Agent Revocation and Suspension Procedures, 62060-62070 [2014-22521]

Agencies

• SMALL BUSINESS ADMINISTRATION

[Federal Register Volume 79, Number 200 (Thursday, October 16, 2014)]
[Proposed Rules]
[Pages 62060-62070]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-22521]


=======================================================================
-----------------------------------------------------------------------

SMALL BUSINESS ADMINISTRATION

2 CFR Part 2700

13 CFR Parts 103, 124 and 134

RIN 3245-AG40


Agent Revocation and Suspension Procedures

AGENCY: Small Business Administration.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This rule proposes detailed procedures for the suspension and 
revocation of an Agent's privilege to do business with the United 
States Small Business Administration (SBA) within a single Part of the 
Code of Federal Regulations; remove 8(a) program specific procedures 
for Agent suspension and revocation; clarify existing and related 
regulations as to suspension, revocation, and debarment; and remove 
Office of Hearings and Appeals jurisdiction over Agent suspensions and 
revocations and government-wide debarment and suspension actions. This 
proposed rule would also conform SBA suspension and revocation 
procedures for Agents with general government-wide non-procurement 
suspension and debarment procedures.

DATES: Comments must be received on or December 15, 2014.

ADDRESSES: You may submit comments, identified by RIN: 3245-AG40 by any 
of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail/Hand Delivery/Courier: Debra L. Mayer, Chief, 
Supervision and Enforcement, Office of Credit Risk

[[Page 62061]]

Management, 409 Third Street SW., 8th Floor, Washington, DC 20416.
    SBA will post all comments to this proposed rule without change on 
www.regulations.gov. If you wish to submit confidential business 
information (CBI) as defined in the User Notice at www.regulations.gov, 
you must submit such information to Debra L. Mayer, Chief, Supervision 
and Enforcement, Office of Credit Risk Management, 409 Third Street 
SW., 8th Floor, Washington, DC 20416 or send an email to 
debra.mayer@sba.gov. Highlight the information that you consider to be 
CBI and explain why you believe SBA should hold this information as 
confidential. SBA will review the information and make the final 
determination whether it will publish the information.

FOR FURTHER INFORMATION CONTACT: Debra L. Mayer, Chief, Supervision and 
Enforcement, Office of Credit Risk Management, 202-205-7577, email: 
debra.mayer@sba.gov.

SUPPLEMENTARY INFORMATION:

I. Background Information

    Under Part 103 of Title 13 of the Code of Federal Regulations 
(CFR), SBA may, for good cause, suspend or revoke an Agent's privilege 
to conduct business with SBA. Part 103 applies to ``Agents''--people/
entities that represent applicants or participants in SBA programs, per 
13 CFR 103(a). Some examples of Agents are attorneys, consultants, loan 
packagers, lender service providers, etc. Part 103 allows SBA to revoke 
an Agent's privilege to conduct business with SBA. In short, a Part 103 
revocation is similar to a debarment, but limited to SBA instead of the 
entire federal government. Also, like debarment, Part 103 provides for 
suspension prior to revocation. However, aside from those similarities, 
revocation does not actually have any connections to debarment. It only 
excludes Agents from conducting business with SBA, not the rest of the 
federal government.
    The current Part 103 regulations contain no procedures for 
suspension/revocation. Instead, SBA currently only has limited 
procedures regarding suspension and revocation, located in SBA's 
Standard Operating Procedure (SOP) 50 53 A and 13 CFR 124.4(c). These 
procedures apply only to a few types of Agents. SBA's Standard 
Operating Procedure (SOP) 50 53 A, Lender Supervision and Enforcement 
(June 2012) contains procedures only for the suspension and revocation 
of only certain Agents related to SBA loan programs. In addition, 13 
CFR 124.4(c) contains procedures only for the suspension and revocation 
of only certain Agents related to SBA's 8(a) Business Development 
Program. The proposed rule would fill this gap by establishing 
procedures for all Part 103 suspensions and revocations; not just those 
of certain programs.
    SBA is modeling its Part 103 suspension and revocation procedures 
after the Title 2 suspension and debarment procedures because the Title 
2 procedures are detailed and clear, have been in use for over 25 
years, and contain the standard tenets of due process--notice, 
opportunity to object, notification of decision, and opportunity to 
request reconsideration. Agents would benefit from the efficiency and 
consistency of a single set of procedures for Part 103 suspension and 
revocation, which would replace SBA's current various procedures at 
Standard Operating Procedure (SOP) 50 53 A and 13 CFR 124.4(c), and 
this single set of procedures would apply to all Agents, as defined in 
13 CFR Part 103(a).
    In summary, this proposed rule would centralize within Part 103 the 
procedures for suspension and revocation for all Agents, without regard 
to the particular SBA program, and would utilize the same procedural 
elements found in current government-wide procedures and in SBA's 
current practices.

II. The Proposal

A. In General

    The proposed rule would be an adaptation of government-wide 
suspension/debarment procedures set forth in 2 CFR Parts 180 and 2700, 
which SBA already utilizes in practice when conducting Part 103 
suspensions and revocations.
    The proposed rule would also eliminate a set of procedures in Part 
124. These are revocation procedures that were established just for 
Agents dealing with the 8(a) Program. Now that SBA is establishing 
procedures affecting Agents in all SBA programs, this section in Part 
124 would be redundant and duplicative if left in place.
    In addition, this proposed rule would remove Office of Hearings and 
Appeals jurisdiction over Part 103 suspensions and revocations and 
Title 2 suspensions and debarments. SBA is currently the only federal 
agency whose administrative judges review nonprocurement suspension and 
debarment. OHA review is a deviation from the government-wide debarment 
regulations, in Title 2 at Part 2700. By eliminating OHA review, SBA 
actually lessens its deviation from the government-wide debarment 
regulations. Another reason for SBA's decision to do this is that OHA 
does not review SBA's procurement debarments (debarments based in the 
Federal Acquisition Regulations), so eliminating OHA review of Title 2 
debarments not only makes SBA consistent with the rest of the federal 
government, but also with SBA procedures for FAR debarments. Because 
revocation is so similar to debarment in function, SBA wishes to make 
the procedures for revocation consistent as well.
    Finally, this proposed rule would make a number of clarifications 
in 13 CFR Part 103 and 2 CFR Part 2700.

B. Section-By-Section Analysis

    Title 2, Sections 2700.765, 2700.890 and 2700.980. SBA is proposing 
to amend its nonprocurement suspension and debarment regulations at 2 
CFR 2700.765 and 2700.890 to remove the Office of Hearings and Appeals' 
jurisdiction over nonprocurement suspension and debarment. SBA is 
currently the only government agency that provides for an appeal of 
nonprocurement suspension and debarment in an administrative court. 
Moreover, procurement suspensions and debarments under the Federal 
Acquisition Regulations do not provide for an appeal to an 
administrative court. SBA is therefore proposing this change in order 
to bring its own procedures into conformity with the rest of the 
government.
    SBA is also proposing to add new section 2700.980 to supplement the 
definition of a ``Participant'' as used in the government-wide 
nonprocurement suspension and debarment regulations at 2 CFR Sec.  
180.980. Although it is SBA's position that all agents who conduct 
business with SBA are clearly included in the current definition of a 
``Participant,'' the proposed rule would add supplemental language to 
clarify that Agents, as defined in 13 CFR Part 103, are Participants 
for the purposes of the nonprocurement suspension and debarment 
regulations at 2 CFR Part 180.
    Title 13, Sections 103.1 through 103.4. SBA is proposing a number 
of changes to existing language of these sections for the purpose of 
clarification.
    Title 13, Section 103.1. In subsection (a), SBA would clarify that 
the list of agents in the definition for Agents is not all-inclusive 
and is proposing to add the term ``loan agent'' into the non-
comprehensive list of various representatives who are considered Agents 
for the purpose of the regulation.

