Standards of Conduct and Other Employee Responsibilities

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SMALL BUSINESS ADMINISTRATION

13 CFR Part 105

Standards of Conduct and Other Employee Responsibilities

AGENCY: Small Business Administration.

ACTION: Proposed Rule.

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SUMMARY: The Small Business Administration (SBA) proposes to amend its

regulations governing employee standards of conduct. The proposed

amendment repeals provisions that are superseded by the Office of

Government Ethics (OGE) Uniform Standards of Conduct for Employees of

the Executive Branch (5 CFR part 2635); amends two provisions by

including participating lender status in the definition of SBA

Assistance and adding the Associate General Counsel for General Law as

an Assistant Standards of Conduct Counselor; and renumbers the

remaining provisions with several minor technical amendments.

DATES: Comments must be received on or before December 27, 1995.

ADDRESSES: Please send comments to David R. Kohler, Regulatory Reform

Team Leader (105), Suite 13, U.S. Small Business Administration, 409

Third Street SW., Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT: Robinson S. Nunn, Chief Counsel for

Ethics, Office of the General Counsel, U.S. Small Business

Administration, 409 Third Street SW., Washington, DC 20416, (202) 205-

6867, or Martin D. Teckler, Deputy General Counsel (202) 205-6642.

SUPPLEMENTARY INFORMATION: The Small Business Administration is

proposing to repeal numerous provisions of its existing standards of

conduct regulations at 13 CFR Part 105 which were superseded by the

Office of Government Ethics' (OGE) uniform Standards of Ethical Conduct

for Employees of the Executive Branch (5 CFR Part 2635); eliminated by

other regulatory authority; or determined to be inappropriate for

continued inclusion in this part. SBA proposes to repeal the following

sections of 13 CFR Part 105: 105.101 through 105.301; 105.401; 105.402;

105.405; 105.406 through 105.408; 105.501 through 105.505; 105.506

except paragraph (g)(1); 105.507 through 105.515; 105.518 through

105.521 and 105.901. The remaining provisions of 13 CFR Part 105 would

be renumbered and renamed ``Standards of Conduct and Employee

Restrictions and Responsibilities.''

In place of SBA's former standards at 13 CFR part 105, SBA would

issue a residual cross reference provision at new 13 CFR 105.101 to

refer to the uniform Standards of Conduct and financial disclosure

regulations for Executive Branch employees and SBA's Supplemental

Standards of Conduct regulation. Additionally, SBA would reissue, in

the new 13 CFR part 105, several provisions regarding other employee

responsibilities.

Section-by-Section Analysis.

Section 105.101 Cross Reference to Employee Ethical Conduct Standards

and Financial Disclosure Regulations.

This section will notify SBA employees that the Standards of

Ethical Conduct for Executive Branch employees are codified at 5 CFR

Part 2635, the uniform financial disclosure regulation for Executive

Branch employees is codified at 5 CFR Part 2634, and the Agency

Supplemental Standards of Conduct are to be codified at 5 CFR Chapter

XLIV.

Sec. 105.201 Definitions

This section provides definitions unique to SBA which are

applicable throughout this part. Some definitions have been deleted

from the former 13 CFR 105.201, as not needed for an understanding of

this part. The definition of ``SBA Assistance'' was amended to include

all participating lenders, including banks as recipients of SBA

Assistance.

Sec. 105.202 Employment of Former Employee by Person Previously the

Recipient of SBA Assistance

This section is the first of two sections which would provide

restrictions relating to former SBA employees. Section 105.202 is based

on a provision of the Small Business Act (15 U.S.C. 642) and sets forth

conditions under which only a former SBA employee who occupied a

position involving discretion or who exercised discretion with respect

to the granting of SBA Assistance or the administration of such

assistance, would be prohibited from accepting or retaining a position

as employee, partner, or otherwise, with a concern which has received

this specific SBA Assistance, for a period of two years following the

the granting or administration of such assistance. It is anticipated

that as was the case with former Sec. 105.403, this prohibition will

apply only to those SBA employees who had final discretionary authority

over the making or administration of specific SBA Assistance. It would

not apply to those whose responsibilities extended only to provision of

advice or recommendations on the granting or administering of

Assistance or performance of ministerial acts with respect to its

administration. Section 105.202 was formerly located at 13 CFR 105.403.

