I 

112TH CONGRESS 

1ST SESSION S. 633 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 22, 2011 

Referred to the Committee on Small Business 

AN ACT 

To prevent fraud in small business contracting, 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, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Small Business Con3 tracting Fraud Prevention Act of 2011’’. 

4 SEC. 2. DEFINITIONS. 

5 In this Act— 

6 (1) the term ‘‘8(a) program’’ means the pro7 gram under section 8(a) of the Small Business Act 

8 (15 U.S.C. 637(a)); 

9 (2) the terms ‘‘Administration’’ and ‘‘Adminis10 trator’’ mean the Small Business Administration 

11 and the Administrator thereof, respectively; 

12 (3) the terms ‘‘HUBZone’’ and ‘‘HUBZone 

13 small business concern’’ and ‘‘HUBZone map’’ have 

14 the meanings given those terms in section 3(p) of 

15 the Small Business Act (15 U.S.C. 632(p)), as 

16 amended by this Act; and 

17 (4) the term ‘‘recertification’’ means a deter18 mination by the Administrator that a business con19 cern that was previously determined to be a qualified 

20 HUBZone small business concern is a qualified 

21 HUBZone small business concern under section 

22 3(p)(5) of the Small Business Act (15 U.S.C. 

23 632(p)(5)). 


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1 SEC. 3. FRAUD DETERRENCE AT THE SMALL BUSINESS AD2 MINISTRATION. 

3 Section 16 of the Small Business Act (15 U.S.C. 645) 

4 is amended— 

5 (1) in subsection (d)— 

6 (A) in paragraph (1)— 

7 (i) in the matter preceding subpara8 graph (A), by striking ‘‘Whoever’’ and all 

9 that follows through ‘‘oneself or another’’ 

10 and inserting the following: ‘‘A person 

11 shall be subject to the penalties and rem12 edies described in paragraph (2) if the per13 son misrepresents the status of any con14 cern or person as a small business concern, 

15 a qualified HUBZone small business con16 cern, a small business concern owned and 

17 controlled by socially and economically dis18 advantaged individuals, a small business 

19 concern owned and controlled by women, 

20 or a small business concern owned and 

21 controlled by service-disabled veterans, in 

22 order to obtain for any person’’; 

23 (ii) by amending subparagraph (A) to 

24 read as follows: 


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1 ‘‘(A) prime contract, subcontract, grant, or co2 operative agreement to be awarded under subsection 

3 (a) or (m) of section 8, or section 9, 15, 31, or 36;’’; 

4 (iii) by striking subparagraph (B); 

5 (iv) by redesignating subparagraphs 

6 (C) and (D) as subparagraphs (B) and 

7 (C), respectively; and 

8 (v) in subparagraph (C), as so redes9 ignated, by striking ‘‘, shall be’’ and all 

10 that follows and inserting a period; 

11 (B) in paragraph (2)— 

12 (i) by redesignating subparagraphs 

13 (C) and (D) as subparagraphs (D) and 

14 (E), respectively; and 

15 (ii) by inserting after subparagraph 

16 (B) the following: 

17 ‘‘(C) be subject to the civil remedies under sub18 chapter III of chapter 37 of title 31, United States 

19 Code (commonly known as the ‘False Claims Act’);’’; 

20 and 

21 (C) by adding at the end the following: 

22 ‘‘(3)(A) In the case of a violation of paragraph 

23 (1)(A), (g), or (h), for purposes of a proceeding described 

24 in subparagraph (A) or (C) of paragraph (2), the amount 

25 of the loss to the Federal Government or the damages susVerDate Mar 15 2010 21:59 Sep 26, 2011 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S633.RFH S633

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1 tained by the Federal Government, as applicable, shall be 

2 an amount equal to the amount that the Federal Govern3 ment paid to the person that received a contract, grant, 

4 or cooperative agreement described in paragraph (1)(A), 

5 (g), or (h), respectively. 

6 ‘‘(B) In the case of a violation of subparagraph (B) 

7 or (C) of paragraph (1), for the purpose of a proceeding 

8 described in subparagraph (A) or (C) of paragraph (2), 

9 the amount of the loss to the Federal Government or the 

10 damages sustained by the Federal Government, as appli11 cable, shall be an amount equal to the portion of any pay12 ment by the Federal Government under a prime contract 

13 that was used for a subcontract described in subparagraph 

14 (B) or (C) of paragraph (1), respectively. 

