[House Report 112-85]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 112-85
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AMENDING TITLE 38, UNITED STATES CODE, TO REVISE THE ENFORCEMENT
PENALTIES FOR MISREPRESENTATION OF A BUSINESS CONCERN AS A SMALL
BUSINESS CONCERN OWNED AND CONTROLLED BY VETERANS OR AS A SMALL
BUSINESS CONCERN OWNED AND CONTROLLED BY SERVICE-DISABLED VETERANS
_______
May 20, 2011.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Miller of Florida, from the Committee on Veterans' Affairs,
submitted the following
R E P O R T
[To accompany H.R. 1657]
[Including cost estimate of the Congressional Budget Office]
The Committee on Veterans' Affairs, to whom was referred
the bill (H.R. 1657) to amend title 38, United States Code, to
revise the enforcement penalties for misrepresentation of a
business concern as a small business concern owned and
controlled by veterans or as a small business concern owned and
controlled by service-disabled veterans, having considered the
same, report favorably thereon without amendment and recommend
that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 3
Subcommittee Consideration....................................... 3
Committee Consideration.......................................... 3
Committee Votes.................................................. 3
Committee Oversight Findings..................................... 3
Statement of General Performance Goals and Objectives............ 4
New Budget Authority, Entitlement Authority, and Tax Expenditures 4
Earmarks and Tax and Tariff Benefits............................. 4
Committee Cost Estimate.......................................... 4
Congressional Budget Office Estimate............................. 4
Federal Mandates Statement....................................... 5
Advisory Committee Statement..................................... 5
Applicability to Legislative Branch.............................. 5
Section-by-Section Analysis of the Legislation................... 5
Changes in Existing Law Made by the Bill as Reported............. 6
Purpose and Summary
H.R. 1657 was introduced on April 15, 2011, by
Representative Marlin Stutzman of Indiana. H.R. 1657 would
revise the enforcement penalties for misrepresentation of a
business concern as a small business concern owned and
controlled by veterans or as a small business concern owned and
controlled by service-disabled veterans.
Background and Need for Legislation
Executive Order 1336 and Public Law 106-50 established a
goal for all Federal agencies to spend not less than three
percent of their contract dollars with Service-Disabled
Veteran-Owned Small Businesses (SDVOBs). According to the Small
Business Administration (SBA), in Fiscal Year (FY) 2005, the
Department of Veterans Affairs (VA) awarded $210,829,326 or
2.151 percent of its total contract dollars with SDVOBs. To
improve VA's performance, Congress enacted Public Law 109-461
in December 2006, to provide VA with new contracting
authorities and protections for SDVOBs. As a result, SBA
statistics show that VA awarded twenty percent of its total
contract dollars to SDVOBs and Veteran-Owned Small Businesses
(VOBs) in FY 2009 and VA internal statistics show an
improvement to approximately 23 percent for FY 2010.
Public Law 109-461 also required VA to maintain a database
of verified SDVOBs and VOBs, so contracting officers and other
privately held businesses could ensure that they were, in fact,
dealing with genuine SDVOBs and VOBs. VA was very slow in
creating and verifying the businesses listed in this database
and, as a result, Public Law 111-275 was enacted to clarify
Congress's intention that only businesses that have been
verified as SDVOBs and VOBs are allowed in the database.
Section 8127 of title 38 United States Code, requires the
Secretary to debar any business found to fraudulently claim
SDVOB or VOB status from doing business with VA, ``for a
reasonable time as determined by the Secretary.''
A Government Accountability Office (GAO) report in 2009,
Service-Disabled Veteran-Owned Small Business Program: Case
Studies Show Fraud and Abuse Allowed Ineligible Firms to Obtain
Millions of Dollars in Contracts (GAO-10-255T) and a follow up
in 2010, Service-Disabled Veteran-Owned Small Business Program:
Fraud Prevention Controls Needed to Improve Program Integrity
(GAO-10-740T), studied the validation of ownership and control
of SDVOBs and found, ``a lack of government-wide fraud
prevention controls, a lack of validation of information
provided by SDVOSB firms used to substantiate their eligibility
for the program, non-existent monitoring of continued
compliance with program requirements, and an ineffective
process for investigating and prosecuting firms found to be
abusing the program.''
Of the ten firms that GAO identified as fraudulent SDVOBs,
the Secretary has not debarred any of them. The Committee
believes that a five-year automatic debarment required under
H.R. 1657 would be a strong deterrent against fraudulent
companies and would result in more contracting dollars going to
legitimate SDVOBs. The Committee expects the Secretary to
aggressively prosecute firms and principals found to be
fraudulently claiming SDVOB and VOB status.
Hearings
On May 3, 2011, the Subcommittee on Economic Opportunity
conducted a legislative hearing on various bills introduced
during the 112th Congress, including H.R. 1657. The following
witnesses testified: Ms. Christina M. Roof, National Acting
Legislative Director for AMVETS; Mr. Tom Tarantino, Senior
Legislative Associate for Iraq and Afghanistan Veterans of
America; Mr. Shane Barker, Senior Legislative Associate of the
National Legislative Service for the Veterans of Foreign Wars
of the United States; Mr. Robert Madden, Assistant Director of
the National Economic Commission for The American Legion; Mr.