Sec. 105.203 SBA Assistance to Person Employing Former SBA Employee

This section is based on the same provision of the Small Business

Act as Sec. 105.202. It would prohibit SBA from providing assistance to

any person who has as an employee, owner, partner, attorney, agent,

owner of stock, officer, director, creditor, or debtor, any individual

who, within one year prior to the request for such assistance, was an

SBA employee, without the prior approval of the SBA Standards of

Conduct Counselor.

Additionally, this section sets forth the criteria to be used in

reviewing such applications for SBA Assistance. Section 105.203 was

formerly located at 13 CFR 105.404.

Sec. 105.204 Assistance to SBA Employees or Members of Their Household

This section explains that prior written approval of the Standards

of Conduct Committee is required before any SBA Assistance, other than

Disaster Loans, as defined in subparagraphs (1) and (2) of section 7(b)

of the Small Business Act, can be provided to a person whose sole

proprietor, partner, officer, director, or significant stockholder is

an SBA employee or a member of his or her household. Section 105.204

was formerly located at 13 CFR 105.506(g)(1).

Sec. 105.205 Duty to Report Irregularities

This section explains the requirement that employees report acts of

malfeasance or misfeasance to the Inspector General. This section was

formerly located at 13 CFR Sec. 105.516.

Sec. 105.206 Applicable Rules and Directions

This section explains the requirement that employees follow Agency

rules, regulations, operating procedures, instructions and other proper

directions in the performance of official functions. This section was

formerly located at 13 CFR 105.517.

Sec. 105.207 Politically Motivated Activities With Respect to the

Minority Small Business Program

This section sets forth prohibitions, on certain SBA employees, and

remedial measures for violations of those prohibitions with regard to

the programs or activities conducted pursuant to sections 8(a) and 7(j)

of the

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Small Business Act. This section is based on sec. 8(a)(19) of the Small

Business Act (15 U.S.C. 637(a)(19)).

Paragraph (a) of Sec. 105.207 prohibits employees, who have

authority to take, direct others to take, recommend, or approve any

action with respect to transactions undertaken pursuant to section 7(j)

of the Small Business Act, from exercising or threatening to exercise

such authority on the basis of the political activity or affiliation of

any party. Furthermore, subsection (a) requires all employees to

``expeditiously report'' to SBA's Inspector General any such action for

which the employee's participation has been solicited or directed.

Paragraph (b) asserts that the penalty for violations of this

section may consist of separation from service, reduction in grade,

suspension, or reprimand and shall be imposed by the Administrator.

Paragraph (c) notes that this section does not apply to any action

taken as a penalty or other enforcement of a violation of any law,

rules, or regulations prohibiting or restricting political activity.

This section was formerly located at 13 CFR 105.522.

Sec. 105.208 Penalties

This section states that any employee found guilty of violating

these regulations may be subject to disciplinary action, including

dismissal or suspension from SBA employment. This provision was

formerly located at 13 CFR 105.701.

Sec. 105.301 Assistance to Officers or Employees of Other Government

Organizations

This section requires a prior written statement from the

appropriate department or military service before any SBA Assistance

may be granted to a person whose sole proprietor, general partner,

officer, director, or stockholder with a 10% or more interest is an

employee of another Government agency or department, having a grade of

GS-13 or its equivalent or higher, in the case of civilian employees,

or the rank of major or lieutenant commander, or its equivalent or

higher, in the case of military personnel.

Additionally, this section provides that, except in special

circumstances, approved by the Standards of Conduct Committee, SBA will

not enter into a contract with a person when its principal, or member

of his or her household, is an employee of a Government agency.

Finally, this section requires similar Standards of Conduct

Committee approval before granting SBA Assistance, other than Disaster

Loans, to persons whose principal, or member of their household, is a

member of Congress, an appointed official, or an employee of the

legislative or judicial branch of the Government. This provision was

formerly located at 13 CFR 105.601.

Sec. 105.302 Assistance to Employees or Members of Quasi-Government

Organizations

This section discusses the requirement of Standards of Conduct

Committee approval for SBA Assistance to members of employees of Small

Business Advisory Councils, SCORE volunteers, or members of their

household. This section was formerly located at 13 CFR 105.602.

Sec. 105.401 Standards of Conduct Committee

This section sets forth the functions and responsibilities of the

SBA Standards of Conduct Committee. The Committee's responsibilities

include advising and giving direction in the administration of

standards of conduct regulations and making decisions on specific

requests for guidance from Agency management, in connection with

matters related to standards of conduct.

This section also delineates the composition of the Standards of

Conduct Committee: the General Counsel or Deputy General Counsel in his

or her absence; the Associate Deputy Administrator for Management and

Administration or the Assistant Administrator for Administration, in

his or her absence; and the Director of Personnel or the Deputy

Director of Personnel in his or her absence.

