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) intro-
duced 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 consider-
ation 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Contracting Oversight 
for Small Business Jobs Act of 2012’’. 
VerDate Mar 15 2010 
03:21 Mar 20, 2012
Jkt 019200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H4206.IH
H4206
jbell on DSK7SPTVN1PROD with BILLS
SEC. 2. INCREASED PENALTIES FOR FRAUD. 
(a) IN GENERAL.—Chapter 47 of title 18, United 
States Code, is amended by adding at the end the fol-
lowing: 
‘‘§ 1041. Misrepresentation of status as a small busi-
ness concern 
‘‘(a) IN GENERAL.—Whoever knowingly— 
‘‘(1) falsifies, conceals, or covers up by any 
trick, scheme, or device a material fact; 
‘‘(2) makes any materially false, fictitious, or 
fraudulent statement or representation; or 
‘‘(3) makes or uses any false writing or docu-
ment, including electronically, knowing the same to 
contain any materially false, fictitious, or fraudulent 
statement or entry; 
concerning status as a small business concern or compli-
ance with the requirements of the Small Business Act in 
an effort to obtain, retain, or complete a federal govern-
ment contract shall be fined $1,000,000 or in a sum equal 
to twice the amount or value of goods or services under 
the contract or order, whichever is greater, imprisoned not 
more than 5 years, or both.’’. 
(b) TECHNICAL AMENDMENT.—The table of sections 
for such chapter is amended by inserting after the item 
relating to the following section: 
‘‘1041. Misrepresentation of status as a small business concern.’’. 
VerDate Mar 15 2010 
20:41 Mar 20, 2012
Jkt 019200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6211
E:\BILLS\H4206.IH
H4206
jbell on DSK7SPTVN1PROD with BILLS
SEC. 3. SAFE HARBOR FOR GOOD FAITH COMPLIANCE EF-
FORTS. 
(a) SMALL BUSINESS FRAUD.—Section 16(d) of the 
Small Business Act (15 U.S.C. 16(d)) is amended by in-
serting after paragraph (2) the following: 
‘‘(3) This subsection shall not apply to any con-
duct in violation of subsection (a) if the defendant 
acted in reliance on a written advisory opinion from 
a licensed attorney who is not an employee of the de-
fendant.’’. 
(b) MISREPRESENTATION OF STATUS.—Section 1041 
of title 18, United States Code, as added by section 2 of 
this Act, is amended by inserting after subsection (a) the 
following: 
‘‘(b) EXCEPTION.—This section shall not apply to 
any conduct in violation of paragraph (2) or (3) of sub-
section (a) if the defendant acted in reliance on a written 
advisory opinion from a licensed attorney who is not an 
employee of the defendant.’’. 
(c) REGULATIONS.—Not later than 270 days after 
the date of enactment of this Act, the Administrator of 
the Small Business Administration shall issue rules defin-
ing what constitutes an adequate advisory opinion for pur-
poses of section 16(d)(3) of the Small Business Act. 
(d) SMALL BUSINESS COMPLIANCE GUIDE.—Not 
later than 270 days after the date of enactment of this 
VerDate Mar 15 2010 
20:41 Mar 20, 2012
Jkt 019200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H4206.IH
H4206
jbell on DSK7SPTVN1PROD with BILLS
Act, the Administrator of the Small Business Administra-
tion shall issue (pursuant to section 212 of the Small 
Business Regulatory Enforcement Fairness Act of 1996) 
a compliance guide to assist business concerns in accu-
rately determining their status as a small business con-
cern. 
SEC. 4. OFFICE OF HEARINGS AND APPEALS. 
(a) CHIEF HEARING OFFICER.—Section 4(b)(1) of 
the Small Business Act is amended by adding at the end 
the following: ‘‘One shall be designated at the time of his 
or her appointment as the Chief Hearing Officer, who 
shall head and administer the Office of Hearings and Ap-
peals within the Administration.’’. 
(b) OFFICE OF HEARINGS AND APPEALS ESTAB-
LISHED IN ADMINISTRATION.—Section 5 of the Small 
Business Act (15 U.S.C. 634) is amended by adding at 
the end the following: 
‘‘(i) OFFICE OF HEARINGS AND APPEALS.— 
‘‘(1) IN GENERAL.—There is established in the 
Administration an Office of Hearings and Appeals— 
‘‘(A) to impartially decide such matters, 
where Congress designates that a hearing on 
the record is required or which the Adminis-
trator designates by regulation or otherwise; 
and 
VerDate Mar 15 2010 
03:21 Mar 20, 2012
Jkt 019200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H4206.IH
H4206
jbell on DSK7SPTVN1PROD with BILLS
‘‘(B) which shall contain the Administra-
tion’s Freedom of Information/Privacy Acts Of-
fice. 
‘‘(2) CHIEF
HEARING
OFFICER.—The Chief 
Hearing Officer shall be a career member of the 
Senior Executive Service and an attorney duly li-
censed by any State, commonwealth, territory, or the 
District of Columbia. 
‘‘(A) DUTIES.—The Chief Hearing Officer 
shall— 
‘‘(i) serve as the Chief Administrative 
Law Judge; and 
‘‘(ii) be responsible for the operation 
and management of the Office of Hearings 
and Appeals, pursuant to the rules of prac-
tice established by the Administrator. 
‘‘(B) ALTERNATIVE
DISPUTE
RESOLU-
TION.—The Chief Hearing Officer may also as-
sign a matter for mediation or other means of 
alternative dispute resolution. 
‘‘(3) ADMINISTRATIVE LAW JUDGES.— 
‘‘(A) IN GENERAL.—An administrative law 
judge shall be an attorney duly licensed by any 
State, commonwealth, territory, or the District 
of Columbia. 
