[Senate Report 107-5]
[From the U.S. Government Publishing Office]
Calendar No. 22
107th Congress Report
SENATE
1st Session 107-5
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INDEPENDENT OFFICE OF ADVOCACY ACT OF 2001
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March 21, 2001.--Ordered to be printed
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Mr. Bond, from the Committee on Small Business, submitted the following
R E P O R T
[To accompany S. 395]
The Committee on Small Business, to which was referred the
bill (S. 395) to ensure independent and nonpartisan operation
of the Office of Advocacy of the Small Business Administration,
having considered the same, the Committee reports favorably
thereon, with amendments, and recommends that the bill, as
amended, do pass.
I. NEED FOR LEGISLATION
The Office of Advocacy (Office) is a unique office within
the Federal government. It is part of the Small business
Administration (SBA/Agency), and its director, the Chief
Counsel for Advocacy, is nominated by the President and
confirmed by the Senate. At the same time, the Office is also
intended to be the independent voice for small business within
the Federal government. It is supposed to develop proposals for
changing government policies to help small businesses and to
represent the views and interests of small businesses before
other Federal agencies.
The General Accounting Office (GAO) published a report in
1999 on personnel practices at the SBA (GAO/GGD-99-68). The GAO
reported that Assistant and Regional Advocates hired by the
Office of Advocacy share many of the attributes of Schedule C
political appointees. During the period covered by the report,
Regional Advocates, who are senior staff in the Office of
Advocacy, were frequently cleared by the White House personnel
office, which is the same procedure followed for approving
Schedule C and non-career SES political appointees. The report
raises questions, concerns and suspicions regarding the
independence of the Office of Advocacy. Consequently, Chairman
Bond introduced the bill to establish a sufficiently
independent Chief Counsel who would not be obligated to comply
with the political demands of the Administration. Further, the
legislation, as approved by the Committee, is written, in part,
to address issues raised by the GAO.
The Independent Office of Advocacy Act of 2001 responds to
these concerns and is designed to build a firewall to prevent
the political intrusion into the day-to-day management of the
Office of Advocacy. The bill requires that the SBA's budget
include a separate account for the Office of Advocacy. No
longer would the Office's funds come from the general operating
account of the Agency. The separate account would also provide
for the number of full-time employees who would work within the
Office of Advocacy. No longer would the Chief Counsel for
Advocacy have to seek approval from the SBA Administrator to
hire staff for the Office of Advocacy.
The bill does not alter the 25-year-old statute that
permits the Chief Counsel to hire individuals critical to the
mission of the Office of Advocacy without going through the
normal competitive procedures directed by Federal law and the
Office of Personnel Management (OPM) (15 U.S.C. 634d). The
special hiring authority, which is limited only to employees
within the Office of Advocacy, is beneficial because it allows
the Chief Counsel to hire quickly those persons who can best
assist the Office in responding to changing issues and problems
confronting small businesses. An early draft of S. 395 included
a restatement of the special hiring authority provided under
existing law to the Chief Counsel. Although the restatement of
existing law was dropped from the bill at the insistence of the
Senator Thompson, Chairman of the Committee on Governmental
Affairs, the statutory authority for the Chief Counsel to hire
staff under 15 U.S.C. 634d has not been modified or rescinded
in any way in S. 395 as approved by the Committee on Small
Business.
As the director of the Office of Advocacy, the Chief
Counsel for Advocacy has a dual responsibility. On the one
hand, this individual is the independent watchdog for small
business. On the other hand, he or she is also a part of the
President's Administration. These two roles are sometimes very
difficult roles to play simultaneously.
The Independent Office of Advocacy Act is designed to make
the Office of Advocacy and the Chief Counsel for Advocacy a
fully independent advocate within the Executive Branch acting
on behalf of the small business community. The bill would
establish a clear mandate that the Office of Advocacy will
continue to work on behalf of small businesses regardless of
the position taken on critical issues by the President and the
Administration.
The Office of Advocacy, as envisioned by the Independent
Office of Advocacy Act of 2001, will be unique within the
Executive Branch. The Chief Counsel for Advocacy will be a
wide-ranging advocate, who will be free to advocate change in
government programs and attitudes as they effect small
businesses.
In 1976, Congress established the Office of Advocacy in the
SBA to be the eyes, ears and voice for small business within
the Federal government. Over time, it has been assumed that the
Office of Advocacy is the ``independent'' voice for small
business. While the Committee believes that the Office of
Advocacy and the Chief Counsel should be independent and free
to continue to advocate or support positions that might be
contrary to the Administration's policies, it has become
apparent that greater independence for the Office would improve
its ability to advocate on behalf of small businesses.
