II 

112TH CONGRESS 

1ST SESSION S. 633 

To prevent fraud in small business contracting, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 17, 2011 

Ms. SNOWE (for herself, Ms. LANDRIEU, Mr. BROWN of Massachusetts, Mr. 

MERKLEY, and Mr. ENZI) introduced the following bill; which was read 

twice and referred to the Committee on Small Business and Entrepreneurship 

A BILL 

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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Con5 tracting Fraud Prevention Act of 2011’’. 

6 SEC. 2. DEFINITIONS. 

7 In this Act— 

8 (1) the term ‘‘8(a) program’’ means the pro9 gram under section 8(a) of the Small Business Act 

10 (15 U.S.C. 637(a)); 


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1 (2) the terms ‘‘Administration’’ and ‘‘Adminis2 trator’’ mean the Small Business Administration 

3 and the Administrator thereof, respectively; 

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

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

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

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

8 amended by this Act; and 

9 (4) the term ‘‘recertification’’ means a deter10 mination by the Administrator that a business con11 cern that was previously determined to be a qualified 

12 HUBZone small business concern is a qualified 

13 HUBZone small business concern under section 

14 3(p)(5) of the Small Business Act (15 U.S.C. 

15 632(p)(5)). 

16 SEC. 3. FRAUD DETERRENCE AT THE SMALL BUSINESS AD17 MINISTRATION. 

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

19 is amended— 

20 (1) in subsection (d)— 

21 (A) in paragraph (1)— 

22 (i) in the matter preceding subpara23 graph (A), by striking ‘‘Whoever’’ and all 

24 that follows through ‘‘oneself or another’’ 

25 and inserting the following: ‘‘A person 


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1 shall be subject to the penalties and rem2 edies described in paragraph (2) if the per3 son misrepresents the status of any con4 cern or person as a small business concern, 

5 a qualified HUBZone small business con6 cern, a small business concern owned and 

7 controlled by socially and economically dis8 advantaged individuals, a small business 

9 concern owned and controlled by women, 

10 or a small business concern owned and 

11 controlled by service-disabled veterans, in 

12 order to obtain for any person’’; 

13 (ii) by amending subparagraph (A) to 

14 read as follows: 

15 ‘‘(A) prime contract, subcontract, grant, or co16 operative agreement to be awarded under subsection 

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

18 (iii) by striking subparagraph (B); 

19 (iv) by redesignating subparagraphs 

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

21 (C), respectively; and 

22 (v) in subparagraph (C), as so redes23 ignated, by striking ‘‘, shall be’’ and all 

24 that follows and inserting a period; 

25 (B) in paragraph (2)— 


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1 (i) by redesignating subparagraphs 

2 (C) and (D) as subparagraphs (D) and 

3 (E), respectively; and 

4 (ii) by inserting after subparagraph 

5 (B) the following: 

6 ‘‘(C) be subject to the civil remedies under sub7 chapter III of chapter 37 of title 31, United States 

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

9 and 

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

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

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

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

14 of the loss to the Federal Government or the damages sus15 tained by the Federal Government, as applicable, shall be 

16 an amount equal to the amount that the Federal Govern17 ment paid to the person that received a contract, grant, 

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

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

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

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

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

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

24 damages sustained by the Federal Government, as appli25 cable, shall be an amount equal to the portion of any payVerDate Mar 15 2010 04:15 Mar 24, 2011 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S633.IS S633

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1 ment by the Federal Government under a prime contract 

2 that was used for a subcontract described in subparagraph 

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

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

5 or (B), no credit shall be applied against any loss or dam6 ages to the Federal Government for the fair market value 

7 of the property or services provided to the Federal Govern8 ment.’’; 

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

10 following: 

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

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

13 business concern, a small business concern owned and con14 trolled by socially and economically disadvantaged individ15 uals, a small business concern owned and controlled by 

16 women, or a small business concern owned and controlled 

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

18 contract, subcontract, grant, or cooperative agreement de19 scribed in subsection (d)(1) shall be made in writing or 