15 ‘‘(C) In a proceeding described in subparagraph (A) 

16 or (B), no credit shall be applied against any loss or dam17 ages to the Federal Government for the fair market value 

18 of the property or services provided to the Federal Govern19 ment.’’; 

20 (2) by striking subsection (e) and inserting the 

21 following: 

22 ‘‘(e) Any representation of the status of any concern 

23 or person as a small business concern, a HUBZone small 

24 business concern, a small business concern owned and con25 trolled by socially and economically disadvantaged individVerDate Mar 15 2010 21:59 Sep 26, 2011 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S633.RFH S633

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1 uals, a small business concern owned and controlled by 

2 women, or a small business concern owned and controlled 

3 by service-disabled veterans, in order to obtain any prime 

4 contract, subcontract, grant, or cooperative agreement de5 scribed in subsection (d)(1) shall be made in writing or 

6 through the Online Representations and Certifications Ap7 plication process required under section 4.1201 of the 

8 Federal Acquisition Regulation, or any successor there9 to.’’; and 

10 (3) by adding at the end the following: 

11 ‘‘(g) A person shall be subject to the penalties and 

12 remedies described in subsection (d)(2) if the person mis13 represents the status of any concern or person as a small 

14 business concern, a qualified HUBZone small business 

15 concern, a small business concern owned and controlled 

16 by socially and economically disadvantaged individuals, a 

17 small business concern owned and controlled by women, 

18 or a small business concern owned and controlled by serv19 ice-disabled veterans— 

20 ‘‘(1) in order to allow any person to participate 

21 in any program of the Administration; or 

22 ‘‘(2) in relation to a protest of a contract award 

23 or proposed contract award made under regulations 

24 issued by the Administration. 


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1 ‘‘(h)(1) A person that submits a request for payment 

2 on a contract or subcontract that is awarded under sub3 section (a) or (m) of section 8, or section 9, 15, 31, or 

4 36, shall be deemed to have submitted a certification that 

5 the person complied with regulations issued by the Admin6 istration governing the percentage of work that the person 

7 is required to perform on the contract or subcontract, un8 less the person states, in writing, that the person did not 

9 comply with the regulations. 

10 ‘‘(2) A person shall be subject to the penalties and 

11 remedies described in subsection (d)(2) if the person— 

12 ‘‘(A) uses the services of a business other than 

13 the business awarded the contract or subcontract to 

14 perform a greater percentage of work under a con15 tract than is permitted by regulations issued by the 

16 Administration; or 

17 ‘‘(B) willfully participates in a scheme to cir18 cumvent regulations issued by the Administration 

19 governing the percentage of work that a contractor 

20 is required to perform on a contract.’’. 

21 SEC. 4. VETERANS INTEGRITY IN CONTRACTING. 

22 (a) DEFINITION.—Section 3(q)(1) of the Small Busi23 ness Act (15 U.S.C. 632(q)(1)) is amended by striking 

24 ‘‘means a veteran’’ and all that follows and inserting the 

25 following: ‘‘means— 


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1 ‘‘(A) a veteran with a service-connected 

2 disability rated by the Secretary of Veterans Af3 fairs as zero percent or more disabling; or 

4 ‘‘(B) a former member of the Armed 

5 Forces who is retired, separated, or placed on 

6 the temporary disability retired list for physical 

7 disability under chapter 61 of title 10, United 

8 States Code.’’. 

9 (b) VETERANS CONTRACTING.—Section 4 of the 

10 Small Business Act (15 U.S.C. 633) is amended by adding 

11 at the end the following: 

12 ‘‘(g) VETERAN STATUS.— 

13 ‘‘(1) IN GENERAL.—A business concern seeking 

14 status as a small business concern owned and con15 trolled by service-disabled veterans shall— 

16 ‘‘(A) submit an annual certification indi17 cating that the business concern is a small busi18 ness concern owned and controlled by service19 disabled veterans by means of the Online Rep20 resentations and Certifications Application 

21 process required under section 4.1201 of the 

22 Federal Acquisition Regulation, or any suc23 cessor thereto; and 

24 ‘‘(B) register with— 


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1 ‘‘(i) the Central Contractor Registra2 tion database maintained under subpart 

3 4.11 of the Federal Acquisition Regulation, 

4 or any successor thereto; and 

5 ‘‘(ii) the VetBiz database of the De6 partment of Veterans Affairs, or any suc7 cessor thereto. 

