Standards of Conduct and Other Employee Responsibilities

SMALL BUSINESS ADMINISTRATION

13 CFR Part 105

Standards of Conduct and Other Employee Responsibilities

AGENCY: Small Business Administration.

ACTION: Final rule.

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SUMMARY: The Small Business Administration (SBA) amends its regulations

governing employee standards of conduct. This 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provisions that are superseded by the Office of Government Ethics (OGE)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 one provision by 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.

EFFECTIVE DATE: This rule is effective February 26, 1996.

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, D.C. 20416, (202)

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

SUPPLEMENTARY INFORMATION: The Small Business Administration repeals

numerous provisions of its existing standards of conduct regulations at

13 CFR Part 105 as either superseded by the Office of Government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 repeals 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 are renumbered and renamed

``Standards of Conduct and Employee Restrictions and

Responsibilities.''

In place of SBA's former standards at 13 CFR Part 105, SBA issues a

residual cross reference provision at new 13 CFR section 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 reissues, in the new

13 CFR Part 105, several provisions regarding other employee

responsibilities.

Proposed changes to Part 105 were published in the Federal Register

on November 27, 1995 (60 FR 58260). The public was invited to comment

during a thirty day comment period. SBA received seven comments (all of

which concerned post-employment restrictions) during that time period.

SBA discusses the comments and SBA's response here.

Section 105.201, ``Definitions'': This section provides definitions

unique to SBA which are applicable throughout Part 105. The definition

of ``SBA Assistance'' (Sec. 105.201(e)) was proposed to be amended to

include all participating lenders, including banks, as recipients of

SBA Assistance. This proposal generated several comments, which noted

that SBA employees with specialized knowledge losing jobs due to

downsizing would now be precluded from employment with participating

lenders, and that such employment is often the only means available to

such employees to maintain a customary standard of living and make use

of education and skills. SBA employees commented that the SBA would be

unable to attract private sector employees to the SBA if they believe

that they will be unmarketable when they leave the government. In

addition, participants in SBA's financial programs commented that the

interpretation would deny them a qualified universe of potential

employees to the detriment of the delivery of SBA's programs.

As a result of these comments, and those relative to the other

sections contained in the proposal (discussed below), SBA has

determined that revision of the definition will be deferred. This final

rule therefore merely restates the existing definition of SBA

Assistance, and does not adopt the proposed change, pending further

review.

SBA also received three comments concerning Section 105.202,

``Employment of Former Employee by Person Previously the Recipient of

SBA Assistance''. This section, the first of two sections providing

restrictions relating to former SBA employees, was not changed by the

proposed rule, although the preamble to this section did not make that

fact completely clear. All of the comments were directed at the effect

on Sec. 105.202 of the addition of participating lenders as recipients

of SBA Assistance to the definition section of section 105.201(e).

All three commenters were concerned that agency employees losing

their employment as a result of an involuntary separation or those

otherwise seeking post-SBA employment would be unfairly denied

employment best suited for their specialized knowledge and education

and would be unable the maintain their lifestyles and support their

families by virtue of section 105.202. One of the commenters also

argued that 105.202 should not apply to Certified Development Companies

(CDC's), because they are not business enterprises receiving loans from

the agency and should therefore be exempt from this rule.

As set forth above, the proposed rule made no change to section

105.202 which is based upon section 13 of the Small Business Act. To

the extent all of these comments were directed at the addition of

participating lenders to the Sec. 105.201 definition of SBA Assistance,

that issue is addressed by the withdrawal of the proposal.

The same issue arises in connection with section 105.203 ``SBA

Assistance to Person Employing Former SBA Employee.'' This section is

based on the same provision of the Small Business Act as section

105.202. It prohibits 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.

SBA received one comment on this section to the effect that this

provision unfairly penalizes a business which hires a qualified former

SBA employee.

As discussed above, to the extent that the impact of this section

was proposed to be altered by adding Participating lenders as

recipients of Assistance, the provision is unaffected by this rule.

However, it is SBA's intent to revisit both sections 105.202 and

105.203 at a later point keeping in mind the comments received in this

rulemaking.

SBA received no other comments on this rule. For a detailed

description of the other changes made to this rule, please refer to

SBA's proposed rules, published at 60 FR 58260 (November 27, 1995).

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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 rule will not be considered a significant

rule within the meaning of Executive Order 12866 and does 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 rule

does not have federalism implications. For purposes of Executive Order

12778, SBA certifies that this 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 rule, if promulgated in final, will impose no new reporting or

recordkeeping requirements.

List of Subjects in 13 CFR Part 105

Conflict of interests.

For the reasons set forth above, 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.

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, 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 any spouse who

resides 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, 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

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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, rule, or regulation

prohibiting or restricting political activity.

(d) The prohibitions in 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.

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 officers or 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 part 35, 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

concerning 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

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 Official, pursuant to the Ethics

in Government Act of 1978 (5 U.S.C. App.), is the Deputy General

Counsel. He or she may, in turn, appoint one or more 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 Official and Alternates administer

the program for Financial Disclosure Statements under 5 CFR 2634.201,

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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 Official and Alternates are set forth in more

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

Office of Government Ethics.

Dated: January 19, 1996.

Philip Lader,

Administrator.

[FR Doc. 96-1161 Filed 1-25-96; 8:45 am]

BILLING CODE 8025-01-P