20 through the Online Representations and Certifications Ap21 plication process required under section 4.1201 of the 

22 Federal Acquisition Regulation, or any successor there23 to.’’; and 

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


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

2 remedies described in subsection (d)(2) if the person mis3 represents the status of any concern or person as a small 

4 business concern, a qualified HUBZone small business 

5 concern, a small business concern owned and controlled 

6 by socially and economically disadvantaged individuals, a 

7 small business concern owned and controlled by women, 

8 or a small business concern owned and controlled by serv9 ice-disabled veterans— 

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

11 in any program of the Administration; or 

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

13 or proposed contract award made under regulations 

14 issued by the Administration. 

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

16 on a contract or subcontract that is awarded under sub17 section (a) or (m) of section 8, or section 9, 15, 31, or 

18 36, shall be deemed to have submitted a certification that 

19 the person complied with regulations issued by the Admin20 istration governing the percentage of work that the person 

21 is required to perform on the contract or subcontract, un22 less the person states, in writing, that the person did not 

23 comply with the regulations. 

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

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


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

2 the business awarded the contract or subcontract to 

3 perform a greater percentage of work under a con4 tract than is permitted by regulations issued by the 

5 Administration; or 

6 ‘‘(B) willfully participates in a scheme to cir7 cumvent regulations issued by the Administration 

8 governing the percentage of work that a contractor 

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

10 SEC. 4. VETERANS INTEGRITY IN CONTRACTING. 

11 (a) DEFINITION.—Section 3(q)(1) of the Small Busi12 ness Act (15 U.S.C. 632(q)(1)) is amended by striking 

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

14 following: ‘‘means— 

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

16 disability rated by the Secretary of Veterans Af17 fairs as zero percent or more disabling; or 

18 ‘‘(B) a former member of the Armed 

19 Forces who is retired, separated, or placed on 

20 the temporary disability retired list for physical 

21 disability under chapter 61 of title 10, United 

22 States Code.’’. 

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

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

25 at the end the following: 


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1 ‘‘(g) VETERAN STATUS.— 

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

3 status as a small business concern owned and con4 trolled by service-disabled veterans shall— 

5 ‘‘(A) submit an annual certification indi6 cating that the business concern is a small busi7 ness concern owned and controlled by service8 disabled veterans by means of the Online Rep9 resentations and Certifications Application 

10 process required under section 4.1201 of the 

11 Federal Acquisition Regulation, or any suc12 cessor thereto; and 

13 ‘‘(B) register with— 

14 ‘‘(i) the Central Contractor Registra15 tion database maintained under subpart 

16 4.11 of the Federal Acquisition Regulation, 

17 or any successor thereto; and 

18 ‘‘(ii) the VetBiz database of the De19 partment of Veterans Affairs, or any suc20 cessor thereto. 

21 ‘‘(2) VERIFICATION OF STATUS.— 

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

23 of Veterans Affairs shall determine whether a 

24 business concern registered with the VetBiz 

25 database of the Department of Veterans AfVerDate Mar 15 2010 04:15 Mar 24, 2011 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S633.IS S633

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1 fairs, or any successor thereto, as a small busi2 ness concern owned and controlled by veterans 

3 or a small business concern owned and con4 trolled by service-disabled veterans is owned 

5 and controlled by a veteran or a service-disabled 

6 veteran, as the case may be. 

7 ‘‘(B) FEDERAL AGENCIES GENERALLY.— 

8 The head of each Federal agency shall— 

9 ‘‘(i) for a sole source contract award10 ed to a small business concern owned and 

11 controlled by service-disabled veterans or a 

12 contract awarded with competition re13 stricted to small business concerns owned 

14 and controlled by service-disabled veterans 

15 under section 36, determine whether a 

16 business concern submitting a proposal for 

17 the contract is a small business concern 

18 owned and controlled by service-disabled 

19 veterans; and 

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

21 Department of Veterans Affairs, or any 

22 successor thereto, in determining whether 

23 a business concern is a small business con24 cern owned and controlled by service-dis25 abled veterans. 