8 ‘‘(2) VERIFICATION OF STATUS.— 

9 ‘‘(A) VETERANS AFFAIRS.—The Secretary 

10 of Veterans Affairs shall determine whether a 

11 business concern registered with the VetBiz 

12 database of the Department of Veterans Af13 fairs, or any successor thereto, as a small busi14 ness concern owned and controlled by veterans 

15 or a small business concern owned and con16 trolled by service-disabled veterans is owned 

17 and controlled by a veteran or a service-disabled 

18 veteran, as the case may be. 

19 ‘‘(B) FEDERAL AGENCIES GENERALLY.— 

20 The head of each Federal agency shall— 

21 ‘‘(i) for a sole source contract award22 ed to a small business concern owned and 

23 controlled by service-disabled veterans or a 

24 contract awarded with competition re25 stricted to small business concerns owned 


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1 and controlled by service-disabled veterans 

2 under section 36, determine whether a 

3 business concern submitting a proposal for 

4 the contract is a small business concern 

5 owned and controlled by service-disabled 

6 veterans; and 

7 ‘‘(ii) use the VetBiz database of the 

8 Department of Veterans Affairs, or any 

9 successor thereto, in determining whether 

10 a business concern is a small business con11 cern owned and controlled by service-dis12 abled veterans. 

13 ‘‘(3) DEBARMENT AND SUSPENSION.—If the 

14 Administrator determines that a business concern 

15 knowingly and willfully misrepresented that the busi16 ness concern is a small business concern owned and 

17 controlled by service-disabled veterans, the Adminis18 trator may debar or suspend the business concern 

19 from contracting with the United States.’’. 

20 (c) INTEGRATION OF DATABASES.—The Adminis21 trator for Federal Procurement Policy and the Secretary 

22 of Veterans Affairs shall ensure that data is shared on 

23 an ongoing basis between the VetBiz database of the De24 partment of Veterans Affairs and the Central Contractor 


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1 Registration database maintained under subpart 4.11 of 

2 the Federal Acquisition Regulation. 

3 (d) EFFECTIVE DATE.— 

4 (1) IN GENERAL.—The amendment made by 

5 subsection (b) and the requirements under sub6 section (c) shall take effect on the date on which the 

7 Secretary of Veterans Affairs (referred to in this 

8 subsection as the ‘‘Secretary’’) publishes in the Fed9 eral Register a determination that the Department 

10 of Veterans Affairs has the necessary resources and 

11 capacity to carry out the additional responsibility of 

12 determining whether small business concerns reg13 istered with the VetBiz database of the Department 

14 of Veterans Affairs are owned and controlled by a 

15 veteran or a service-disabled veteran, as the case 

16 may be, in accordance with subsection (g) of section 

17 4 of the Small Business Act (15 U.S.C. 633), as 

18 added by subsection (b). 

19 (2) TIMELINE.—If the Secretary determines 

20 that the Secretary is not able to publish the deter21 mination under paragraph (1) before the date that 

22 is 1 year after the date of enactment of this Act, the 

23 Secretary shall, not later than 1 year after the date 

24 of enactment of this Act, submit a report containing 

25 an estimate of the date on which the Secretary will 


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1 publish the determination under paragraph (1) to 

2 the Committee on Small Business and Entrepre3 neurship and the Committee on Veterans’ Affairs of 

4 the Senate and the Committee on Small Business 

5 and the Committee on Veterans’ Affairs of the 

6 House of Representatives. 

7 SEC. 5. SECTION 8(a) PROGRAM IMPROVEMENTS. 

8 (a) REVIEW OF EFFECTIVENESS.—Section 8(a) of 

9 the Small Business Act (15 U.S.C. 637(a)) is amended 

10 by adding at the end the following: 

11 ‘‘(22) Not later than 3 years after the date of enact12 ment of this paragraph, and every 3 years thereafter, the 