[[Page 62062]]

    In subsections (b)(1) and (b)(2), SBA is proposing to add the word 
``assisting in the preparation of'' in order to eliminate any possible 
ambiguity in the use of the word ``preparing.'' This addition would 
clarify that preparing an application for federal assistance includes 
any assistance in such preparation.
    SBA is also proposing to add a new subsection (b)(3) and 
redesignate subsections (b)(3), (b)(4), and (b)(5) as (b)(4), (b)(5), 
and (b)(6), respectively. The proposed new subsection (b)(3) would 
specify that actions taken as a Referral Agent are included in the 
definition of the term ``conduct business with SBA.''
    In subsection (d), SBA is proposing to change the words ``a 
specific'' to ``an'' in order to prevent confusion as to whether there 
is a limiting factor regarding which documents the suspending official 
may examine. SBA knows of no such limitation.
    In subsection (f), SBA is proposing to add the words, ``such as a 
broker'' in order to make clear that the term ``Referral Agent'' 
includes brokers.
    In subsection (g), SBA is proposing to add the term ``procurement'' 
in order to make clear that a ``Participant'' as defined in this 
section includes persons or entities involved in all of SBA's programs, 
including those related to government procurement.
    Title 13, Section 103.2. SBA is proposing to change the word 
``may'' to the words ``have the privilege to'' in order to clarify that 
it is a privilege to conduct business with SBA and not a right. SBA is 
also proposing to change the words ``Applicant, Participant or lender'' 
to ``Applicant or Participant'' because the defined terms ``Applicant'' 
and ``Participant'' include by their definitions any lender that is 
participating or has applied to participate in an SBA program, 
including for example an SBA lender as defined in Title 13, Section 
120.10.
    Title 13, Section 103.3. SBA is proposing to remove language from 
section 103.3 that provides for an appeal to the Office of Hearings and 
Appeals (OHA) for suspension and revocation of Agents. SBA is proposing 
to also remove OHA's jurisdiction over nonprocurement suspension and 
debarment actions. These changes would conform SBA's suspension and 
revocation procedures to the government-wide procedures for 
nonprocurement suspension and debarment. In addition, SBA is proposing 
to add that the Agency may publish the names of agents subject to 
actions under this part in the System for Award Management (SAM), or 
any successor system, and on SBA's Web site.
    Title 13, Section 103.4. In the introductory paragraph, SBA is 
proposing to add the words ``but is not limited to'' in order to make 
clear that the list of activities within the section that constitute 
``good cause'' is not exclusive.
    In subsections 103.4(b) and (d), SBA is proposing to add the words 
``or Participant'' in order to make clear that the listed actions with 
regard to both Applicants and Participants constitute unlawful or 
unethical activity.
    In subsection 103.4(d), SBA is also proposing to add language 
regarding an Agent's inaccurate representations of endorsement or 
approval by SBA. In so doing, SBA aims to make clear that an 
implication or statement of special influence with SBA also includes 
implications or statements of SBA's approval or endorsement where those 
implications or statements are not accurate (i.e., where an Agent has 
no such approval or endorsement).
    In subsection 103.4(f), SBA is proposing to add the words ``but not 
limited to'' in order to make clear that the list of conduct within the 
subsection that constitutes ``conduct indicating a lack of business 
integrity'' is not exclusive. In addition, SBA is proposing to clarify 
the term ``false statements'' by changing it to ``making false or 
misleading statements or representations,'' which would make clear that 
the type of false statements at issue include misleading statements and 
representations. SBA is also proposing to move ``debarment, criminal 
conviction, or civil judgment within the last seven years'' to a 
separate sentence, stating that they, when based upon certain conduct, 
constitute evidence of certain conduct, because they are not actually 
``conduct'' of an agent.
    In subsection 103.4(g), SBA is proposing to replace the words 
``Lender Service Provider or Referral Agent and a Packager for an 
Applicant'' with the words ``a Lender Service Provider and a Packager 
for an Applicant or acting as both a Referral Agent and a Packager for 
an Applicant'' in order to clearly state the specific relationships 
that constitute the ``two master'' prohibition set forth in the 
subsection. SBA is also proposing to add the word ``Participant'' 
before each instance of the word ``lender'' in order to clarify that a 
lender in this example is a Participant for whom the Agent is acting.
    In subsection 103.4(h), SBA is proposing to change the citation 
``103.5'' to ``103.39'' in order to conform to the redesignation of 
Section 103.5 as Section 103.39 in this proposed rule. In subsection 
103.4(i), SBA is proposing to add the words ``Participant, or Agent'' 
in order to clarify that the section applies to any violations of which 
the Applicant, Participant, or Agent has been made aware.
    In subsection 103.4(i), SBA is proposing to delete the words ``of 
which the Applicant, Participant or Agent has been made aware.'' This 
deletion would clarify the subsection in that the deleted words merely 
state a point of fact and not a requirement. An Applicant, Participant 
or Agent has constructive knowledge of SBA's regulations, policies, and 
procedures by nature of their publication and thus SBA is not required 
to prove such knowledge in taking a suspension or revocation action.
    Title 13, Sections 103.5 through 103.38. SBA is proposing to 
redesignate the current Section 103.5 as Section 103.38 and add new 
Sections 103.5 through 103.37. These sections are similar in substance 
to the government-wide procedures for nonprocurement suspension and 
debarment set forth at 2 CFR Part 180. OMB guidance for implementing 
those procedures was first issued in 1987 [52 FR 20360, May 29, 1987]. 
OMB revised its guidance in 1988 [53 FR 19160, May 26, 1988] after 
agencies issued a common rule to implement the suspension and debarment 
guidance, and again in 1995 [60 FR 33036, June 26, 1995] and 2005 [70 
FR 51863, August 31, 2005] to conform to agencies' updates to the 
common rule. [68 FR 66534, November 26, 2003]. In 2006 OMB codified 
final guidance in Title 2 of the CFR [71 FR 66431, November 15, 2006], 
which, among other things, required agencies to adopt the guidance as 
the government-wide nonprocurement debarment and suspension procedures 
instead of the common rule. SBA adopted those procedures in 2007 [72 FR 
39728, July 20, 2007], including SBA-specific additions to those 
procedures as set forth in 2 CFR Part 2700.
    In seeking to codify detailed procedures for Agent suspension and 
revocation, SBA notes that there are clear parallels between the 
suspension and revocation remedies at SBA and government-wide 
nonprocurement suspension and debarment remedies: both place a bar on 
one's privilege to conduct business with the federal government. Given 
these clear parallels and the 25-year history of the government-wide 
nonprocurement suspension and debarment procedures (which have been 
open to public comment on numerous occasions), SBA has determined that 
it is logical and appropriate to use the same suspension

