Senate Bill Introduced to Combat SBA Fraud

By: Edward T. DeLisle

Senator Olympia Snowe, R-Maine, introduced a bipartisan bill on Thursday that is designed to combat fraud and abuse in the world of small business contracting. As we have reported, the General Accounting Office (GAO) has issued a number of reports over the last several years detailing the existence of fraud in the HUBZone, Service-Disabled, Veteran-Owned Small Business (SDVOSB) and 8(a) programs. These reports have generated much discussion about the need to revamp the system and, in certain circumstances, talk has led to action. The implementation of the current SDVOSB verification system is but one example of the government’s response to the current state of affairs. S. 633, entitled the “Small Business Contracting Fraud Prevention Act of 2011” (Fraud Prevention Act), is designed to take the government’s ability to respond to fraud and abuse in small business contracting to a new level.

As reported by Law360, the Fraud Prevention Act contains three key provisions:

     1. It calls for the development of an oversight structure within the Small Business Administration (SBA) that would allow for better enforcement of the rules governing small business contracting;

     2. It would allow for an increase in criminal prosecutions, suspensions and debarments for those who violate the rules; and

     3. It would require the SBA to issue annual reports to Congress regarding those who are suspended, debarred or referred to the Department of Justice for prosecution.

S. 633 is yet another step to close the loopholes that have developed in the federal government’s small business contracting system. We will track this legislation and report any further developments.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

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