13 Comptroller General of the United States shall— 

14 ‘‘(A) conduct an evaluation of the effectiveness 

15 of the program under this subsection, including an 

16 examination of— 

17 ‘‘(i) the number and size of contracts ap18 plied for, as compared to the number received 

19 by, small business concerns after successfully 

20 completing the program; 

21 ‘‘(ii) the percentage of small business con22 cerns that continue to operate during the 3-year 

23 period beginning on the date on which the small 

24 business concerns successfully complete the pro25 gram; 


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1 ‘‘(iii) whether the business of small busi2 ness concerns increases during the 3-year pe3 riod beginning on the date on which the small 

4 business concerns successfully complete the pro5 gram; and 

6 ‘‘(iv) the number of training sessions of7 fered under the program; and 

8 ‘‘(B) submit to the Committee on Small Busi9 ness and Entrepreneurship of the Senate and the 

10 Committee on Small Business of the House of Rep11 resentatives a report regarding each evaluation 

12 under subparagraph (A).’’. 

13 (b) OTHER IMPROVEMENTS.—In order to improve 

14 the 8(a) program, the Administrator shall— 

15 (1) not later than 90 days after the date of en16 actment of this Act, begin to— 

17 (A) evaluate the feasibility of— 

18 (i) using additional third-party data 

19 sources; 

20 (ii) making unannounced visits of 

21 sites that are selected randomly or using 

22 risk-based criteria; 

23 (iii) using fraud detection tools, in24 cluding data-mining techniques; and 


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1 (iv) conducting financial and analyt2 ical training for the business opportunity 

3 specialists of the Administration; 

4 (B) evaluate the feasibility and advisability 

5 of amending regulations applicable the 8(a) pro6 gram to require that calculations of the ad7 justed net worth or total assets of an individual 

8 include assets held by the spouse of the indi9 vidual; and 

10 (C) develop a more consistent enforcement 

11 strategy that includes the suspension or debar12 ment of contractors that knowingly make mis13 representations in order to qualify for the 8(a) 

14 program; and 

15 (2) not later than 1 year after the date on 

16 which the Comptroller General submits the report 

17 under section 8(a)(22)(B) of the Small Business 

18 Act, as added by subsection (c), issue, in final form, 

19 proposed regulations of the Administration that— 

20 (A) determine the economic disadvantage 

21 of a participant in the 8(a) program based on 

22 the income and asset levels of the participant at 

23 the time of application and annual recertifi24 cation for the 8(a) program; and 


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1 (B) limit the ability of a small business 

2 concern to participate in the 8(a) program if an 

3 immediate family member of an owner of the 

4 small business concern is, or has been, a partic5 ipant in the 8(a) program, in the same indus6 try. 

7 SEC. 6. HUBZONE IMPROVEMENTS. 

8 (a) PURPOSE.—The purpose of this section is to re9 form and improve the HUBZone program of the Adminis10 tration. 

11 (b) IN GENERAL.—The Administrator shall— 

12 (1) ensure the HUBZone map is— 

13 (A) accurate and up-to-date; and 

14 (B) revised as new data is made available 

15 to maintain the accuracy and currency of the 

16 HUBZone map; 

17 (2) implement policies for ensuring that only 

18 HUBZone small business concerns determined to be 

19 qualified under section 3(p)(5) of the Small Busi20 ness Act (15 U.S.C. 632(p)(5)) are participating in 

21 the HUBZone program, including through the ap22 propriate use of technology to control costs and 

23 maximize, among other benefits, uniformity, com24 pleteness, simplicity, and efficiency; 


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1 (3) submit to the Committee on Small Business 

2 and Entrepreneurship of the Senate and the Com3 mittee on Small Business of the House of Rep4 resentatives a report regarding any application to be 

5 designated as a HUBZone small business concern or 

6 for recertification for which the Administrator has 

7 not made a determination as of the date that is 60 

8 days after the date on which the application was 

9 submitted or initiated, which shall include a plan 

10 and timetable for ensuring the timely processing of 

11 the applications; and 

12 (4) develop measures and implement plans to 

13 assess the effectiveness of the HUBZone program 

14 that— 

15 (A) require the identification of a baseline 

16 point in time to allow the assessment of eco17 nomic development under the HUBZone pro18 gram, including creating additional jobs; and 

19 (B) take into account— 

20 (i) the economic characteristics of the 

21 HUBZone; and 

22 (ii) contracts being counted under 

23 multiple socioeconomic subcategories. 