[[Page 62063]]

and debarment procedures for Agent suspension and revocation. As such, 
the language and substance of the proposed procedures for Agent 
suspension and revocation are specifically adapted from those in 2 CFR 
Parts 180 and 2700 which address suspension and debarment.
    Although the language in the proposed procedures is largely 
identical to those in 2 CFR Parts 180 and 2700, language has been 
changed to adapt debarment and debarment-specific standards and bases 
to revocation and revocation-specific standards and bases. A small 
number of other changes have been made for clarity.
    Title 13, Section 103.5. Although not currently formalized in the 
CFR, SBA's suspending and revoking officials are the same as its 
suspending and debarring officials. This proposed rule would merely 
codify this role. Designating the Agency's suspending and debarring 
officials as the suspending and revoking officials makes sense in that 
the process and substance of suspension and revocation are similar to 
those for nonprocurement suspension and debarment.
    Title 13, Sections 103.6 through 103.10. These sections of the 
proposed rule would set forth the process by which SBA determines to 
issue a suspension and the manner in which it issues the suspension. 
This includes the bases for suspension, considerations the suspending 
official must make, and the manner and form in which SBA provides 
notice of the suspension.
    Title 13, Section 103.8. In adapting language from 2 CFR 180.705, 
SBA is proposing to remove the word ``basic,'' which may lead to 
confusion as to whether there is a limiting factor regarding which 
documents the suspending official may examine. Because SBA knows of no 
such limitation, SBA is not including the word.
    Title 13, Sections 103.11 through 103.14. These sections of the 
proposed rule, which are modeled on comparable sections in Title 2, 
would set forth the procedures for challenging a suspension, including 
the time period in which to respond, and the information that must be 
submitted to respond to the Notice of Suspension.
    Title 13, Sections 103.15 through 103.19. These sections of the 
proposed rule makes it clear that suspensions are not formal 
proceedings, describe the factors the suspending official will consider 
in reviewing submissions in opposition to the Notice of Suspension, and 
how he or she will conduct fact-finding, if necessary, and decide 
whether to continue or terminate the suspension.
    Title 13, Section 103.16. In adapting language from 2 CFR 180.745, 
SBA is proposing to change the phrase ``If fact-finding is conducted'' 
to ``If the suspending official determines that fact-finding is 
necessary.'' This change would clarify the procedures for conducting 
fact-finding if an Agent receives an additional opportunity to 
challenge the facts on which the suspension is based by stating the 
circumstances under which fact-finding would occur.
    Title 13, Section 103.19. In adapting language from 2 CFR 180.760, 
SBA is proposing to reword subsection (a) to clarify what is meant by 
``legal or revocation proceedings.'' SBA aims to make clear that the 
time limitation is based upon (a) a revocation proceeding, or (b) legal 
action on behalf of the government, or if none, then no longer than 12 
months. SBA also aims to make clear that the legal action referred to 
is an action taken by the government regarding the facts giving rise to 
the suspension, rather than any legal action without limitation. SBA is 
also proposing to add its Inspector General to those officials from 
whom SBA may consider a request to extend a suspension, because Part 
103 suspension is an SBA-specific remedy, which is likely to not only 
be affected by ongoing investigation and prosecution by the Department 
of Justice but also ongoing investigation by SBA's Inspector General.
    Title 13, Section 103.20. This section of the proposed rule, 
adapted from 2 CFR 2700.765, sets forth the right of the subject of a 
suspension to ask the suspending official to reconsider his or her 
determination to continue a suspension and the process to make such 
request. As with the changes to 2 CFR Part 2700, stated above, this 
section does not provide for an appeal to SBA's Office of Hearings and 
Appeals because jurisdiction over suspensions is proposed to be removed 
from the Office of Hearings and Appeals.
    Title 13, Sections 103.21 through 103.22. These sections of the 
proposed rule, which are modeled on comparable sections in Title 2, set 
forth the process by which SBA would determine to issue a revocation 
and the manner in which it issues the revocation. This includes the 
manner and form in which SBA provides notice of the revocation and a 
statement of when revocation takes effect.
    Title 13, Sections 103.23 through 103.26. These sections of the 
proposed rule, which are modeled on comparable sections in Title 2, set 
forth the procedures the subject of a revocation may use to challenge 
the revocation, including the time period in which to respond, as well 
as what information must be submitted to respond to the Notice of 
Proposed Revocation.
    Title 13, Sections 103.27 through 103.34. These sections of the 
proposed rule, which are modeled on comparable sections in Title 2, 
provide for the procedure and manner in which the revoking official 
will consider submissions in opposition to the Notice of Proposed 
Revocation, conduct fact-finding, if necessary, and decide whether to 
revoke the privilege to conduct business with SBA and the revocation 
term, as well as how SBA sends notice of the revoking official's 
decision.
    Title 13, Section 103.27. 2 CFR 180.835 states, ``Debarment 
proceedings are conducted in a fair and informal manner. The debarring 
official may use flexible procedures to allow you as a respondent to 
present matters in opposition. In so doing, the debarring official is 
not required to follow formal rules of evidence or procedure in 
creating an official record upon which the official will base the 
decision whether to debar.'' In adapting language from 2 CFR 180.835, 
SBA proposes to reword subsection (a) from the nonprocurement debarment 
regulations for the sake of clarity by utilizing more straightforward 
language.
    Title 13, Section 103.28. In adapting language from 2 CFR 180.840, 
SBA would change the phrase ``If fact-finding is conducted'' to ``If 
the revoking official determines that fact-finding is necessary.'' This 
change would clarify the procedures for conducting fact-finding if an 
Agent receives an additional opportunity to challenge the facts on 
which the proposed revocation is based.
    Title 13, Sections 103.35 through 103.36. These sections of the 
proposed rule, which are modeled on comparable sections in Title 2, set 
forth the procedures by which the subject of a revocation may request 
reconsideration from the revoking official, including the factors that 
may influence the revoking official's decision on reconsideration.
    Title 13, Section 103.37. This section of the proposed rule sets 
forth the procedures by which a revoking official may extend a 
revocation.
    Title 13, Section 103.38. This section of the proposed rule, which 
is modeled on a comparable section in Title 2, sets forth the Agency's 
ability to impute conduct between individuals and organizations, as 
well as between organizations.

[[Page 62064]]

    Title 13, Section 134.102. SBA is proposing to remove jurisdiction 
over Part 103 suspension and revocation and Title 2 suspension and 
debarment from the Office and Hearings and Appeals. As such, the final 
agency decision of SBA with regard to such suspension or revocation and 
suspension or debarment would be from the debarring or revoking 
official. This change is being made to bring SBA's nonprocurement 
suspension and debarment procedures into conformity with the other 
federal agencies, which do not provide for an additional level of 
administrative review of suspension and debarment decisions, as well as 
maintain consistency between the procedures for suspension and 
revocation with nonprocurement suspension and debarment.

III. Comments Requested

    Readers are encouraged to review closely the proposed rule to fully 
comprehend the extent of the rule and its changes. SBA invites comment 
on all aspects of this proposed rule, including the underlying 
policies.