For example, funding for the Office of Advocacy comes from
the Salaries and Expense Account of the SBA's budget. Staffing
is allocated by the SBA Administrator to the Office of Advocacy
from the overall staff allocation for the Agency. In 1990,
there were 70 full-timeemployees working on behalf of small
businesses in the Office of Advocacy. The FY 2001 allocation of staff
is 51, but in recent years the Office has not been fully staffed as the
result of the hiring freeze imposed by the SBA Administrator three
years ago. The independence of the Office is diminished when the Office
of Advocacy staff is reduced to allow for increased staffing for new
programs and additional initiatives in other areas of the SBA, at the
discretion of the Administrator.
II. DESCRIPTION OF THE BILL
The Independent Office of Advocacy Act of 2001 provides for
an effective, independent advocate for small business within
the Federal government that is not restricted by the views or
policies of the Small Business Administration (SBA/Agency) or
any other agency. The Act is designed to make the Office of
Advocacy and the Chief Counsel for Advocacy a full independent
advocate within the Executive Branch acting on behalf of the
small business community.
Under this bill, the Office of Advocacy will be unique
within the Executive Branch. The Chief Counsel for Advocacy
will be a wide-ranging advocate, who will be free to take
positions contrary to the Administration's policies and to
advocate change in government programs and attitudes as they
impact small business.
The Act establishes for the first time in the Small
Business Act that the Office of Advocacy has the statutory
independence and adequate financial resources to be an advocate
for the small business community. In addition to the statement
of the Office's independence, the bill provides for a separate
authorization to fund the Office of Advocacy. As designed in
this bill, its annual budget would be a separate account in the
SBA budget, similar to the separate accounts for the Office of
Inspector General and the Business Loans Program. The Act
further directs the SBA to provide appropriate and adequate
office space at the SBA headquarters and its field office
locations, together with equipment, office supplies, and
communications facilities and services as are necessary to
support the requirements of the Office of Advocacy.
Each appropriation request submitted by the Administration
to the Congress would also provide for the number of full-time
employees who would work within the Office of Advocacy. The
Chief Counsel for Advocacy would not need the approval of the
SBA Administrator to hire staff. As stated earlier in this
report, the bill does not alter the practice set forth in
existing law that allows the Chief Counsel to hire individuals
critical to the mission of the Office of Advocacy without going
through the normal competitive procedures directed by federal
law and the OPM. Without regard for the civil service laws and
regulations, the Chief Counsel may hire and terminate those
individuals who are considered necessary to carry out the
duties of the Office. This existing law is intended to include
the regular staff of the Office of Advocacy and such
consultants and experts on a temporary or intermittent basis
that the Chief Counsel deems necessary. The special hiring
authority rests solely with the Chief Counsel. It is the
Committee's intention that the authority of the Chief Counsel
to hire staff, consultants and experts would be limited only by
the amounts appropriated annually by the Congress, without
further review or approval needed from the Administration..
Section 4 of the Independent Office of Advocacy Act of 2001
sets forth in detail the functions of the Office of Advocacy as
intended by the Congress. The Chief Counsel will head up the
Office of Advocacy. The Chief Counsel will be appointed by the
President from civilian life with the advice and consent of the
Senate without regard to the person's political affiliation. To
be eligible for the position, the nominee cannot have served in
any position at the SBA during the five years preceding
appointment.
Because of the independent nature of the office, the
committee established the office in such a manner so that the
incumbent Chief Counsel would not feel that his or her job were
in jeopardy by taking a position critical of or in opposition
to an Administration initiative. To strengthen this position,
the bill provides that the President must notify the Congress
30 days in advance before removing the Chief Counsel from
office, except in cases of misconduct, neglect of duty,
malfeasance, or if there is reasonable cause to believe that
the Chief Counsel has committed a crime for which a sentence of
imprisonment can be imposed. This provision does not restrict
the President's removal authority; simply, it is intended to
give Congress advance notice that the Chief Counsel is being
removed.
Section 4 sets forth the primary functions of the Office of
Advocacy, which the Committee views as wide-ranging and
comprehensive insofar as are the needs and problems confronting
small businesses nationwide. In setting forth the
responsibilities of the Office of Advocacy, the Committee
intends for the Office to serve as focal point to receive
complaints, criticisms and suggestions concerning the policies
and programs of the Federal government that affect small
businesses. Additionally, the Committee believes that women-
owned businesses and minority-owned businesses play an equally
important role in our economy. Therefore, the bill adds women-
owned business concerns to the primary function of the Office
of Advocacy.