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

2 Administrator determines that a business concern 

3 knowingly and willfully misrepresented that the busi4 ness concern is a small business concern owned and 

5 controlled by service-disabled veterans, the Adminis6 trator may debar or suspend the business concern 

7 from contracting with the United States.’’. 

8 (c) INTEGRATION OF DATABASES.—Not later than 1 

9 year after the date of enactment of this Act, the Adminis10 trator for Federal Procurement Policy and the Secretary 

11 of Veterans Affairs shall ensure that data is shared on 

12 an ongoing basis between the VetBiz database of the De13 partment of Veterans Affairs and the Central Contractor 

14 Registration database maintained under subpart 4.11 of 

15 the Federal Acquisition Regulation. 

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

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

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

19 by adding at the end the following: 

20 ‘‘(22) Not later than 3 years after the date of enact21 ment of this paragraph, and every 3 years thereafter, the 

22 Comptroller General of the United States shall— 

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

24 of the program under this subsection, including an 

25 examination of— 


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1 ‘‘(i) the number and size of contracts ap2 plied for, as compared to the number received 

3 by, small business concerns after successfully 

4 completing the program; 

5 ‘‘(ii) the percentage of small business con6 cerns that continue to operate during the 3-year 

7 period beginning on the date on which the small 

8 business concerns successfully complete the pro9 gram; 

10 ‘‘(iii) whether the business of small busi11 ness concerns increases during the 3-year pe12 riod beginning on the date on which the small 

13 business concerns successfully complete the pro14 gram; and 

15 ‘‘(iv) the number of training sessions of16 fered under the program; and 

17 ‘‘(B) submit to the Committee on Small Busi18 ness and Entrepreneurship of the Senate and the 

19 Committee on Small Business of the House of Rep20 resentatives a report regarding each evaluation 

21 under subparagraph (A).’’. 

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

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

24 (1) not later than 90 days after the date of en25 actment of this Act, begin to— 


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1 (A) evaluate the feasibility of— 

2 (i) using additional third-party data 

3 sources; 

4 (ii) making unannounced visits of 

5 sites that are selected randomly or using 

6 risk-based criteria; 

7 (iii) using fraud detection tools, in8 cluding data-mining techniques; and 

9 (iv) conducting financial and analyt10 ical training for the business opportunity 

11 specialists of the Administration; 

12 (B) evaluate the feasibility and advisability 

13 of amending regulations applicable the 8(a) pro14 gram to require that calculations of the ad15 justed net worth or total assets of an individual 

16 include assets held by the spouse of the indi17 vidual; and 

18 (C) develop a more consistent enforcement 

19 strategy that includes the suspension or debar20 ment of contractors that knowingly make mis21 representations in order to qualify for the 8(a) 

22 program; and 

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

24 which the Comptroller General submits the report 

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


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

2 proposed regulations of the Administration that— 

3 (A) determine the economic disadvantage 

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

5 the income and asset levels of the participant at 

6 the time of application and annual recertifi7 cation for the 8(a) program; and 

8 (B) limit the ability of a small business 

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

10 immediate family member of an owner of the 

11 small business concern is, or has been, a partic12 ipant in the 8(a) program, in the same indus13 try. 

14 SEC. 6. HUBZONE IMPROVEMENTS. 

15 (a) PURPOSE.—The purpose of this section is to re16 form and improve the HUBZone program of the Adminis17 tration. 