Compliance With Executive Orders 12866, 12988, 13132, and 13563, the 
Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory 
Flexibility Act (5 U.S.C. 601-612) Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
proposed rule constitutes a significant regulatory action under the 
meaning of Executive Order 12866. This proposed rule is not a major 
rule under the Congressional Review Act. The Regulatory Impact Analysis 
is set forth below.
1. Necessity of Regulation
    Currently, SBA utilizes procedures for Part 103 suspension and 
revocation for loan program Agents, as adopted in SBA's Standard 
Operating Procedure 50 53 A. Similar procedures for suspension or 
revocation of agents in SBA's 8(a) Business Development Program are 
codified in 13 CFR Part 124.
    However, Part 103 suspension and revocation is not limited to 
Agents under particular SBA programs such as SBA loan programs or the 
8(a) Business Development Program. Instead, these remedies, which have 
long existed, may be used against any Agent, as defined in the 
regulation. Agents may exist in many other contexts apart from SBA's 
loan programs or 8(a) Business Development Program but SBA does not 
currently have detailed written procedures for the suspension and 
revocation of such Agents.
    The proposed changes would clearly codify the same procedures for 
all Agents who are subject to suspension or revocation regardless of 
the SBA program at issue. In addition, by making the suspension and 
revocation procedures consistent across programs, SBA intends to 
alleviate any possible public confusion.
2. Alternate Approaches to Regulation
    SBA's alternate options to a single set of agency-wide procedures 
for Part 103 suspensions and revocations are limited and far less 
effective than setting forth the procedures in regulation. One 
alternate option would be to have no written procedures throughout the 
Agency. However, the proposed regulation is simpler and clearer for the 
public. Also, without written procedures for suspensions and 
revocations, those actions would be subjected to greater scrutiny by 
courts when evaluating them for due process, because due process is 
more readily achieved where the public is aware of a known and 
published set of procedures for such actions. As such, SBA finds that 
amending Part 103 to codify procedures for suspension and revocation 
avoids the drawbacks of proceeding with no written procedures.
    Another alternative that SBA considered was providing a consistent 
set of procedures by enacting those same procedures through numerous 
Standard Operating Procedures and policy notices throughout SBA, 
relating to various SBA programs. However, this too proves to be an 
inadequate alternative to providing procedures by regulation. The 
process of identifying the numerous locations to publish such 
procedures and then publishing in those locations doing so would prove 
far more burdensome for SBA than placing the procedures in one location 
within the regulations--Part 103--where suspension and revocation 
themselves are set forth. This single location for the procedures would 
also reduce the burden on the public, who would not have to seek out 
which version of the procedures to follow. It is for these reasons that 
SBA has determined that the most sensible and appropriate means to 
provide procedures for Part 103 suspensions and revocations is to place 
those procedures within the Part 103 regulation itself.
3. Potential Benefits and Costs
    By amending Part 103 to codify a standard set of procedures agency-
wide, SBA will be poised to make full use of these remedies in 
combatting fraud, waste, and abuse against the Agency. SBA has already 
used a similar remedy, suspension and debarment under 2 CFR Part 180, 
as an enforcement measure against many types of wrongdoers. Part 103 
suspension and revocation, however, provide a remedy against Agents in 
situations beyond the scope of 2 CFR Part 180 suspension and debarment. 
In fiscal years 2008 through 2011, SBA suspended 23 Participants (as 
defined in 2 CFR Part 180) and debarred 86 Participants. These 
Participants either defrauded the government or were not eligible for 
the contracts or benefits that they received. Hundreds of millions of 
dollars had been awarded or paid out by the government to these 
Participants prior to those suspension and debarment actions, and 
taking such actions has prevented such Participants from receiving 
further benefits and/or money. Thus, these actions have saved the 
government from potentially paying hundreds of millions of further 
government funds to those wrongdoers during their suspensions or 
subsequent to their debarments.
    SBA expects to achieve similar results from Part 103 suspensions 
and revocations through the use of consistent procedures for such 
actions agency-wide. Agents are collectively paid hundreds of millions 
of dollars by the small business community each year to conduct 
business with SBA on behalf of Applicants and Participants in SBA 
programs. By having centralized, consistent procedures, SBA will be 
able to fully utilize these remedies to limit the proportion of those 
dollars that goes into the hands of wrongdoers who commit fraud, waste, 
and abuse of SBA programs and government funds.
    Conversely, there are no costs to enacting these amendments to Part 
103. No extra requirements are being placed upon those subjected to 
Part 103 suspensions and revocations. Rather, the codification of these 
procedures will enable such Agents to better understand their rights 
and the procedures by which SBA seeks to carry out those suspensions 
and revocations.
    SBA notes that it is the sole agency subject to 2 CFR Part 180 
suspensions and debarments that provides for appeals to go to an 
administrative court. Without being required to exhaust their 
administrative remedies through the Office of Hearings and Appeals, 
Agents will be able to receive a final determination by SBA more 
quickly and without the cost and delay of protracted administrative 
litigation. SBA believes that the ability to appeal directly to federal 
court constitutes a benefit to those subjected to suspension, 
debarment, and revocation.

[[Page 62065]]

    These amendments to Part 103 also would pose no costs to SBA. The 
remedies of Part 103 suspension and revocation already exist. Because 
the proposed procedures are substantially similar to those of 2 CFR 
Part 180 suspension and debarment, SBA is capable of performing Part 
103 suspension and revocation actions with the same resources as it 
already utilizes for suspension and debarment. Also, the centralization 
of those procedures also ensures that various elements within SBA are 
not exercising different versions of these procedures. In addition, by 
removing the review of the 2 CFR Part 180 suspension and debarment 
actions from the jurisdiction of Office of Hearings and Appeals, SBA 
would benefit from decreased burden on that Office.

Executive Order 12988

    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

Executive Order 13132

    For purposes of Executive Order 13132, SBA has determined that the 
rule will not have substantial, direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. Therefore, for the purpose of Executive Order 13132, 
Federalism, SBA has determined that this proposed rule has no 
federalism implications warranting preparation of a federalism 
assessment.

Executive Order 13563

    Executive Order 13563 reaffirms the principles of Executive Order 
12866 while calling for improvements in the nation's regulatory system 
to promote predictability, to reduce uncertainty, and to use the best, 
most innovative, and least burdensome tools for achieving regulatory 
ends. The executive order directs agencies to consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public where these approaches are relevant, feasible, 
and consistent with regulatory objectives. We have developed this rule 
in a manner consistent with these requirements. Executive Order 13563 
also emphasizes that the rulemaking process must allow for public 
participation and an open exchange of ideas. With regard to this 
proposed rule, the number and variety of individuals and entities 
affected is too broad and varied to allow for meaningful direct 
participation with the public regarding the procedures set forth in the 
proposed rule prior to its publication in the Federal Register. As 
such, SBA intends to use the publication of this proposed rule in the 
Federal Register as the primary medium for generating public dialogue 
on the standards proposed in the rule. Concurrent with publication in 
the Federal Register, SBA will also post a notice on its Web site, 
including specific program Web sites, to publicize the publication of 
the rule and to encourage the public to review it and provide comment 
through www.regulations.gov. After an analysis of any public comments, 
SBA will consider whether additional efforts are warranted.

Paperwork Reduction Act, 44 U.S.C., Ch. 35

    SBA has determined that this proposed rule imposes no additional 
reporting or recordkeeping requirements under the Paperwork Reduction 
Act (PRA), 44 U.S.C., Chapter 35. Any information reported to SBA as a 
result of these regulations would be in the context of an 
administrative action involving the specific individuals facing 
possible suspension or revocation under these regulations. Information 
submitted in such proceedings is exempt from the requirements of the 
PRA.

Regulatory Flexibility Act, 5 U.S.C. 601-612

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires 
administrative agencies to consider the effect of their actions on 
small entities, small non-profit enterprises, and small local 
governments. Pursuant to RFA, when an agency issues a rulemaking, the 
agency must prepare a regulatory flexibility analysis which describes 
the impact of the rule on small entities. However, section 605 of the 
RFA allows an agency to certify a rule, in lieu of preparing an 
analysis, if the rulemaking is not expected to have a significant 
economic impact on a substantial number of small entities. Within the 
meaning of RFA, SBA certifies that this rule will not have a 
significant economic impact on a substantial number of small entities. 
As this proposed rule merely sets forth procedures that SBA already 
substantively utilizes, including the basic elements of due process 
such as notice and the opportunity to respond, in conducting 
suspensions and revocations, no part of this proposed rule would impose 
any significant additional cost or burden.