The bill requires and authorizes the Chief Counsel to
submit certain reports to the President and the Congress,
including an annual report on the Regulatory Flexibility Act.
The Committee believes strongly that these reports should not
be subject to the mandatory review and editing that has
historically been required by past and current Administrations.
In August 1999, when this legislation was first approved
unanimously by the full Senate, the bill was amended at the
request of Senator Thompson to insure that the other
Congressional Committees with a specific interest in the
Regulatory Flexibility Act receive the annual reports,
including the Senate Committee on Governmental Affairs, the
House Government Reform Committee and the Senate and House
Judiciary Committees. This change has been included in S. 395.
In order for the Committees on Small Business of the Senate and
House of Representatives to carry out their responsibilities on
behalf of the small business community, it is important that
they receive regular reports from the Chief Counsel that have
not been submitted to the OMB or any other Federal department
or agency for editing and/or approval.
An early version of S. 395 restated the existing law, which
directs each Federal agency toprovide the Chief Counsel with
all information that the Chief Counsel believes is necessary to
carrying out the responsibilities of the Office of Advocacy (15 U.S.C.
634e). At the insistence of the Senate Committee on Armed Service, the
reference to this provision was dropped from the bill. The Committee
believes that this authority is very important, and the fact that this
provision is not restated in S. 395 as approved by the Committee should
in no way be interpreted as a modification or recission of existing
law.
The bill authorizes such sums as are necessary for carrying
out the responsibilities of the Office of Advocacy. The amounts
appropriated should remain available until spent and should not
be limited to fiscal year limitations. This subsection is
intended to give the Chief Counsel the flexibility to respond
to matters that come before the Office of Advocacy without the
pressures of obligating funds, perhaps prematurely, prior to
the end of a fiscal year.
If, at the time of enactment, there is a sitting Chief
Counsel for Advocacy who was reviewed and approved by the
Committee and the full Senate, it is the intention of the
Committee that the incumbent will continue to serve subject to
the requirements of this bill once enacted.
III. COMMITTEE VOTE
In compliance with rule XXVI(7)(b) of the Standing Rules of
the Senate, the following vote on S. 395 was recorded on
February 28, 2001. A motion by Senator Kerry to adopt the
Independent Office of Advocacy Act was approved by a unanimous
recorded vote, with the following Senators voting in the
affirmative: Bond, Kerry, Burns, Bennett, Snowe, Enzi,
Fitzgerald, Crapo, Allen, Ensign, Levin, Harkin, Lieberman,
Wellstone, Cleland, Landrieu, Edwards, and Cantwell.
IV. COST ESTIMATE
In compliance with rule XXVI(11)(a)(1) of the Standing
Rules of the Senate, the Committee estimates the cost of the
legislation will be equal to the amounts indicated by the
Congressional Budget Office in the following letter.
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 7, 2001.
Hon. Christopher S. Bond,
Chairman, Committee on Small Business,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 395, the Independent
Office of Advocacy Act of 2001.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Ken Johnson.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
S. 395--Independent Office of Advocacy Act of 2001
S. 395 would authorize the appropriation of such sums as
necessary for the Office of Advocacy within the Small Business
Administration (SBA). In addition, the bill would clarify the
office's role and would codify requirements for reports to the
Congress on issues affecting small businesses.
Based on information from the SBA, CBO estimates that the
office will spend about $4 million in 2001. Assuming
appropriations of the necessary amounts, we estimate that SBA
would spend about $5 million a year over the 2002-2006 period
to implement S. 395. The increase in estimated costs would
primarily cover anticipated inflation.
S. 395 would not affect direct spending or receipts;
therefore, pay-as-you-go procedures would not apply. S. 395
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 is Ken Johnson. This estimate was
approved by Peter H. Fontaine, Deputy Assistant Director for
Budget Analysis.
V. EVALUATION OF REGULATORY IMPACT
In compliance with rule XXVI(11)(b) of the Standing Rules
of the Senate, it is the opinion of the Committee that no
significant additional regulatory impact will be incurred in
carrying out the provisions of this legislation. There will be
no additional impact of the personal privacy of companies or
individuals who utilize the assistance authorized by this
legislation.
VI. CHANGES IN EXISTING LAW
In the opinion of the Committee, it is necessary to
dispense with the requirement of rule XXVI(12) of the Standing
Rules of the Senate in order to expedite the business of the
Senate.
VII. SECTION-BY-SECTION ANALYSIS
Section 1. Short title
The Act is titled the ``Independent Office of Advocacy Act
of 2001.''