VerDate Mar 15 2010 
03:21 Mar 20, 2012
Jkt 019200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H4206.IH
H4206
jbell on DSK7SPTVN1PROD with BILLS
‘‘(B) CONDITIONS
OF
EMPLOYMENT.—(i) 
An administrative law judge shall serve in the 
excepted service as an employee of the Adminis-
tration under section 2103 of title 5, United 
States Code, and under the supervision of the 
Chief Hearing Officer. 
‘‘(ii) Administrative law judge positions 
shall be classified at Senior Level, as such term 
is defined in section 5376 of title 5, United 
States Code. 
‘‘(iii) Compensation for administrative law 
judge positions shall be set in accordance with 
the pay rates of section 5376 of title 5, United 
States Code. 
‘‘(C) TREATMENT
OF
CURRENT
PER-
SONNEL.—An individual serving as a Judge in 
the Office of Hearings and Appeals (as that po-
sition and office are designated in section 
134.101 of title 13, Code of Federal Regula-
tions (as in effect on January 1, 2012)) on the 
effective date of this subsection shall be consid-
ered as qualified to be and redesignated as ad-
ministrative law judges. 
‘‘(D) POWERS.—An administrative law 
judge shall have the authority to conduct hear-
VerDate Mar 15 2010 
20:41 Mar 20, 2012
Jkt 019200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H4206.IH
H4206
jbell on DSK7SPTVN1PROD with BILLS
ings in accordance with sections 554, 556, and 
557 of title 5, United States Code.’’. 
SEC. 5. REQUIREMENT FRAUDULENT BUSINESSES BE SUS-
PENDED OR DEBARRED. 
(a) IN GENERAL.—Section 16(d)(2) of the Small 
Business Act (15 U.S.C. 645(d)(3)) is amended by strik-
ing ‘‘on the basis that such misrepresentation indicates a 
lack of business integrity that seriously and directly af-
fects the present responsibility to perform any contract 
awarded by the Federal Government or a subcontract 
under such a contract’’ and inserting ‘‘if the misrepresen-
tation is established by a preponderance of the evidence 
(in the case of debarment) or adequate evidence (in the 
case of suspension)’’. 
(b) REVISION TO FAR.—Not later than 270 days 
after the date of enactment of this Act, the Federal Acqui-
sition Regulation shall be revised to implement the amend-
ment made by this section. 
(c) PUBLICATION OF PROCEDURES REGARDING SUS-
PENSION AND DEBARMENT.—Not later than 270 days 
after the date of enactment of this Act, the Administrator 
shall publish on the Administration’s Web site the stand-
ard operating procedures for suspension and debarment 
in effect, and the name and contact information for the 
individual designated by the Administrator as the senior 
VerDate Mar 15 2010 
03:21 Mar 20, 2012
Jkt 019200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H4206.IH
H4206
jbell on DSK7SPTVN1PROD with BILLS
individual responsible for suspension and debarment pro-
ceedings. 
(d) REQUIRED REGULATIONS.—Not later than 270 
days after the date of enactment of this Act, the Adminis-
trator of the Small Business Administration shall issue 
regulations defining the term ‘‘adequate evidence’’ for pur-
poses of section 16(d)(2) of the Small Business Act. 
SEC. 
6. 
ANNUAL 
REPORT 
ON 
SUSPENSIONS 
AND 
DEBARMENTS PROPOSED BY SMALL BUSI-
NESS ADMINISTRATION. 
(a) REPORT REQUIREMENT.—The Administrator of 
the Small Business Administration shall submit each year 
to the Committee on Small Business and Entrepreneur-
ship of the Senate, and the Committee on Small Business 
of the House of Representatives a report on the suspen-
sion and debarment actions taken by the Administrator 
during the year preceding the year of submission of the 
report. 
(b) MATTERS COVERED.—The report required by 
subsection (a) shall include the following information for 
the year covered by the report: 
(1) NUMBER.—The number of contractors pro-
posed for suspension or debarment. 
VerDate Mar 15 2010 
03:21 Mar 20, 2012
Jkt 019200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H4206.IH
H4206
jbell on DSK7SPTVN1PROD with BILLS
(2) SOURCE.—The office within a Federal 
agency that originated each proposal for suspension 
or debarment. 
(3) REASONS.—The reason for each proposal 
for suspension or debarment. 
(4) RESULTS.—The result of each proposal for 
suspension or debarment, and the reason for such 
result. 
(5) REFERRALS.—The number of suspensions 
or debarments referred to the Inspector General of 
the Small Business Administration or another agen-
cy, or to the Attorney General (for purposes of this 
paragraph, the Administrator may redact identifying 
information on names of companies or other infor-
mation in order to protect the integrity of any ongo-
ing criminal or civil investigation). 
SEC. 7. SENSE OF CONGRESS. 
It is the sense of Congress that the Administrator 
of the Small Business Administration should present to 
the Inspector General of the Administration or the Attor-
ney General any evidence of a violation or potential viola-
tion of section 1041, title 18, United States Code, or sec-
tion 16(d) of the Small Business Act, presented in a pro-
VerDate Mar 15 2010 
03:21 Mar 20, 2012
Jkt 019200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H4206.IH
H4206
jbell on DSK7SPTVN1PROD with BILLS
ceeding conducted by the Office of Hearings and Appeals 
established in section 4 of this Act. 
Æ 
VerDate Mar 15 2010 
03:21 Mar 20, 2012
Jkt 019200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6301
E:\BILLS\H4206.IH
H4206
jbell on DSK7SPTVN1PROD with BILLS