List of Subjects

2 CFR Part 2700

    Administrative practice and procedure, Government contracts, Grant 
programs, Loan programs, Reporting and recordkeeping requirements.

13 CFR Part 103

    Administrative practice and procedure, Lawyers.

13 CFR Part 124

    Administrative practice and procedure, Government procurement, 
Reporting and recordkeeping requirements, Technical assistance.

13 CFR Part 134

    Administrative practice and procedure, Claims, Lawyers, 
Organization and functions (Government agencies).

    For the reasons stated in the preamble, SBA proposes to amend 2 CFR 
Part 2700, and 13 CFR Parts 103, 124, and 134 as follows:

PART 2700--NONPROCUREMENT DEBARMENT AND SUSPENSION

0
1. The authority citation for part 2700 is revised to read as follows:

    Authority:  15 U.S.C. 634(b)(6); Sec 2455, Pub L. 103-355, 108 
Stat. 3327 (31 U.S.C. 6101 note); E.O. 12549, 51 FR 6370, 3 CFR, 
1986 Comp., p. 189; E.O. 12689. 54 FR 34131, 3 CFR, 1989 Comp., p. 
235.

0
2. Amend Sec.  2700.765 by revising the section heading and paragraphs 
(a) and (c); and by removing paragraph (d) to read as follows:


Sec.  2700.765  May I ask the suspending official to reconsider a 
decision to continue my suspension?

    (a) If the SBA suspending official issues a decision under Sec.  
180.755 to continue your suspension after you present information in 
opposition to that suspension under Sec.  180.720, you may ask the 
suspending official to reconsider the decision for material errors of 
fact or law that you believe will change the outcome of the matter.
* * * * *
    (c) The SBA suspending official must notify you of the decision 
under this section, in writing, using the notice procedures set forth 
at Sec. Sec.  180.615 and 180.975.


Sec.  2700.890  [Removed]

0
3. Remove Sec.  2700.890.
0
4. Add new Sec.  2700.980 to read as follows:

[[Page 62066]]

Sec.  2700.980  Participant (SBA supplement to governmentwide 
definition at 2 CFR 180.980).

    Participant means, in addition to those individuals and entities 
listed at 2 CFR 180.980, any Agent as defined in 13 CFR part 103.

Title 13: Business Credit and Assistance

PART 103--STANDARDS FOR CONDUCTING BUSINESS WITH SBA

0
5. The authority citation for part 103 is revised to read as follows:

    Authority:  15 U.S.C. 634 and 642.

0
6. Amend Sec.  103.1 as follows:
0
a. Revise paragraphs (a), (b)(1) and (b)(2);
0
b. Redesignate paragraphs (b)(3) through (b)(5) as (b)(4) through 
(b)(6);
0
c. Add new paragraph (b)(3);
0
d. Revise paragraphs (d), (f), and (g).
    The revisions and additions read as follows:


Sec.  103.1  Key Definitions.

    (a) Agent means a representative authorized to conduct business on 
behalf of another, including but not limited to an attorney, 
accountant, consultant, loan agent (such as a packager, referral agent, 
or lender service provider), or any other person representing an 
Applicant or Participant by conducting business with SBA.
    (b) * * *
    (1) Preparing, assisting in the preparation of, or submitting on 
behalf of an applicant an application for financial assistance of any 
kind, assistance from the Investment Division of SBA, or assistance in 
procurement and technical matters;
    (2) Preparing, assisting in the preparation of, or processing on 
behalf of a lender or a participant in any of SBA's programs an 
application for federal financial assistance;
    (3) Acting as a Referral Agent, such as a broker, in connection 
with an applicant's efforts to obtain financial assistance of any kind, 
assistance from the Investment Division of SBA, or assistance in 
procurement and technical matters.
* * * * *
    (d) Lender Service Provider means an Agent who carries out lender 
functions in originating, disbursing, servicing, or liquidating an SBA 
business loan or loan portfolio for compensation from the lender. SBA 
determines whether or not an Agent is a ``Lender Service Provider'' on 
a loan-by-loan basis.
* * * * *
    (f) Referral Agent means a person or entity who identifies and 
refers an Applicant to a lender or a lender to an Applicant, such as a 
broker. The Referral Agent may be employed and compensated by either an 
Applicant or a lender.
    (g) Participant means a person or entity that is participating in 
any of the financial, investment, procurement, or business development 
programs authorized by the Small Business Act or Small Business 
Investment Act of 1958.
0
7. Amend Sec.  103.2, by revising the first sentence of paragraph (b), 
to read as follows:


Sec.  103.2  Who may conduct business with SBA?

* * * * *
    (b) If you are an Agent, you have the privilege to conduct business 
with SBA on behalf of an Applicant or Participant, unless 
representation is otherwise prohibited by law or the regulations in 
this part or any other part in this chapter. * * *


Sec.  103.3  [Amended]

0
8. Revise Sec.  103.3 to read as follows:


Sec.  103.3  May SBA suspend or revoke an Agent's privilege?

    The Administrator of SBA or designee may, for good cause, suspend 
or revoke the privilege of any Agent to conduct business with SBA. SBA 
may publish the names of agents subject to actions under this part in 
the System for Award Management, or any successor system, and on SBA's 
Web site.
0
9. Amend Sec.  103.4 as follows:
0
a. Revise the introductory paragraph;
0
b. Revise paragraphs (b), (d), (f), (g), (h) and (i).
    The revisions read as follows:


Sec.  103.4  What is ``good cause'' for suspension or revocation?

    Any unlawful or unethical activity is good cause for suspension or 
revocation of the privilege to conduct business with SBA. This 
includes, but is not limited to:
* * * * *
    (b) Soliciting for the provision of services to an Applicant or 
Participant by another entity when there is an undisclosed business 
relationship between the two parties.
* * * * *
    (d) Implying or stating that the work to be performed for an 
Applicant or Participant will include use of political or other special 
influence with SBA or inaccurately representing SBA endorsement or 
approval. Examples include indicating that the entity is affiliated 
with or paid, endorsed, approved or employed by SBA, advertising or 
otherwise holding oneself out to the public using the words Small 
Business Administration or SBA in a manner that inaccurately implies 
SBA's endorsement, approval or sponsorship, use of SBA's seal or 
symbol, and giving a ``guaranty'' to an Applicant or Participant that 
the application will be approved.
* * * * *
    (f) Engaging in any conduct indicating a lack of business integrity 
or business honesty, including but not limited to fraud, embezzlement, 
theft, forgery, bribery, falsification or destruction of records, 
making false statements or misleading statements or representations, 
conspiracy, receiving stolen property, false claims, or obstruction of 
justice. Debarment, criminal conviction, or civil judgment within the 
last seven years for such conduct demonstrates evidence of that 
conduct.
    (g) Acting as both a Lender Service Provider and a Packager for an 
Applicant or acting as both a Referral Agent and a Packager for an 
Applicant on the same SBA business loan, and receiving compensation for 
such activity from both the Applicant and Participant lender without 
full disclosure of compensation to both the Applicant and Participant 
lender. A limited exception to this ``two master'' prohibition exists 
when an Agent acts as a Packager and is compensated by the Applicant 
for packaging services, acts as a Referral Agent and is compensated by 
the Participant lender for those activities, discloses the referral 
activities to the Applicant, and discloses the packaging activities to 
the Participant lender.
    (h) Violating materially the terms of any compensation agreement or 
Lender Service Provider agreement provided for in Sec.  103.39.
    (i) Violating or assisting in the violation of any SBA program 
requirement, including, without limitation, any requirement imposed by 
an SBA regulation, policy, procedure, notice, form, or agreement. Such 
violations include but are not limited to failure to disclose fees paid 
by an Applicants or Participant when required by SBA program 
requirements.10. Redesignate Sec.  103.5 as Sec.  103.39.
0
11. Add new Sec. Sec.  103.5 through 103.38 to part 103 to read as 
follows:

Sec.
103.5 Who are the suspending and revoking officials?
103.6 How does SBA provide notification of a suspension or 
revocation action?
103.7 When may the suspending official issue a suspension?
103.8 What does the suspending official consider in issuing a 
suspension?
103.9 When does a suspension take effect?