This provision was formerly located at 13 CFR 105.801.

Sec. 105.402 Standards of Conduct Counselors

This section designates the Deputy General Counsel as SBA Standards

of Conduct Counselor and the Associate General Counsel for General Law

as an Assistant Standards of Conduct Counselor, and outlines the duties

and responsibilities of those positions. This provision was formerly

located at 13 CFR 105.402, except that the current Sec. 105.802 has

been amended to add the Associate General Counsel as an Assistant

Standards of Conduct Counselor and to delete Regional Standards of

Conduct Counselors. The section also amends the standards of conduct

Counselors' responsibilities for review of employees Confidential

Financial Disclosure Reports (Standard Form 450) instead of the

previous requirement to review Statements of Employment and Financial

Interests (SBA Form 703).

Sec. 105.403 Designated Agency Ethics Official

This section designates the Deputy General Counsel as SBA's

Designated Agency Ethics Official, authorizes the appointment of

Alternate Ethics Officials, and outlines the duties and

responsibilities for those positions. This provision was formerly

located at 13 CFR 105.403, except that the current section has been

amended to permit the appointment of more than one Alternate Agency

Ethics Official.

Compliance With Executive Orders 12612, 12778 and 12866; the Regulatory

Flexibility Act, 5 U.S.C. 601 et seq.; and the Paperwork Reduction Act,

44 U.S.C. ch. 35

SBA certifies that this proposed rule will not be considered a

significant rule within the meaning of Executive Order 12866 and will

not have a significant economic impact on a substantial number of small

entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C.

601, et seq.

For purposes of Executive Order 12612, SBA certifies that this

proposed rule would not have federalism implications.

For purposes of Executive Order 12778, SBA certifies that this

proposed rule is drafted, to the extent practicable, in accordance with

the standards set forth in section 2 of that Order.

For purposes of the Paperwork Reduction Act, SBA certifies that

this proposed rule, if promulgated in final, would impose no new

reporting or recordkeeping requirements.

List of Subjects in 13 CFR Part 105

Conflict of interest.

For the reasons set forth above, SBA is amending Title 13 of the

Code of Federal Regulations as follows:

Part 105 of Title 13, Code of Federal Regulations, is revised to

read as follows:

PART 105--STANDARDS OF CONDUCT AND EMPLOYEE RESTRICTIONS AND

RESPONSIBILITIES

Standards of Conduct

Sec.

105.101 Cross reference to employee ethical conduct standards and

financial disclosure regulations.

Restrictions and Responsibilities Related to SBA Employees and Former

Employees

105.201 Definitions.

105.202 Employment of former employee by person previously the

recipient of SBA Assistance.

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105.203 SBA Assistance to person employing former SBA employee.

105.204 Assistance to SBA employees or members of their household.

105.205 Duty to report irregularities.

105.206 Applicable rules and directions.

105.207 Politically motivated activities with respect to the

Minority Small Business Program.

105.208 Penalties.

Restrictions on SBA Assistance to Other Individuals

105.301 Assistance to officers or employees of other Government

organizations.

105.302 Assistance to employees or members of quasi-Government

organizations.

Administrative Provisions

105.401 Standards of Conduct Committee.

105.402 Standards of Conduct Counselors.

105.403 Designated Agency Ethics Officials.

Authority: 5 U.S.C. 7301; 15 U.S.C. 634; 15 U.S.C. 637(a)(18)

and (a)(19), 642, and 645(a).

Standards of Conduct

Sec. 105.101 Cross-reference to employee ethical conduct standards and

financial disclosure regulations.

In addition to this Part, Small Business Administration (SBA)

employees should refer to the uniform Standards of Ethical Conduct for

Executive Branch employees at 5 CFR Part 2635, the SBA Supplemental

Standards of Ethical Conduct at 5 CFR Chapter XLIV, and the uniform

Financial Disclosure regulation for Executive Branch employees at 5 CFR

Part 2634.

Restrictions and Responsibilities Related to SBA Employees and

Former Employees

Sec. 105.201 Definitions.

(a) Employee means an officer or employee of the SBA regardless of

grade, status or place of employment, including employees on leave with

pay or on leave without pay other than those on extended military

leave. Unless stated otherwise. Employee shall include those within the

category of Special Government Employee.

(b) Special Government Employee means an officer or employee of

SBA, who is retained, appointed or employed to perform temporary duties

on a full-time or intermittent basis, with or without compensation, for

not to exceed 130 days during any period of 365 consecutive days.

