning status as a small business concern or compli17 ance with the requirements of the Small Business Act in 

18 an effort to obtain, retain, or complete a federal govern19 ment contract shall be fined $1,000,000 or in a sum equal 

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

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

22 more than 5 years, or both.’’. 

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

24 for such chapter is amended by inserting after the item 

25 relating to the following section: 

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


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1 SEC. 3. SAFE HARBOR FOR GOOD FAITH COMPLIANCE EF2 FORTS. 

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

4 Small Business Act (15 U.S.C. 16(d)) is amended by in5 serting after paragraph (2) the following: 

6 ‘‘(3) This subsection shall not apply to any con7 duct in violation of subsection (a) if the defendant 

8 acted in reliance on a written advisory opinion from 

9 a licensed attorney who is not an employee of the de10 fendant.’’. 

11 (b) MISREPRESENTATION OF STATUS.—Section 1041 

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

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

14 following: 

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

16 any conduct in violation of paragraph (2) or (3) of sub17 section (a) if the defendant acted in reliance on a written 

18 advisory opinion from a licensed attorney who is not an 

19 employee of the defendant.’’. 

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

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

22 the Small Business Administration shall issue rules defin23 ing what constitutes an adequate advisory opinion for pur24 poses of section 16(d)(3) of the Small Business Act. 

25 (d) SMALL BUSINESS COMPLIANCE GUIDE.—Not 

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


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1 Act, the Administrator of the Small Business Administra2 tion shall issue (pursuant to section 212 of the Small 

3 Business Regulatory Enforcement Fairness Act of 1996) 

4 a compliance guide to assist business concerns in accu5 rately determining their status as a small business con6 cern. 

7 SEC. 4. OFFICE OF HEARINGS AND APPEALS. 

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

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

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

11 or her appointment as the Chief Hearing Officer, who 

12 shall head and administer the Office of Hearings and Ap13 peals within the Administration.’’. 

14 (b) OFFICE OF HEARINGS AND APPEALS ESTAB15 LISHED IN ADMINISTRATION.—Section 5 of the Small 

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

17 the end the following: 

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

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

20 Administration an Office of Hearings and Appeals— 

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

22 where Congress designates that a hearing on 

23 the record is required or which the Adminis24 trator designates by regulation or otherwise; 

25 and 


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1 ‘‘(B) which shall contain the Administra2 tion’s Freedom of Information/Privacy Acts Of3 fice. 

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

5 Hearing Officer shall be a career member of the 

6 Senior Executive Service and an attorney duly li7 censed by any State, commonwealth, territory, or the 

8 District of Columbia. 

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

10 shall— 

11 ‘‘(i) serve as the Chief Administrative 

12 Law Judge; and 

13 ‘‘(ii) be responsible for the operation 

14 and management of the Office of Hearings 

15 and Appeals, pursuant to the rules of prac16 tice established by the Administrator. 

17 ‘‘(B) ALTERNATIVE DISPUTE RESOLU18 TION.—The Chief Hearing Officer may also as19 sign a matter for mediation or other means of 

20 alternative dispute resolution. 

21 ‘‘(3) ADMINISTRATIVE LAW JUDGES.— 

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

23 judge shall be an attorney duly licensed by any 

24 State, commonwealth, territory, or the District 

25 of Columbia. 


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

2 An administrative law judge shall serve in the 

3 excepted service as an employee of the Adminis4 tration under section 2103 of title 5, United 

5 States Code, and under the supervision of the 

6 Chief Hearing Officer. 

7 ‘‘(ii) Administrative law judge positions 

8 shall be classified at Senior Level, as such term 

9 is defined in section 5376 of title 5, United 

10 States Code. 

11 ‘‘(iii) Compensation for administrative law 

12 judge positions shall be set in accordance with 

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

14 States Code. 

15 ‘‘(C) TREATMENT OF CURRENT PER16 SONNEL.—An individual serving as a Judge in 

17 the Office of Hearings and Appeals (as that po18 sition and office are designated in section 

19 134.101 of title 13, Code of Federal Regula20 tions (as in effect on January 1, 2012)) on the 

21 effective date of this subsection shall be consid22 ered as qualified to be and redesignated as ad23 ministrative law judges. 

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

25 judge shall have the authority to conduct hearVerDate Mar 15 2010 20:41 Mar 20, 2012 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4206.IH H4206

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1 ings in accordance with sections 554, 556, and 

2 557 of title 5, United States Code.’’. 

3 SEC. 5. REQUIREMENT FRAUDULENT BUSINESSES BE SUS4 PENDED OR DEBARRED. 

5 (a) IN GENERAL.—Section 16(d)(2) of the Small 

6 Business Act (15 U.S.C. 645(d)(3)) is amended by strik7 ing ‘‘on the basis that such misrepresentation indicates a 

8 lack of business integrity that seriously and directly af9 fects the present responsibility to perform any contract 

10 awarded by the Federal Government or a subcontract 

11 under such a contract’’ and inserting ‘‘if the misrepresen12 tation is established by a preponderance of the evidence 

13 (in the case of debarment) or adequate evidence (in the 

14 case of suspension)’’. 

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

16 after the date of enactment of this Act, the Federal Acqui17 sition Regulation shall be revised to implement the amend18 ment made by this section. 

19 (c) PUBLICATION OF PROCEDURES REGARDING SUS20 PENSION AND DEBARMENT.—Not later than 270 days 

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

22 shall publish on the Administration’s Web site the stand23 ard operating procedures for suspension and debarment 

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

25 individual designated by the Administrator as the senior 


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1 individual responsible for suspension and debarment pro2 ceedings. 

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

4 days after the date of enactment of this Act, the Adminis5 trator of the Small Business Administration shall issue 

6 regulations defining the term ‘‘adequate evidence’’ for pur7 poses of section 16(d)(2) of the Small Business Act. 

8 SEC. 6. ANNUAL REPORT ON SUSPENSIONS AND 

9 DEBARMENTS PROPOSED BY SMALL BUSI10 NESS ADMINISTRATION. 

11 (a) REPORT REQUIREMENT.—The Administrator of 

12 the Small Business Administration shall submit each year 

13 to the Committee on Small Business and Entrepreneur14 ship of the Senate, and the Committee on Small Business 

15 of the House of Representatives a report on the suspen16 sion and debarment actions taken by the Administrator 

17 during the year preceding the year of submission of the 

18 report. 

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

20 subsection (a) shall include the following information for 

21 the year covered by the report: 

22 (1) NUMBER.—The number of contractors pro23 posed for suspension or debarment. 


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

2 agency that originated each proposal for suspension 

3 or debarment. 

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

5 for suspension or debarment. 

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

7 suspension or debarment, and the reason for such 

8 result. 

9 (5) REFERRALS.—The number of suspensions 

10 or debarments referred to the Inspector General of 

11 the Small Business Administration or another agen12 cy, or to the Attorney General (for purposes of this 

13 paragraph, the Administrator may redact identifying 

14 information on names of companies or other infor15 mation in order to protect the integrity of any ongo16 ing criminal or civil investigation). 

17 SEC. 7. SENSE OF CONGRESS. 

18 It is the sense of Congress that the Administrator 

19 of the Small Business Administration should present to 

20 the Inspector General of the Administration or the Attor21 ney General any evidence of a violation or potential viola22 tion of section 1041, title 18, United States Code, or sec23 tion 16(d) of the Small Business Act, presented in a proVerDate Mar 15 2010 03:21 Mar 20, 2012 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4206.IH H4206

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1 ceeding conducted by the Office of Hearings and Appeals 

2 established in section 4 of this Act. 

Æ 


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