Bill Targets Front Companies A Pennsylvania congressman is proposing tougher penalties for front companies. Rep. Joe Sestak, a Democratic member of the Small Business Committee, introduced the Small Business Contract Protection Act, H.R. 4420, on Jan. 12. It provides for suspension, debarment and criminal penalties including fines and prison terms for “misrepresentation through use of a pass-through business.” The bill defines a pass-through business as one that meets one or more of these criteria in its relationship with another company: (1) The business shares a location with the other company. (2) The business shares ordering or personnel systems with the other company. (3) An officer, director, principal, stockholder, managing member or key employee of the business participates in the business decisions of the other company. (4) Equity interest in the business owned by the other company. (5) The accounts receivable of the business is directly or indirectly controlled by the other company. (6) The relationship with the business generates more than 50 percent of the income of the other company. Front companies have long been a problem in federal small business programs. A recent report by the Government Accountability Office found evidence that some service-disabled veteran-owned businesses were passing through most or all of their work to large companies. GAO’s chief investigator told a congressional subcommittee, “Some people refer to it as rent-a-vet.” (SAA, 1/8)