[[Page 62067]]

103.10 What notice does the suspending official give me if I am 
suspended?
103.11 How may I contest a suspension?
103.12 How much time do I have to contest a suspension?
103.13 What information must I provide to the suspending official if 
I contest the suspension?
103.14 Under what conditions do I get an additional opportunity to 
challenge the facts on which the suspension is based?
103.15 Are suspension proceedings formal?
103.16 How is fact-finding conducted?
103.17 What does the suspending official consider in deciding 
whether to continue or terminate my suspension?
103.18 When will I know whether the suspension is continued or 
terminated?
103.19 How long may my suspension last?
103.20 May I ask the suspending official to reconsider a decision to 
continue my suspension?
103.21 What notice does the revoking official give me if I am 
proposed for revocation?
103.22 When does a revocation take effect?
103.23 How may I contest a proposed revocation?
103.24 How much time do I have to contest a proposed revocation?
103.25 What information must I provide to the revoking official if I 
contest the proposed revocation?
103.26 Under what conditions do I get an additional opportunity to 
challenge the facts on which the proposed revocation is based?
103.27 Are revocation proceedings formal?
103.28 How is a fact-finding conducted?
103.29 What does the revoking official consider in deciding whether 
to revoke my privilege to conduct business with SBA?
103.30 What is the standard of proof in a revocation action?
103.31 Who has the burden of proof in a revocation action?
103.32 What factors may influence the revoking official's decision?
103.33 How long may my revocation last?
103.34 When do I know if the revoking official revokes my privilege 
to conduct business with SBA?
103.35 May I ask the revoking official to reconsider a decision to 
revoke my privilege to conduct business with SBA?
103.36 What factors may influence the revoking official during 
reconsideration?
103.37 May the revoking official extend a revocation?
103.38 May the Agency impute conduct of one person to another?


Sec.  103.5  Who are the suspending and revoking officials?

    The suspending and revoking officials are those officials 
designated as suspending and debarring officials for SBA at 2 CFR Sec.  
180.930.


Sec.  103.6  How does SBA provide notification of a suspension or 
revocation action?

    The suspending or revoking official sends a written notice to the 
last known street address, facsimile number, or email address of you or 
your identified counsel.


Sec.  103.7  When may the suspending official issue a suspension?

    Suspension is a serious action. Using the procedures of this part, 
the suspending official may impose suspension only when that official 
determines that--
    (a) There exists adequate evidence of any good cause under Sec.  
103.4; and
    (b) Immediate action is necessary to protect the public interest.


Sec.  103.8  What does the suspending official consider in issuing a 
suspension?

    (a) In determining whether there is adequate evidence to support 
the suspension, the suspending official considers how much information 
is available, how credible it is given the circumstances, whether or 
not important allegations are corroborated, and what inferences can 
reasonably be drawn as a result. During this assessment, the suspending 
official may examine the documents, including grants, cooperative 
agreements, loan authorizations, contracts, and other relevant 
documents.
    (b) An indictment, conviction, civil judgment, or other official 
findings by Federal, State, or local bodies that determine factual and/
or legal matters, constitutes reasonable evidence for purposes of 
suspension actions.
    (c) In deciding whether immediate action is needed to protect the 
public interest, the suspending official has wide discretion. For 
example, the suspending official may infer the necessity for immediate 
action to protect the public interest either from the nature of the 
circumstances giving rise to a cause for suspension or from potential 
business relationships or involvement with a program of the Federal 
Government.


Sec.  103.9  When does a suspension take effect?

    A suspension is effective when the suspending official signs the 
decision to suspend.


Sec.  103.10  What notice does the suspending official give me if I am 
suspended?

    After deciding to suspend you, the suspending official will 
promptly send you a Notice of Suspension advising you--
    (a) That you have been suspended;
    (b) Of the good cause upon which the suspending official relied 
under Sec.  103.4 for imposing suspension;
    (c) That your suspension is for a temporary period pending the 
completion of an investigation or resulting legal or revocation 
proceedings; and
    (d) Of the applicable provisions of this part, and any other agency 
procedures governing suspension decision making, including appeals and 
appeal rights.


Sec.  103.11  How may I contest a suspension?

    If you as a respondent wish to contest a suspension, you or your 
representative must provide the suspending official with information in 
opposition to the suspension. You may do this orally or in writing, but 
any information provided orally that you consider important must also 
be submitted in writing for the official record.


Sec.  103.12  How much time do I have to contest a suspension?

    (a) As a respondent you or your representative must either send, or 
make arrangements to appear and present, the information and argument 
to the suspending official within 30 days after you receive the Notice 
of Suspension.
    (b) SBA considers the notice to be received by you--
    (1) When delivered, if the agency mails the notice to the last 
known street address, or five days after the agency sends it if the 
letter is undeliverable;
    (2) When sent, if the agency sends the notice by facsimile or five 
days after the agency sends it if the facsimile is undeliverable; or
    (3) When delivered, if the agency sends the notice by email or five 
days after the agency sends it if the email is undeliverable.


Sec.  103.13  What information must I provide to the suspending 
official if I contest the suspension?

    (a) In addition to any information and argument in opposition, as a 
respondent your submission to the suspending official must identify 
specific facts that contradict the statements contained in the Notice 
of Suspension. A general denial is insufficient to raise a genuine 
dispute over facts material to the suspension.
    (b) If you fail to disclose this information, or provide false 
information, SBA may seek further criminal, civil or administrative 
action against you, as appropriate.


Sec.  103.14  Under what conditions do I get an additional opportunity 
to challenge the facts on which the suspension is based?

    (a) You as a respondent will have an opportunity to challenge the 
facts if the suspending official determines that your presentation in 
opposition raises a genuine dispute over facts material to the 
suspension.

[[Page 62068]]

    (b) If you have an opportunity to challenge disputed material facts 
under this section, the suspending official or designee must conduct 
additional proceedings to resolve those facts.


Sec.  103.15  Are suspension proceedings formal?

    (a) Suspension proceedings are not formal and formal rules of 
evidence do not apply. The suspending official will use flexible 
procedures to allow you to present matters in opposition. In so doing, 
the suspending official is not required to follow formal rules of 
evidence or procedure in creating an official record upon which the 
official will base a final suspension decision.
    (b) You as a respondent or your representative must submit any 
documentary evidence you want the suspending official to consider.


Sec.  103.16  How is fact-finding conducted?