(c) Person means an individual, a corporation, a company, an

association, a firm, a partnership, a society, a joint stock company,

or any other organization or institution.

(d) Household member means spouse and minor children of an

employee, all blood relations of the employee and his any spouse who

reside in the same place of abode with the employee.

(e) SBA Assistance means financial, contractual, grant, managerial

or other aid, including size determinations, section 8(a)

participation, licensing, certification, participating lender status,

and other eligibility determinations made by SBA. The term also

includes an express decision to compromise or defer possible litigation

or other adverse action.

Sec. 105.202 Employment of former employee by person previously the

recipient of SBA Assistance.

(a) No former employee, who occupied a position involving

discretion over, or who exercised discretion with respect to, the

granting or administration of SBA Assistance may occupy a position as

employee, partner, agent, attorney or other representative of a concern

which has received this SBA Assistance for a period of two years

following the date of granting or administering such SBA Assistance

if--

(1) The date of granting or administering such SBA Assistance was

within the period of the employee's term of employment, or;

(2) The date of granting or administering such SBA Assistance was

within one year following the termination of such employment.

(b) Failure of a recipient of SBA Assistance to comply with these

provisions may result, in the discretion of SBA, in the requirement for

immediate repayment of SBA financial Assistance, the immediate

termination of other SBA Assistance involved or other appropriate

action.

Sec. 105.203 SBA Assistance to person employing former SBA employee.

(a) SBA will not provide SBA Assistance to any person who has, as

an employee, owner, partner, attorney, agent, owner of stock, officer,

director, creditor or debtor, any individual who, within one year prior

to the request for such SBA Assistance was an SBA employee, without the

prior approval of the SBA Standards of Conduct Counselor. The Standards

of Conduct Counselor will refer matters of a controversial nature to

the Standards of Conduct Committee for final decision; otherwise, his

or her decision is final.

(b) In reviewing requests for approval, the Standards of Conduct

Counselor will consider:

(1) The relationship of the former employee with the applicant

concern;

(2) The nature of the SBA Assistance requested;

(3) The position held by the former employee with SBA and its

relationship to the SBA Assistance requested; and

(4) Whether an apparent conflict of interest might exist if the SBA

Assistance were granted.

Sec. 105.204 Assistance to SBA employees or members of their

household.

Without the prior written approval of the Standards of Conduct

Committee, no SBA Assistance, other than Disaster loans under

subparagraphs (1) and (2) of section 7(b) of the Small Business Act,

shall be furnished to a person when the sole proprietor, partner,

officer, director or significant stockholder of the person is an SBA

employee or a household member.

Sec. 105.205 Duty to report irregularities.

Every employee shall immediately report to the SBA Inspector

General any acts of malfeasance or misfeasance or other irregularities,

either actual or suspected, arising in connection with the performance

by SBA of any of its official functions.

Sec. 105.206 Applicable rules and directions.

Every employee shall follow all agency rules, regulations,

operating procedures, instructions and other proper directions in the

performance of his official functions.

Sec. 105.207 Politically motivated activities with respect to the

Minority Small Business Program.

(a) Any employee who has authority to take, direct others to take,

recommend, or approve any action with respect to any program or

activity conducted pursuant to section 8(a) or section 7(j) of the

Small Business Act, shall not, with respect to any such action,

exercise or threaten to exercise such authority on the basis of the

political activity or affiliation of any party. Employees shall

expeditiously report to the SBA Inspector General any such action for

which such employee's participation has been solicited or directed.

(b) Any employee who willfully and knowingly violates this section

shall be subject to disciplinary action, which may consist of

separation from service, reduction in grade, suspension, or reprimand.

(c) This section shall not apply to any action taken as a penalty

or other enforcement of a violation of any law, rules, or regulation

prohibiting or restricting political activity.

(d) The prohibitions of and remedial measures provided for under

this section with regard to such prohibitions, shall be in addition to,

and not in lieu of, any other prohibitions, measures or liabilities

that may arise under any other provision of law.

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Sec. 105.208 Penalties.

Any employee guilty of violating any of the provisions in this Part

may be disciplined, including removal or suspension from SBA

employment.

Restrictions on SBA Assistance to Other Individuals

Sec. 105.301 Assistance to employees of other Government

organizations.