Andrew Connolly of Dubuque, IA; Mr. Keith M. Wilson, Director
of the Education Service for the Veterans Benefit
Administration of the U.S. Department of Veterans Affairs, who
was accompanied by Mr. Jan R. Frye, Deputy Assistant Secretary
for Acquisitions and Logistics for the U.S. Department of
Veterans Affairs and Mr. F. John Brizzi, Deputy Assistant
General Counsel for the U.S. Department of Veterans Affairs.
Those submitting statements for the record included:
Paralyzed Veterans of America, Gold Star Wives of America,
National Association of Veteran Program Administrators, and the
Military Officers Association of America.
Subcommittee Consideration
On March 5, 2011, the Subcommittee on Economic Opportunity
met in an open markup session and ordered H.R. 1657 favorably
forwarded to the full Committee by voice vote.
Committee Consideration
On May 12, 2011, the full Committee met in an open markup
session, a quorum being present, and ordered H.R. 1657 reported
favorably to the House of Representatives, by voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the recorded
votes on the motion to report the legislation and amendments
thereto. There were no recorded votes taken on amendments or in
connection with ordering H.R. 1657 reported to the House. A
motion by Ranking Member Bob Filner of California to order H.R.
1657 reported favorably to the House of Representatives was
agreed to by voice vote.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the descriptive portions of this report.
Statement of General Performance Goals and Objectives
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goals and objectives are reflected in the descriptive portions
of this report.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Earmarks and Tax and Tariff Benefits
H.R. 1657 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI of the Rules of the House of
Representatives.
Committee Cost Estimate
The Committee adopts as its own the cost estimate on H.R.
1657 prepared by the Director of the Congressional Budget
Office pursuant to section 402 of the Congressional Budget Act
of 1974.
Congressional Budget Office Cost Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
for H.R. 1657 provided by the Congressional Budget Office
pursuant to section 402 of the Congressional Budget Act of
1974:
May 16, 2011.
Hon. Jeff Miller,
Chairman, Committee on Veterans' Affairs, House of Representatives,
Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1657, a bill to
amend title 38, United States Code, to revise the enforcement
penalties for misrepresentation of a business concern as a
small business concern owned and controlled by veterans or as a
small business concern owned and controlled by service-disabled
veterans.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Dwayne M.
Wright.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure.
H.R. 1657--A bill to amend title 38, United States Code, to revise the
enforcement penalties for misrepresentation of a business
concern as a small business concern owned and controlled by
veterans or as a small business concern owned and controlled by
service-disabled veterans
H.R. 1657 would revise the penalty for businesses that, in
their dealings with the Department of Veterans Affairs (VA),
misrepresent their status as small business concerns owned and
controlled by veterans or service-disabled veterans. Under
current law, VA is required to preclude such businesses from
contracting with the agency for a period of time determined by
the Secretary of Veterans Affairs to be reasonable.
Under H.R. 1657, any small business concern--and all
principals involved--found to be misrepresenting their status
would be prohibited from contracting with VA for no less than
five years. Upon determining that a business misrepresented its
status, VA would be required to take action to bar that
business within 90 days. Based on information from VA, CBO
estimates that implementing H.R. 1657 would have no budgetary
impact.
Enacting H.R. 1657 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
H.R. 1657 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Dwayne M.
Wright. The estimate was approved by Theresa Gullo, Deputy
Assistant Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates regarding H.R. 1657 prepared by the Director of the
Congressional Budget Office pursuant to section 423 of the
Unfunded Mandates Reform Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act would be created by H.R.
1657.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Department of Veterans Affairs Enforcement Penalties for
Misrepresentation of a Business Concern as a Small Business
Concern Owned and Controlled by Veterans or as a Small Business
Concern Owned and Controlled by Service-Disabled Veterans
This section would require VA to debar a company and its
principals from contracting with VA for a period of five years,
if it is determined that the company has fraudulently
represented itself as a Service-Disabled Veteran-Owned Small
Business (SDVOB). Section 1 also requires the Secretary of
Veterans Affairs to begin such actions no later than within 30
days of a finding on non-compliance and complete the debarment
process no later than within 90 days of the finding of
misrepresentation.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TITLE 38, UNITED STATES CODE
* * * * * * *
PART VI--ACQUISITION AND DISPOSITION OF PROPERTY
* * * * * * *
CHAPTER 81--ACQUISITION AND OPERATION OF HOSPITAL AND DOMICILIARY
FACILITIES; PROCUREMENT AND SUPPLY; ENHANCED-USE LEASES OF REAL
PROPERTY
* * * * * * *
Subchapter II--Procurement and Supply
* * * * * * *
Sec. 8127. Small business concerns owned and controlled by veterans:
contracting goals and preferences.
(a) * * *
* * * * * * *
(g) Enforcement Penalties for Misrepresentation.--[Any
business] (1) Any business concern that is determined by the
Secretary to have misrepresented the status of that concern as
a small business concern owned and controlled by veterans or as
a small business concern owned and controlled by service-
disabled veterans for purposes of this subsection shall be
debarred from contracting with the Department for a reasonable
period of time, as determined by the Secretary a period of not
less than five years.
(2) In the case of a debarment under paragraph (1), the
Secretary shall commence debarment action against the business
concern by not later than 30 days after determining that the
concern misrepresented the status of the concern as described
in paragraph (1) and shall complete debarment actions against
such concern by not later than 90 days after such
determination.
(3) The debarment of a business concern under paragraph (1)
includes the debarment of all principals in the business
concern for a period of not less than five years.
* * * * * * *