    (a) If the suspending official determines that fact-finding is 
necessary--
    (1) You may present witnesses and other evidence, and confront any 
witness presented; and
    (2) The fact-finder must prepare written findings of fact for the 
record.
    (b) A transcribed record of fact-finding proceedings must be made, 
unless you as a respondent and SBA agree to waive it in advance. If you 
want a copy of the transcribed record, you may purchase the record from 
the transcription service.


Sec.  103.17  What does the suspending official consider in deciding 
whether to continue or terminate my suspension?

    (a) The suspending official bases the decision on all information 
contained in the official record. The record includes--
    (1) All information in support of the suspending official's initial 
decision to suspend you;
    (2) Any further information and argument presented in support of, 
or opposition to, the suspension; and
    (3) Any transcribed record of fact-finding proceedings.
    (b) The suspending official may refer disputed material facts to 
another official for findings of fact. The suspending official may 
reject any resulting findings, in whole or in part, only after 
specifically determining them to be arbitrary, capricious, or clearly 
erroneous.


Sec.  103.18  When will I know whether the suspension is continued or 
terminated?

    The suspending official must make a written decision whether to 
continue, modify, or terminate your suspension within 45 days of 
closing the official record. The official record closes upon the 
suspending official's receipt of final submissions, information and 
findings of fact, if any. The suspending official may extend that 
period for good cause.


Sec.  103.19  How long may my suspension last?

    (a) If revocation proceedings or legal action on behalf of the 
government regarding the facts giving rise to the suspension are 
initiated at the time of, or during, your suspension, the suspension 
may continue until the conclusion of those proceedings or legal action. 
However, if such proceedings or legal action are not initiated, a 
suspension may not exceed 12 months.
    (b) The suspending official may extend the 12 month limit under 
paragraph (a) of this section for an additional 6 months if SBA's 
Inspector General or an office of a U.S. Assistant Attorney General, 
U.S. Attorney, or other responsible prosecuting official requests an 
extension in writing. In no event may a suspension exceed 18 months 
without initiating proceedings described under paragraph (a) of this 
section.
    (c) The suspending official must notify the appropriate officials 
under paragraph (b) of this section of an impending termination of a 
suspension at least 30 days before the 12 month period expires to allow 
the officials an opportunity to request an extension.


Sec.  103.20  May I ask the suspending official to reconsider a 
decision to continue my suspension?

    (a) If the SBA suspending official issues a decision under Sec.  
103.18 to continue your suspension after you present information in 
opposition to that suspension under Sec.  103.11, you may ask the 
suspending official to reconsider the decision for material errors of 
fact or law that you believe will change the outcome of the matter.
    (b) A request for review under this section must be in writing; 
state the specific findings you believe to be in error; and include the 
reasons or legal bases for your position.
    (c) The SBA suspending official must notify you of his or her 
decision under this section, in writing, using the notice procedures 
set forth at Sec.  103.6.


Sec.  103.21  What notice does the revoking official give me if I am 
proposed for revocation?

    After consideration of the causes in Sec.  103.4, if the revoking 
official proposes to revoke your privilege to conduct business with 
SBA, the official sends you a Notice of Proposed Revocation, pursuant 
to Sec.  103.6, advising you--
    (a) That the revoking official is considering revoking your 
privilege to conduct business with SBA;
    (b) Of the reasons for proposing to revoke your privilege to 
conduct business with SBA in terms sufficient to put you on notice of 
the conduct or transactions upon which the proposed revocation is 
based;
    (c) Of the good cause under Sec.  103.4 upon which the revoking 
official relied for proposing your revocation; and
    (d) Of the applicable provisions of this part, and any other agency 
procedures governing revocation.


Sec.  103.22  When does a revocation take effect?

    A revocation is not effective until the revoking official issues a 
decision. The revoking official does not issue a decision until the 
respondent has had an opportunity to contest the proposed revocation.


Sec.  103.23  How may I contest a proposed revocation?

    If you as a respondent wish to contest a proposed revocation, you 
or your representative must provide the revoking official with 
information in opposition to the proposed revocation. You may do this 
orally or in writing, but any information provided orally that you 
consider important must also be submitted in writing for the official 
record.


Sec.  103.24  How much time do I have to contest a proposed revocation?

    (a) As a respondent you or your representative must send the 
information and argument to the revoking official within 30 days after 
you receive the Notice of Proposed Revocation.
    (b) SBA considers the Notice of Proposed Revocation to be received 
by you--
    (1) When delivered, if the agency mails the notice to the last 
known street address, or five days after the agency sends it if the 
letter is undeliverable;
    (2) When sent, if the agency sends the notice by facsimile or five 
days after the agency sends it if the facsimile is undeliverable; or
    (3) When delivered, if the agency sends the notice by email or five 
days after the agency sends it if the email is undeliverable.


Sec.  103.25  What information must I provide to the revoking official 
if I contest the proposed revocation?

    (a) In addition to any information and argument in opposition, as a 
respondent your submission to the revoking official must identify 
specific facts that contradict the statements contained in

[[Page 62069]]

the Notice of Proposed Revocation. Include any information about any of 
the factors listed in Sec.  103.4. A general denial is insufficient to 
raise a genuine dispute over facts material to the revocation.
    (b) If you fail to disclose this information, or provide false 
information, SBA may seek further criminal, civil or administrative 
action against you, as appropriate.


Sec.  103.26  Under what conditions do I get an additional opportunity 
to challenge the facts on which the proposed revocation is based?

    (a) You as a respondent will have an additional opportunity to 
challenge the facts if the revoking official determines that your 
presentation in opposition raises a genuine dispute over facts material 
to the proposed revocation.
    (b) If you have an opportunity to challenge disputed material facts 
under this section, the revoking official or designee must conduct 
additional proceedings to resolve those facts.


Sec.  103.27  Are revocation proceedings formal?

    (a) Revocation proceedings are not formal and formal rules of 
evidence do not apply. The revoking official will use flexible 
procedures in creating an official record upon which the official will 
base a final revocation decision.
    (b) You or your representative must submit any documentary evidence 
you want the revoking official to consider.


Sec.  103.28  How is fact-finding conducted?

    (a) If the revoking official determines that fact-finding is 
necessary--
    (1) You may present witnesses and other evidence, and confront any 
witness presented; and
    (2) The fact-finder must prepare written findings of fact for the 
record.
    (b) A transcribed record of fact-finding proceedings must be made, 
unless you as a respondent and SBA agree to waive it in advance. If you 
want a copy of the transcribed record, you may purchase it.


Sec.  103.29  What does the revoking official consider in deciding 
whether to revoke my privilege to conduct business with SBA?

    (a) The revoking official may revoke your privilege to conduct 
business with SBA for any of the causes in Sec.  103.4. However, the 
official need not revoke your privilege to conduct business with SBA 
even if a cause for revocation exists. The official may consider the 
seriousness of your acts or omissions and the mitigating or aggravating 
factors set forth at Sec.  103.32.
    (b) The revoking official bases the decision on all information 
contained in the official record. The record includes--
    (1) All information in support of the revoking official's proposed 
revocation;
    (2) Any further information and argument presented in support of, 
or in opposition to, the proposed revocation; and
    (3) Any transcribed record of fact-finding proceedings.
    (c) The revoking official may refer disputed material facts to 
another official for findings of fact. The revoking official may reject 
any resultant findings, in whole or in part, only after specifically 
determining them to be arbitrary, capricious, or clearly erroneous.


Sec.  103.30  What is the standard of proof in a revocation action?

    (a) In any revocation action, SBA must establish the cause for 
revocation by a preponderance of the evidence.
    (b) If the proposed revocation is based upon a conviction or civil 
judgment, the standard of proof is met.