(a) SBA must receive a written statement of no objection by the

pertinent Department or military service before it gives any SBA

Assistance, other than Disaster loans under subparagraphs (1) and (2)

of section 7(b) of the Small Business Act, to a person when its sole

proprietor, partner, officer, director or stockholder with a 10 percent

or more interest, or a household member, is an employee of another

Government Department or Agency having a grade of at least GS-13 or its

equivalent.

(b) The Standards of Conduct Committee must approve an SBA contract

with an entity if a sole proprietor, general partner, officer,

director, or stockholder with a 10 or more percent interest (or a

household member of such individuals) is an employee of a Government

Department or Agency. See also 48 CFR Subpart 3.6.

(c) The Standards of Conduct Committee must approve SBA Assistance,

other than disaster loans under subparagraphs (1) and (2) of section

7(b) of the Small Business Act, to a person if its sole proprietor,

general partner, officer, director or stockholder with a 10 percent or

more interest (or a household member of such individual) is a member of

Congress or an appointed official or employee of the legislative or

judicial branch of the Government.

Sec. 105.302 Assistance to employees or members of quasi-Government

organizations.

(a) The Standards of Conduct Committee must approve SBA Assistance,

other than Disaster loans under subparagraphs (1) and (2) of section

7(b) of the Small Business Act, to a person if its sole proprietor,

general partner, officer, director or stockholder with a 10 percent or

more interest (or a household member) is a member or employee of a

Small Business Advisory Council or is a SCORE volunteer.

(b) In reviewing requests for approval, factors the Standards of

Conduct Committee may consider include whether the granting of the SBA

Assistance might result in or create the appearance of giving

preferential treatment, the loss of complete independence or

impartiality, or adversely affect the confidence of the public in the

integrity of the Government.

Administrative Provisions

Sec. 105.401 Standards of Conduct Committee.

(a) The Standards of Conduct Committee will:

(1) Advise and give direction to SBA management officials in the

administration of this Part and any other rules, regulations or

directives dealing with conflicts of interest and ethical standards of

SBA employees; and

(2) Make decisions on specific requests when its approval is

required.

(b) The Standards of Conduct Committee will consist of:

(1) The General Counsel or, in his or her absence, the Deputy

General Counsel or, in his or her absence, the Acting General Counsel

who shall act as Chairman of the Committee;

(2) The Associate Deputy Administrator for Management and

Administration, or in his or her absence, the Assistant Administrator

for Administration; and

(3) The Director of Human Resources, or in his or her absence the

Deputy Director of Human Resources.

Sec. 105.402 Standards of Conduct Counselors.

(a) The SBA Standards of Conduct Counselor is the Deputy General

Counsel. The Associate General Counsel for General Law (AGC) is an

Assistant Standards of Conduct Counselor, and other Assistants may be

designated by the Standards of Conduct Counselor.

(b) The Standards of Conduct Counselors and Assistants:

(1) Provide general advice, assistance and guidance to employees

concerning this Part and the regulations referred to in Sec. 105.101.

(2) Monitor the Standards of Conduct Program within their assigned

areas and provide required reports thereon;

(3) Review Confidential Financial Disclosure Reports as required

under 5 CFR Part 2634, Subpart I and provide an annual report on

compliance with filing requirements to the SBA Standards of Conduct

Counselor as of February 1 of each year; and

(4) Provide Outside Employment decisions pursuant to 5 CFR

Sec. 5401.104.

(c) Each employee will be periodically informed of the name,

address and telephone number of the Assistant Standards of Conduct

Counselor to contact for advice and assistance.

(d) Employee requests for advice or rulings should be directed to

the appropriate Standards of Conduct Counselor for appropriate action.

Sec. 105.403 Designated Agency Ethics Officials.

(a) The Designated Agency Ethics Officials, pursuant to the Ethics

in Government Act of 1978, is the Deputy General Counsel. He or she

may, in turn, appoint one or more an Alternate Designated Agency Ethics

Officials. The Alternates will assist the Designated Agency Ethics

Official and act for him or her whenever absent.

(b) The Designated Agency Ethics Officials and Alternates

administer the program for Financial Disclosure Statements under 5 CFR

2634.201, receive and evaluate these statements, and provide advice and

counsel regarding matters relating to the Ethics in Government Act of

1978 and its implementing regulations. The duties and responsibilities

of the Designated Agency Ethics Officials and Alternates are set forth

in more detail in 5 CFR 2638.203, which is promulgated and amended by

the Office of Government Ethics.

Philip Lader,

Administrator.

[FR Doc. 95-28513 Filed 11-24-95; 8:45 am]

BILLING CODE 8025-01-P