Advocacy: Ethics Rule Costly for Small Firms SBA’s Office of Advocacy has urged regulators to reconsider how a proposed ethics rule will affect small businesses. In a comment on the proposed Code of Ethics and Business Conduct regulation issued by the Federal Acquisition Regulation councils in February, Advocacy said the cost of compliance “would be significant” for small firms. The proposed rule would require all contractors receiving an award worth more than $5 million to establish a written code of ethics and provide ethics training for employees. (SAA, 2/23) “If a small business is required to implement an employee ethics and compliance training program and an internal control system, it is estimated by at least one established professional organization that the minimal set-up cost will be around $10,000,” Counsel for Advocacy Tom Sullivan wrote. Sullivan said the FAR councils should prepare an initial regulatory flexibility analysis to assess the rule’s impact on small businesses. “Advocacy would further urge the Councils to give careful consideration to the need for reasonable alternatives for small business compliance with the proposed regulation,” he added. The proposed rule would also apply to subcontractors doing at least $5 million worth of work. Sullivan said about 763 small businesses received prime contract awards above the $5 million threshold proposed in fiscal 2005. The number of subcontractors affected cannot be determined. Because of the lack of data, Advocacy recommended delaying the application of the rule to subcontractors.