24 (c) EMPLOYMENT PERCENTAGE.—Section 3(p) of the 

25 Small Business Act (15 U.S.C. 632(p)) is amended— 


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1 (1) in paragraph (5), by adding at the end the 

2 following: 

3 ‘‘(E) EMPLOYMENT PERCENTAGE DURING

4 INTERIM PERIOD.— 

5 ‘‘(i) DEFINITION.—In this subpara6 graph, the term ‘interim period’ means the 

7 period beginning on the date on which the 

8 Administrator determines that a HUBZone 

9 small business concern is qualified under 

10 subparagraph (A) and ending on the day 

11 before the date on which a contract under 

12 the HUBZone program for which the 

13 HUBZone small business concern submits 

14 a bid is awarded. 

15 ‘‘(ii) INTERIM PERIOD.—During the 

16 interim period, the Administrator may not 

17 determine that the HUBZone small busi18 ness is not qualified under subparagraph 

19 (A) based on a failure to meet the applica20 ble employment percentage under subpara21 graph (A)(i)(I), unless the HUBZone small 

22 business concern— 

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1 centage under subparagraph (A)(i)(I); 

2 or 

3 ‘‘(II) does not meet the applica4 ble employment percentage— 

5 ‘‘(aa) on the date on which 

6 the HUBZone small business 

7 concern submits a bid for a con8 tract under the HUBZone pro9 gram; or 

10 ‘‘(bb) on the date on which 

11 the HUBZone small business 

12 concern is awarded a contract 

13 under the HUBZone program.’’; 

14 and 

15 (2) by adding at the end the following: 

16 ‘‘(8) HUBZONE PROGRAM.—The term 

17 ‘HUBZone program’ means the program established 

18 under section 31. 

19 ‘‘(9) HUBZONE MAP.—The term ‘HUBZone 

20 map’ means the map used by the Administration to 

21 identify HUBZones.’’. 

22 (d) REDESIGNATED AREAS.—Section 3(p)(4)(C)(i) of 

23 the Small Business Act (15 U.S.C. 632(p)(4)(C)(i)) is 

24 amended to read as follows: 


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1 ‘‘(i) 3 years after the first date on 

2 which the Administrator publishes a 

3 HUBZone map that is based on the results 

4 from the 2010 decennial census; or’’. 

5 SEC. 7. ANNUAL REPORT ON SUSPENSION, DEBARMENT, 

6 AND PROSECUTION. 

7 The Administrator shall submit an annual report to 

8 the Committee on Small Business and Entrepreneurship 

9 of the Senate and the Committee on Small Business of 

10 the House of Representatives that contains— 

11 (1) the number of debarments from participa12 tion in programs of the Administration issued by the 

13 Administrator during the 1-year period preceding 

14 the date of the report, including— 

15 (A) the number of debarments that were 

16 based on a conviction; and 

17 (B) the number of debarments that were 

18 fact-based and did not involve a conviction; 

19 (2) the number of suspensions from participa20 tion in programs of the Administration issued by the 

21 Administrator during the 1-year period preceding 

22 the date of the report, including— 

23 (A) the number of suspensions issued that 

24 were based upon indictments; and 


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1 (B) the number of suspensions issued that 

2 were fact-based and did not involve an indict3 ment; 

4 (3) the number of suspension and debarments 

5 issued by the Administrator during the 1-year period 

6 preceding the date of the report that were based 

7 upon referrals from offices of the Administration, 

8 other than the Office of Inspector General; 

9 (4) the number of suspension and debarments 

10 issued by the Administrator during the 1-year period 

11 preceding the date of the report based upon referrals 

12 from the Office of Inspector General; and 

13 (5) the number of persons that the Adminis14 trator declined to debar or suspend after a referral 

15 described in paragraph (8), and the reason for each 

16 such decision. 

Passed the Senate September 21, 2011. 

Attest: NANCY ERICKSON, 

Secretary. 


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