Sec.  103.31  Who has the burden of proof in a revocation action?

    (a) SBA has the burden to prove that a cause for revocation exists.
    (b) Once a cause for revocation is established, you as a respondent 
have the burden of demonstrating to the satisfaction of the revoking 
official that revocation is not necessary.


Sec.  103.32  What factors may influence the revoking official's 
decision?

    This section lists the mitigating and aggravating factors that the 
revoking official may consider in determining whether to revoke your 
privilege to conduct business with SBA and the length of your 
revocation period. The revoking official may consider other factors if 
appropriate in light of the circumstances of a particular case. The 
existence or nonexistence of any factor, such as one of those set forth 
in this section, is not necessarily determinative of whether revocation 
is necessary. In making a revocation decision, the revoking official 
may consider the following factors:
    (a) The actual or potential harm or impact that result or may 
result from the wrongdoing.
    (b) The frequency of incidents and/or duration of the wrongdoing.
    (c) Whether there is a pattern or prior history of wrongdoing. For 
example, if you have been found by another Federal agency or a State 
agency to have engaged in wrongdoing similar to that found in the 
revocation action, the existence of this fact may be used by the 
revoking official in determining that you have a pattern or prior 
history of wrongdoing.
    (d) Whether you are or have been excluded or disqualified by an 
agency of the Federal Government or have not been allowed to 
participate in State or local contracts or assistance agreements on a 
basis of conduct similar to one or more of the causes for revocation 
specified in this part.
    (e) Whether you have entered into an administrative agreement with 
a Federal agency or a State or local government that is based on 
conduct similar to one or more of the causes for revocation specified 
in this part.
    (f) Whether and to what extent you planned, initiated, or carried 
out the wrongdoing.
    (g) Whether you have accepted responsibility for the wrongdoing and 
recognize the seriousness of the misconduct that led to the cause for 
revocation.
    (h) Whether you have paid or agreed to pay all criminal, civil and 
administrative liabilities for the improper activity, including any 
investigative or administrative costs incurred by the government, and 
have made or agreed to make full restitution.
    (i) Whether you have cooperated fully with the government agencies 
during the investigation and any court or administrative action. In 
determining the extent of cooperation, the revoking official may 
consider when the cooperation began and whether you disclosed all 
pertinent information known to you.
    (j) Whether you took appropriate corrective action or remedial 
measures to correct your wrongdoing.
    (k) Other factors that are appropriate to the circumstances of a 
particular case.


Sec.  103.33  How long may my revocation last?

    (a) If the revoking official decides to revoke your privilege to 
conduct business with SBA, your period of revocation will be based on 
the seriousness of the cause(s) upon which your revocation is based.
    (b) In determining the period of revocation, the revoking official 
may consider the factors in Sec.  103.32. If a suspension has preceded 
your revocation, the revoking official must consider the time you were 
suspended.


Sec.  103.34  When do I know if the revoking official revokes my 
privilege to conduct business with SBA?

    (a) The revoking official must make a written decision within 45 
days of closing the official record. The official record closes upon 
the revoking official's receipt of final submissions,

[[Page 62070]]

information and findings of fact, if any. The revoking official may 
extend that period for good cause.
    (b) The revoking official sends you written notice, pursuant to 
Sec.  103.6, that the official decided either--
    (1) Not to revoke your privilege to conduct business with SBA; or
    (2) To revoke your privilege to conduct business with SBA. In this 
event, the notice:
    (i) Refers to the Notice of Proposed Revocation;
    (ii) Specifies the reasons for your revocation; and
    (iii) States the period of your revocation, including the effective 
dates.


Sec.  103.35  May I ask the revoking official to reconsider a decision 
to revoke my privilege to conduct business with SBA?

    Yes, you may ask the revoking official to reconsider the revocation 
decision or to reduce the time period or scope of the revocation. 
However, you must put your request in writing and support it with 
documentation.


Sec.  103.36  What factors may influence the revoking official during 
reconsideration?

    The revoking official may reduce or terminate your revocation based 
on--
    (a) Newly discovered material evidence not previously available;
    (b) A reversal of the conviction or civil judgment upon which your 
revocation was based;
    (c) A bona fide change in ownership or management;
    (d) Elimination of other causes for which the revocation was 
imposed; or
    (e) Other reasons the revoking official finds appropriate.


Sec.  103.37  May the revoking official extend a revocation?

    (a) Yes, the revoking official may extend a revocation for an 
additional period, if that official determines that an extension is 
necessary to protect the public interest.
    (b) However, the revoking official may not extend a revocation 
solely on the basis of the facts and circumstances upon which the 
initial revocation action was based.
    (c) If the revoking official decides that a revocation for an 
additional period is necessary, the revoking official must follow the 
applicable procedures in this part to extend the revocation, at 
Sec. Sec.  103.21 through 103.36 of this part.


Sec.  103.38  May the Agency impute conduct of one person to another?

    For purposes of actions taken under this rule, SBA may impute 
conduct as follows:
    (a) Conduct imputed from an individual to an organization. SBA may 
impute the fraudulent, criminal, or other improper conduct of any 
officer, director, shareholder, partner, employee, or other individual 
associated with an organization, to that organization when the improper 
conduct occurred in connection with the individual's performance of 
duties for or on behalf of that organization, or with the 
organization's knowledge, approval or acquiescence. The organization's 
acceptance of the benefits derived from the conduct is evidence of 
knowledge, approval or acquiescence.
    (b) Conduct imputed from an organization to an individual, or 
between individuals. SBA may impute the fraudulent, criminal, or other 
improper conduct of any organization to an individual, or from one 
individual to another individual, if the individual to whom the 
improper conduct is imputed either participated in, had knowledge of, 
or reason to know of the improper conduct.
    (c) Conduct imputed from one organization to another organization. 
SBA may impute the fraudulent, criminal, or other improper conduct of 
one organization to another organization when the improper conduct 
occurred in connection with a partnership, joint venture, joint 
application, association or similar arrangement, or when the 
organization to whom the improper conduct is imputed has the power to 
direct, manage, control or influence the activities of the organization 
responsible for the improper conduct. Acceptance of the benefits 
derived from the conduct is evidence of knowledge, approval or 
acquiescence.

PART 124--8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS 
STATUS DETERMINATIONS

0
13. The authority citation for part 124 is revised to read as follows:

    Authority:  15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d); 42 
U.S.C. 9815; Pub. L. 99-661; Pub L. 100-656; sec. 1207, Pub L. 101-
37; Pub. L. 101-574; sec. 8021, Pub. L. 108-87.


Sec.  124.4  [Amended]

0
14. Amend Sec.  124.4 by removing paragraph (c) and redesignating 
paragraph (d) as paragraph (c).

PART 134--RULES OF PROCEDURE GOVERNING CASES BEFORE THE OFFICE OF 
HEARINGS AND APPEALS

0
15. The authority citation for part 134 continues to read as follows:

    Authority:  5 U.S.C. 504; 15 U.S.C. 632, 634(b)(6), 637(a), 
648(l), 656(i), and 687(c); E.O. 12549, 51 FR 6370, 3 CFR, 1986 
Comp., p. 189.


Sec.  134.102  [Amended]

0
16. Amend Sec.  134.102 by removing and reserving paragraphs (c) and 
(p).

Maria Contreras-Sweet,
Administrator.
[FR Doc. 2014-22521 Filed 10-14-14; 8:45 am]
BILLING CODE 8025-01-P