Section 2. Findings
This section describes the need for an effective,
independent advocate for small business within the Federal
government that is not restricted by the views or policies of
the Small Business Administration (SBA/Agency) or any other
agency. This section also sets forth the important role the
Office of Advocacy plays in providing research, information and
its expertise on small business matters to the Congress and the
Executive Branch.
Section 3. Purposes
This section states that the purpose of the Act is to
ensure that the Office of Advocacy has the statutory
independence and adequate financial resources to be an advocate
for small business. The Office of Advocacy is directed to keep
the Senate and House Small Business Committees and the SBA
Administrator informed on matters of importance to small
businesses.
Subsection (3) provides that there will be a separate
authorization for the Office of Advocacy.
Subsection (4) states that the Office of Advocacy will
continue to monitor Agency compliance with the Regulatory
Flexibility Act and will report annually to the Congress.
Subsection 5 states that the purpose of the Act is to enhance
the role of the Office of Advocacy in the panel review process.
Section 4. Office of Advocacy
Section 4 amends Title II of Public Law 94-305 (15 U.S.C.
634a et seq.) describing the Office of Advocacy.
Section 202 of Title II defines specific terms including
``Chief Counsel'' and ``Office.''
Section 203 of Title II establishes within SBA the Office
of Advocacy and designates the Chief Counsel for Advocacy to
manage the Office. This section sets forth that the Chief
Counsel shall be nominated by the President, who shall give the
Congress 30 days notice should he decide to remove the Chief
Counsel, except in cases of misconduct, neglect of duty,
malfeasance, or if there is reasonable cause to believe that
the Chief counsel has committed a crime for which a sentence of
imprisonment can be imposed. Section 203 also requires the SBA
to submit a separate budget request each year for the Office of
Advocacy.
Subsection (c) of Section 203 sets forth the following
primary functions for the Office of Advocacy:
(1) Examine the role played by small business within
the U.S. economy;
(2) Examine the effectiveness of Federal subsidy and
assistance programs;
(3) Measure the direct costs of regulation on small
business concerns;
(4) Determine the impact of the U.S. tax system on
small business concerns;
(5) Study the ability of the private sector to meet
the credit needs of small business and determine the
impact of government demands for credit on small
business concerns;
(6) Determine the availability of credit and
management assistance to small business concerns;
(7) Evaluate the efforts of Federal agencies and the
private sector to help minority-owned and women-owned
small business concerns;
(8) make recommendations to help in the development
and strengthening of minority- and women-owned small
business concerns;
(9) Make recommendations to help small business
expand to their full potential and to assess any common
reasons for businesses success and failures;
(10) Develop a set of criteria to be used to define
small businesses;
(11) Make recommendations on issues and regulations
affecting small business concerns; and
(12) Evaluate the efforts of each Federal agency and
of private industry to assist small business concerns
owned and controlled by veterans and service-disabled
veterans.
Subsection (d) of Section 203 also describes the following
additional functions of the Office of Advocacy:
(1) Serve as a focal point for receipt of complaints,
criticisms and suggestions concerning the policies and
programs of the Federal government that affect small
business concerns;
(2) Counsel small business concerns on how to resolve
their difficulties with the Federal government;
(3) Develop proposals to improve the policies and
activities of Federal agencies so that they can better
assist small business concerns;
(4) Represent the interests and views of small
business concerns before other Federal agencies;
(5) Encourage both private and public entities to
disseminate information about services and programs for
small business concerns; and
(6) Carry out its responsibilities under the
Regulatory Flexibility Act.
Subsection (e) of Section 203 directs the SBA to provide
the Office of Advocacy with adequate office space in the
headquarters and field offices. The SBA shall also provide
equipment, office supplies, and communications facilities and
services as are necessary.
Section 206 of Title II directs the Chief Counsel to submit
an annual report on Agency compliance with the requirements of
the Regulatory Flexibility Act to the Senate and House
Committees on Small Business, the Senate Committee on
Governmental Affairs, the House Committee on Government Reform
and the Senate and House Committees on the Judiciary. Further,
the Chief Counsel is authorized to prepare and submit to the
President and Congress such reports as he or she deems
necessary. In no case shall a report from the Office of
Advocacy be submitted in advance to OMB for approval or
Administration clearance.
Section 207 of Title II authorizes such sums as are
necessary to be appropriated for the Office of Advocacy.
A new Subsection (d) has been added to Section 207 to
permit the incumbent Chief Counsel for Advocacy, if one exists
at the time of enactment, to continue to serve in that position
after the date of enactment of this Act in accordance with the
requirements of Title II.