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

19 (1) ensure the HUBZone map is— 

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

21 (B) revised as new data is made available 

22 to maintain the accuracy and currency of the 

23 HUBZone map; 

24 (2) implement policies for ensuring that only 

25 HUBZone small business concerns determined to be 


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1 qualified under section 3(p)(5) of the Small Busi2 ness Act (15 U.S.C. 632(p)(5)) are participating in 

3 the HUBZone program, including through the ap4 propriate use of technology to control costs and 

5 maximize, among other benefits, uniformity, com6 pleteness, simplicity, and efficiency; 

7 (3) submit to the Committee on Small Business 

8 and Entrepreneurship of the Senate and the Com9 mittee on Small Business of the House of Rep10 resentatives a report regarding any application to be 

11 designated as a HUBZone small business concern or 

12 for recertification for which the Administrator has 

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

14 days after the date on which the application was 

15 submitted or initiated, which shall include a plan 

16 and timetable for ensuring the timely processing of 

17 the applications; and 

18 (4) develop measures and implement plans to 

19 assess the effectiveness of the HUBZone program 

20 that— 

21 (A) require the identification of a baseline 

22 point in time to allow the assessment of eco23 nomic development under the HUBZone pro24 gram, including creating additional jobs; and 

25 (B) take into account— 


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1 (i) the economic characteristics of the 

2 HUBZone; and 

3 (ii) contracts being counted under 

4 multiple socioeconomic subcategories. 

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

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

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

8 following: 

9 ‘‘(E) EMPLOYMENT PERCENTAGE DURING

10 INTERIM PERIOD.— 

11 ‘‘(i) DEFINITION.—In this subpara12 graph, the term ‘interim period’ means the 

13 period beginning on the date on which the 

14 Administrator determines that a HUBZone 

15 small business concern is qualified under 

16 subparagraph (A) and ending on the day 

17 before the date on which a contract under 

18 the HUBZone program for which the 

19 HUBZone small business concern submits 

20 a bid is awarded. 

21 ‘‘(ii) INTERIM PERIOD.—During the 

22 interim period, the Administrator may not 

23 determine that the HUBZone small busi24 ness is not qualified under subparagraph 

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1 ble employment percentage under subpara2 graph (A)(i)(I), unless the HUBZone small 

3 business concern— 

4 ‘‘(I) has not attempted to main5 tain the applicable employment per6 centage under subparagraph (A)(i)(I); 

7 or 

8 ‘‘(II) does not meet the applica9 ble employment percentage— 

10 ‘‘(aa) on the date on which 

11 the HUBZone small business 

12 concern submits a bid for a con13 tract under the HUBZone pro14 gram; or 

15 ‘‘(bb) on the date on which 

16 the HUBZone small business 

17 concern is awarded a contract 

18 under the HUBZone program.’’; 

19 and 

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

21 ‘‘(8) HUBZONE PROGRAM.—The term 

22 ‘HUBZone program’ means the program established 

23 under section 31. 


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

2 map’ means the map used by the Administration to 

3 identify HUBZones.’’. 

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

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

6 amended to read as follows: 

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

8 which the Administrator publishes a 

9 HUBZone map that is based on the results 

10 from the 2010 decennial census; or’’. 

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

12 AND PROSECUTION. 

13 The Administrator shall submit an annual report to 

14 the Committee on Small Business and Entrepreneurship 

15 of the Senate and the Committee on Small Business of 

16 the House of Representatives that contains— 

17 (1) the number of debarments from participa18 tion in programs of the Administration issued by the 

19 Administrator during the 1-year period preceding 

20 the date of the report, including— 

21 (A) the number of debarments that were 

22 based on a conviction; and 

23 (B) the number of debarments that were 

24 fact-based and did not involve a conviction; 


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1 (2) the number of suspensions from participa2 tion in programs of the Administration issued by the 

3 Administrator during the 1-year period preceding 

4 the date of the report, including— 

5 (A) the number of suspensions issued that 

6 were based upon indictments; and 

7 (B) the number of suspensions issued that 

8 were fact-based and did not involve an indict9 ment; 

10 (3) the number of suspension and debarments 

11 issued by the Administrator during the 1-year period 

12 preceding the date of the report that were based 

13 upon referrals from offices of the Administration, 

14 other than the Office of Inspector General; 

15 (4) the number of suspension and debarments 

16 issued by the Administrator during the 1-year period 

17 preceding the date of the report based upon referrals 

18 from the Office of Inspector General; and 

19 (5) the number of persons that the Adminis20 trator declined to debar or suspend after a referral 

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

22 such decision. 

Æ 


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